Document:

Exhibit 10.8

 

AMENDED AND RESTATED

SUBORDINATION AGREEMENT

THIS AMENDED AND RESTATED SUBORDINATION AGREEMENT (“Agreement”), dated as of February 13, 2017 is made by and among the undersigned (collectively the “Subordinated Creditors”), Sabby Healthcare Master Fund, Ltd. (“SHMF”), Sabby Volatility Master Fund Ltd. (“SVMF,” and together with SHMF, “Sabby”), and Dillon Hill Capital, LLC  (“Dillon Hill,” and collectively with Sabby and each of their participants, successors and assigns, Dillon Hill and Sabby are sometimes referred to herein as the “Senior Lenders”, and together with the Subordinated Creditors, the “Parties”). For all purposes herein, the “Borrower” means RiceBran Technologies, a California corporation.

BACKGROUND

 

A.            Borrower previously entered into that certain Note and Warrant Purchase Agreement dated January 17, 2012 (as amended thereafter, including without limitation pursuant to that Second Amended and Restated Note and Warrant Purchase Agreement dated as of November 13, 2013) (the “Purchase Agreement”) with each of the Subordinated Creditors. In connection with the transactions contemplated by the Purchase Agreement, the Borrower issued to the Subordinated Creditors convertible promissory notes (as amended, the “Original Notes”).

 

B.            Borrower and Subordinated Creditors entered into that certain Amendment to Loan Documents dated as of May 12, 2015 (“First Amendment”), pursuant to which (i) the Original Notes held by the Subordinated Creditors were amended and restated (as amended and restated, the “Notes”) and (ii) warrants to purchase 300,000 shares of Borrower’s common stock were issued to the Subordinated Creditors (“2015 Warrants”). Borrower and the Subordinated Creditors are parties to a Third Amended and Restated Security Agreement, dated as of May 12, 2015 (“Security Agreement”), which secures Borrower’s obligations under the Notes.

 

C.            Borrower, Subordinated Creditors and Full Circle Capital Corporation, a Maryland corporation (“FCCC”) are parties to that certain Subordination Agreement dated as of May 12, 2015 (“Existing Agreement”).

 

D.            Borrower concurrent herewith is amending the Purchase Agreement with that certain Amendment Number Two to Loan Documents dated as of February 9, 2017 (“Second Amendment”), pursuant to which the Subordinated Creditors will agree to (i) subordinate their Notes and their security interests under the Security Agreement to the obligations and security interests relating to the Credit Facility (as defined below), (ii) extend the maturity date of the Notes and (iii) reduce the interest rate of the Notes, all on the terms describe herein.

 

E.             Borrower has entered into a Securities Purchase Agreement with the Senior Lenders (“Loan Agreement”) relating to the issuance of Original Issue Discount Senior Secured Debentures thereunder (“Debentures”) dated of even date herewith (together with ancillary documents, “Credit Facility”).  The Credit Facility is a “Replacement Credit Facility” and a “Senior Debt Facility”, and the lenders under the Credit Facility are “Senior Lenders”, under the terms of the Security Agreement.

 

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F.             This Agreement amends and restates the Existing Agreement in its entirety.

 

G.             In consideration of the capital to be provided under the Credit Facility, and other financial accommodations that have been made and may hereafter be made by the Senior Lenders for the benefit of the Borrower, which in turn benefits the Subordinated Creditors, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Subordinated Creditors hereby agree to the terms hereof.

 

AGREEMENT

 

1.             Definitions.  As used herein, the following terms have the meanings set forth below:

 

“Borrower Default” means any Event of Default as defined in the Debentures.

 

“Lien” means any security interest, mortgage, deed of trust, pledge, lien, charge, encumbrance, title retention agreement or analogous instrument or device, including the interest of each lessor under any capitalized lease and the interest of any bondsman under any payment or performance bond, in, of or on any assets or properties of a person, whether now owned or hereafter acquired and whether arising by agreement or operation of law.

 

“Senior Lender Debt”, used herein in its most comprehensive sense, means the Loan Agreement, the Debentures and any and all advances, debts, obligations and liabilities of the Borrower to the Senior Lenders, heretofore, now or hereafter made, incurred or created, whether voluntary or involuntary and however arising, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, including under any swap, derivative, foreign exchange, hedge, deposit, treasury management or other similar transaction or arrangement at any time entered into by the Borrower with the Senior Lenders, and whether the Borrower may be liable individually or jointly with others, or whether recovery upon such amounts may be or hereafter become unenforceable.

 

“Subordinated Indebtedness” means all obligations arising under the Subordinated Notes and each and every other debt, liability and obligation of every type and description which the Borrower or any of its subsidiaries may now or at any time hereafter owe to one or more of the Subordinated Creditors, whether such debt, liability or obligation now exists or is hereafter created or incurred, and whether it is or may be direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated or unliquidated, or joint, several or joint and several.

 

“Subordinated Notes” means Borrower’s Second Amended and Restated Secured Promissory Notes, dated May 12, 2015 and/or Amended and Restated Secured Promissory Note dated May 12, 2015, as amended on February 9, 2017, payable to the order of the Subordinated Creditors in the original aggregate principal amount of Five Million Four Hundred Fifty Thousand Three Hundred Ninety Four Dollars ($5,450,394), together with all renewals, extensions and modifications thereof and any note or notes issued in substitution therefor.

 

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2.             Subordinated Indebtedness. The Borrower and the Subordinated Creditors have delivered to the Senior Lenders true and complete copies of the  Second Amendment and any and all other documents governing the terms of the Subordinated Indebtedness in effect on the date hereof (collectively, the “Subordinated Indebtedness Documents”). No purported amendment, modification, waiver or restatement of the Subordinated Indebtedness Documents shall be effective without the express prior written consent of the Senior Lenders.

 

3.             Subordination.  The payment of all of the Subordinated Indebtedness is hereby expressly subordinated to the extent and in the manner hereinafter set forth to the payment in full of the Senior Lender Debt; and regardless of any priority otherwise available to the Subordinated Creditors by law or by agreement, and any Lien claimed therein by the Subordinated Creditors shall be and remain fully subordinate for all purposes to the rights of the Senior Lenders for all purposes whatsoever. The Subordinated Indebtedness shall continue to be subordinated to the Senior Lender Debt even if the Senior Lender Debt or any portion thereof is deemed subordinated, avoided or disallowed under the United States Bankruptcy Code or other applicable law.

 

4.             Principal and Interest Payments.

 

4.1.          Principal Payments. Except as expressly set forth in Section 6, until all of the Senior Lender Debt has been paid in full, no Subordinated Creditor shall, without the prior written consent of the Senior Lender, demand, receive or accept any principal payment from the Borrower in respect of the Subordinated Indebtedness, or exercise any right of or permit any setoff in respect of the Subordinated Indebtedness.

 

4.2.          Interest Payments.  A Subordinated Creditor may demand, receive and accept regularly scheduled payments of interest in respect of the Subordinated Indebtedness; provided, that without the prior written consent of the Senior Lenders, the Subordinated Creditor shall not demand, receive or accept any interest payment from the Borrower in respect of the Subordinated Indebtedness so long as any Borrower Default exists or if a Borrower Default will occur as a result of or immediately following such interest payment.

 

5.             Receipt of Prohibited Payments.  The Subordinated Creditors each agree that if the Subordinated Creditor receives any payment on the Subordinated Indebtedness that the Subordinated Creditor is not entitled to receive under the provisions of this Agreement, the Subordinated Creditor will hold the amount so received in trust for the Senior Lenders and will forthwith turn over such payment to the Senior Lenders in the form received (except for the endorsement of the Subordinated Creditor where necessary) for application to then-existing Senior Lender Debt (whether or not due), in such manner of application as the Senior Lenders may deem appropriate.  If a Subordinated Creditor exercises any right of setoff that the Subordinated Creditor is not permitted to exercise under the provisions of this Agreement, the Subordinated Creditor will promptly pay over to the Senior Lender, in immediately available funds, an amount equal to the amount of the claims or obligations offset.  If a Subordinated Creditor fails to make any endorsement required under this Agreement, the Senior Lenders, or any officer or employee or agent on behalf of the Senior Lenders, are hereby irrevocably appointed as the attorney-in-fact (which appointment is coupled with an interest) for such Subordinated Creditor to make such endorsement in the Subordinated Creditor’s name.

 

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6.             Action on Subordinated Indebtedness.  The Subordinated Creditors each agree not to commence any action or proceeding against the Borrower to recover all or any part of the Subordinated Indebtedness, or join with any creditor (unless the Senior Lenders shall so join) in bringing any proceeding against the Borrower under any bankruptcy, reorganization, readjustment of debt, arrangement of debt receivership, liquidation or insolvency law or statute of the federal or any state government, or take possession of, sell, or dispose of any item that comprises “Collateral” pursuant to the terms of the Credit Facility (“Collateral”), or exercise or enforce any right or remedy available to a Subordinated Creditor with respect to any such Collateral, unless and until all Senior Lender Debt has been paid in full. Notwithstanding anything to the contrary set forth in this Section 6, if all of Borrower’s obligations to the Senior Lenders are not fully paid and satisfied, and no Senior Lender has not initiated a foreclosure or other action against Borrower, upon five (5) business days’ prior written notice to the Senior Lenders after expiration of the Subordinated Creditor Standstill Period (as defined below), the Subordinated Creditors may exercise any rights or remedies they may have against Borrower whether by judicial or non-judicial foreclosure or otherwise provided that the receipt of any payments by the Subordinated Creditors shall be paid over to the Senior Lenders, in immediately available funds, until payment in full of the obligations to the Senior Lenders. “Subordinated Creditor Standstill Period” means the period beginning on the occurrence of an event of default under any of the agreements between the Subordinated Creditors and Borrower and ending on the date that is six (6) months following the date after the Subordinated Creditors shall have given notice to each of the Senior Lenders and to Borrower that such event of default shall have occurred and be continuing and of the intent of any of the Subordinated Creditors to exercise their rights and remedies.

 

7.             Action Concerning Collateral.

 

7.1.          Remedies. Notwithstanding any Lien now held or hereafter acquired by the Subordinated Creditors, the Senior Lenders may take possession of, sell, dispose of, and otherwise deal with all or any part of any collateral of the Subordinated Creditors, and may enforce any right or remedy available to it with respect to the Borrower or such collateral, all without notice to or consent of any of the Subordinated Creditors except as specifically required by applicable law.

 

7.2.          Deemed Consent and Release of Lien. In addition, and without limiting the generality of Section 7.1, if (i) a Borrower Default has occurred and is continuing, (ii) the Borrower or any of the Senior Lenders intends to sell or otherwise dispose of any Collateral of the Senior Lenders to an unrelated third party outside the ordinary course of business, (iii) Senior Lenders have each given written notice thereof to the Subordinated Creditors, and (iv) the Subordinated Creditors have failed, within ten (10) days after receipt of such notice, to purchase for cash the Senior Lender Debt for the full amount thereof, the Subordinated Creditors shall be deemed to have consented to such sale or disposition, to have released any Lien they may have in such Collateral and to have authorized each Senior Lender or its agents to file partial releases (and any related financing statements such as “in lieu” financing statements under Part 7 of Article 9 of the Uniform Commercial Code) with respect to such Collateral.

 

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7.3.          No Assumed Duty. The Senior Lenders shall have no duty to preserve, protect, care for, insure, take possession of, collect, dispose of, or otherwise realize upon any of the assets of Borrower, whether or not they comprise Collateral for the Senior Lenders, and in no event shall any Senior Lender be deemed a Subordinated Creditor’s agent with respect to any assets of Borrower.  All proceeds received by the Senior Lenders with respect to any of Borrower’s assets may be applied, first, to pay or reimburse the Senior Lenders for all costs and expenses (including reasonable attorneys’ fees) incurred by the Senior Lenders (or either of them) in connection with the collection of such proceeds, and, second, to any Senior Lender Debt in any order that the Senior Lender may choose.

 

8.             Bankruptcy and Insolvency.  In the event of any receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization or arrangement with creditors, whether or not pursuant to bankruptcy law, the sale of all or substantially all of the assets of the Borrower, dissolution, liquidation or any other marshalling of the assets or liabilities of the Borrower, the Subordinated Creditors will file all claims, proofs of claim or other instruments of similar character necessary to enforce the obligations of the Borrower in respect of the Subordinated Indebtedness and will hold in trust for the Senior Lenders and promptly pay over to the Senior Lender in the form received (except for the endorsement of the Subordinated Creditors where necessary) for application to the then-existing Senior Lender Debt, any and all moneys, dividends or other assets received in any such proceedings on account of the Subordinated Indebtedness, unless and until the Senior Lender Debt has been paid in full. If a Subordinated Creditor shall fail to take any such action, the Senior Lenders, as attorney-in-fact for the Subordinated Creditor, may take such action on the Subordinated Creditor’s behalf.  The Subordinated Creditors each hereby irrevocably appoints the Senior Lenders, or any officers or employees of the Senior Lenders designated by such Senior Lender, as the attorney-in-fact for the Subordinated Creditors (which appointment is coupled with an interest) with the power but not the duty to demand, sue for, collect and receive any and all such moneys, dividends or other assets and give acquaintance therefor and to file any claim, proof of claim or other instrument of similar character, to vote claims comprising Subordinated Indebtedness to accept or reject any plan of partial or complete liquidation, reorganization, arrangement, composition or extension and to take such other action in the Senior Lender’s name or in the name of the Subordinated Creditors as the Senior Lender may deem necessary or advisable for the enforcement of the agreements contained herein; and the Subordinated Creditors will each execute and deliver to the Senior Lender such other and further powers-of-attorney or instruments as the Senior Lender may request in order to accomplish the foregoing. If the Senior Lender desires to permit the use of cash collateral or to provide post-petition financing to the Borrower, the Subordinated Creditors shall not object to the same or assert that its interests are not being adequately protected.

 

9.             Restrictive Legend; Transfer of Subordinated Indebtedness.  The Subordinated Creditors will cause the Subordinated Notes and all other notes, bonds, debentures or other instruments evidencing the Subordinated Indebtedness or any part thereof to contain a specific statement (in the form attached hereto as Exhibit A) thereon to the effect that the indebtedness thereby evidenced is subject to the provisions of this Agreement, and the Subordinated Creditors will mark their books conspicuously to evidence the subordination effected hereby.  The Subordinated Creditors each represents and warrants to the Senior Lender that each such Subordinated Creditor is the lawful holder of the applicable Subordinated Note and has not transferred any interest therein to any other person or entity.  In the event of the transfer in any manner of the Subordinated Indebtedness by the Subordinated Creditors to any person who is not a party to this Agreement, the transferring party shall obtain, as a condition to and upon such transfer, the written consent of the transferee to become a party to and be bound by the terms of this Agreement and to the placing of the legend as required by this Section 9 upon the notes, bonds, debentures or other instruments evidencing the Subordinated Indebtedness.

 

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10.           Continuing Effect.  This Agreement shall constitute a continuing agreement of subordination, and the Senior Lenders may, without notice to or consent by the Subordinated Creditors, and except as set forth in Section 2, modify any term of the Senior Lender Debt in reliance upon this Agreement.  Without limiting the generality of the foregoing, the Senior Lenders may, at any time and from time to time, without the consent of or notice to the Subordinated Creditors and without incurring responsibility to the Subordinated Creditors or impairing or releasing any of the Senior Lenders’ rights or the Subordinated Creditors’ obligations hereunder:

 

(a)          change the amount of payment or extend the time for payment or renew or otherwise alter the terms of any Senior Lender Debt or any instrument evidencing the same in any manner;

 

(b)          if applicable, sell, exchange, release or otherwise deal with any property at any time securing payment of all or any portion of the Senior Lender Debt or any part thereof;

 

(c)          release anyone liable in any manner for the payment or collection of the Senior Lender Debt or any part thereof;

 

(d)          exercise or refrain from exercising any right against the Borrower or any other person (including the Subordinated Creditors); and

 

(e)          apply any sums received by the Senior Lender, by whomsoever paid and however realized, to the Senior Lender Debt in such manner as the Senior Lender shall deem appropriate.

 

11.           No Commitment.  None of the provisions of this Agreement shall be deemed or construed to constitute or imply any commitment or obligation on the part of the Senior Lenders to make any future loans or other extensions of credit or financial accommodations to the Borrower. Each of the Subordinated Creditors hereby waives any and all right to require the marshalling of assets in connection with the exercise of any of the Senior Lenders’ remedies permitted by applicable law or agreement.

 

12.           Notices.  Any notice or other communication required or permitted to be given or made under this Agreement (i) shall be in writing, (ii) may be delivered by hand delivery, First Class U.S. Mail (regular, certified, registered or expedited delivery), FedEx, UPS Overnight, Airborne or other nationally recognized delivery service, fax, or electronic transmission, and (iii) shall be delivered or transmitted to the appropriate address as set forth herein. Each notice or other communication shall be delivered or addressed to a party at its address set forth below.  A party’s address for notice may be changed from time to time by notice given to the other party.

 

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If to the Subordinated Creditors:

 

	 	
Gregory J. Vislocky

	 	
7700 NE Parkway Drive, Suite 300

	 	
Vancouver, WA 98662

	 	
Fax:(360) 823-0126

	 	 
	 	
Brian Rick Delamarter

	 	
3396 Stoneridge Lane

	 	
Los Angeles, CA 90077

	 	 
	 	
Harold Guy Delamarter

	 	
7700 NE Parkway Drive, Suite 300

	 	
Vancouver, WA 98662

	 	
Fax:(360) 823-0126

	 	 
	 	
The Shoshana Shapiro Halpern Revocable Trust UA June 13, 2006

	 	
20900 NE 30th Ave, Suite 200

	 	
Aventura, FL 33180

	 	
Attention:  Baruch Halpern

	 	 
	 	
Weintraub Partners

	 	
400 Capitol Mall, 11th Floor

	 	
Sacramento, CA 95814

	 	
Attention: Chris Chediak, Esq.

	 	
Facsimile: (916) 446-1611

	 	 
	 	
W. John Short and Karen A Wilson

	 	
c/o RiceBran Technologies

	 	
6720 N. Scottsdale Road, Suite 390

	 	
Scottsdale, AZ 85253

	 	 
	 	
Pensco Trust Co., FBO Baruch Halpern IRA

	 	
20900 NE 30th Ave, Suite 200

	 	
Aventura, FL 33180

	 	
Attention:  Baruch Halpern

 

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If to the Senior Lenders:

	
Sabby Management, LLC, as Agent

	 	
10 Mountain View Road, Suite 205,

	 	
Upper Saddle River, NJ 07458

	 	
Attn.: Robert Grundstein

	 	
Email:  rgrundstein@sabbycapital.com

 

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

	 	 
	 	
Ellenoff Grossman & Schole LLP

	 	
1345 Avenue of the Americas

	 	
New York, NY 10105

	 	
Attn:  Robert Charron

	 	
Email:  rcharron@egsllp.com

 

	
If to the Borrower:

	
6720 North Scottsdale Road, Suite 390

	
 

	
Scottsdale, AZ 85253

	
 

	
Attention: W. John Short

	
 

	
Facsimile: (480) 315-8275

 

	
With a copy to:

	
Weintraub Tobin Chediak Coleman Grodin

	
(which shall not constitute notice)

	
400 Capitol Mall, 11th Floor

	
 

	
Sacramento, CA 95814

	
 

	
Attention: Chris Chediak, Esq.

	
 

	
Facsimile: (916) 446-1611

 

Absent fraud or manifest error, a receipt signed by the addressee or its authorized representative, a certified or registered mail receipt, a signed delivery service confirmation or a fax or e-mail confirmation of transmission shall constitute proof of delivery.  Any notice actually received by the addressee shall constitute delivery notwithstanding the failure to comply with any provisions of this subsection. A notice delivered by regular First Class U.S. Mail shall be deemed to have been delivered on the third (3rd) business day after its post-mark.  Any other notice shall be deemed to have been received on the date and time of the signed receipt or confirmation of delivery or transmission thereof, unless that receipt or confirmation date and time is not a business day or is after 5:00 p.m. local time on a business day, in which case such notice shall be deemed to have been received on the next succeeding business day.

 

13.           Conflict in Agreements.  If the subordination provisions of any instrument evidencing Subordinated Indebtedness conflict with the terms of this Agreement, the terms of this Agreement shall govern the relationship between the Senior Lenders and the Subordinated Creditors.

 

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14.           No Waiver.  No waiver shall be deemed to be made by any Party of any of its rights hereunder unless the same shall be in writing signed on behalf of the Party, and each such waiver, if any, shall be a waiver only with respect to the specific matter or matters to which the waiver relates and shall in no way impair the rights of the Party or the obligations of the other Parties in any other respect at any time.

 

15.           Binding Effect; Acceptance.  This Agreement shall be binding upon the Parties and their respective heirs, legal representatives, successors and assigns and shall inure to the benefit of the Parties and their respective participants, successors and assigns irrespective of whether this or any similar agreement is executed by any other creditor of the Borrower.  Notice of acceptance of this Agreement or of reliance upon this Agreement is hereby waived by each of the Parties.

 

16.           Miscellaneous.  The Section and paragraph headings herein are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.  This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

 

17.           Governing Law; Consent to Jurisdiction and Venue.  This Agreement shall be governed by and construed in accordance with the substantive laws (other than conflict laws) of the State of California.  Each party consents to the personal jurisdiction of the state and federal courts located in the State of California in connection with any controversy related to this Agreement, waives any argument that venue in any such forum is not convenient, and agrees that any litigation initiated by any of them in connection with this Agreement may be venued in either the state or federal courts located in Sacramento County, California.

 

18.           Waiver of Jury Trial.  To the extent permissible under law, the parties hereto, each after consulting or having had the opportunity to consult with legal counsel, knowingly, voluntarily and intentionally waive any right they may have to a trial by jury in any litigation.  No party shall seek to consolidate, by counterclaim or otherwise, any litigation in which a jury trial has been waived with any other litigation in which a jury trial cannot be or has not been waived.  This provision shall be deemed to be enforceable to the fullest extent of the law as it may exist at the time any litigation is commenced.

 

[Remainder of Page Intentionally Left Blank; Signature Pages Follow]

 

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The Parties have executed this Subordination Agreement as of the date and year first above-written.

SENIOR LENDERS:

 

	
Sabby Healthcare Master Fund, Ltd.

	 
	 	 
	
By:

	
/s/ Robert Grundsteim

	 
	 	 
	
Name:  

	
Robert Grundstein 

	 
	 	 
	
Title:

	
COO of Investment Manager

	 
	 	 
	
Sabby Volatility Warrant Master Fund, Ltd.

	 
	 	 
	
By:

	
/s/ Robert Grundstein

	 
	 	 
	
Name:  

	
Robert Grundstein

	 
	 	 
	
Title:

	
COO of Investment Manager

	 
	 	 
	
Dillon Hill Capital, LLC

	 
	 	 
	
By:

	
/s/ Bruce Grossman

	 
	 	 
	
Name:  

	
Bruce Grossman

	 
	 	 
	
Title:

	
CEO & Managing Partner

	 

	 	
SUBORDINATED CREDITORS:

	 
	 	 	 
	 	
/s/ Greg Vislocky

	 
	 	
(Greg Vislocky)

	 

 

Continued Signature Page for Subordinated Creditors

 

	 	
/s/ Brian Rick Delamarter

	 
	 	
(Brian Rick Delamarter)

	 

 

Continued Signature Page for Subordinated Creditors

 

	 	
/s/ Harold Guy Delamarter

	 
	 	
(Harold Guy Delamarter)

	 

 

Continued Signature Page for Subordinated Creditors

	 	
Walter John Short and Karen A. Wilson

	 
	 	 	 
	 		 
	 	
(W. John Short)

	 
	 	 	 
	 		 
	 	
(Karen A. Wilson)

	 

 

Continued Signature Page for Subordinated Creditors

	 	
The Shoshana Shapiro Halpern Revocable Trust UA June 13, 2006

	 
	 	 	 	 
	 	
By:

	
/s/ Baruch Halpern

	 
	 	
Name:  

	
Baruch Halpern

	 
	 	
Its:

	
Trustee

	 
	 	 	 	 
	 	
By:

	
/s/ Shoshana Halpern

	 
	 	
Name:  

	
Shoshana Halpern

	 
	 	
Its:

	
Trustee

	 
	 	 	 	 
	 	
Pensco Trust Co., FBO Baruch Halpern IRA

	 
	 	 	 	 
	 	
/s/ Baruch Halpern

	 
	 	
(Baruch Halpern)

	 

 

Continued Signature Page for Subordinated Creditors

	 	
Weintraub Partners

	 
	 	 	 	 
	 	
By:

	
/s/ Chris Chediak

	 
	 	
Name:  

	Chris Chediak	 
	 	
Title:  

	Partner	 

 

ACKNOWLEDGMENT BY BORROWER

 

The undersigned, being the Borrower referred to in the foregoing Subordination Agreement (“Agreement”), hereby (i) acknowledges receipt of a copy thereof, (ii) agrees to all of the terms and provisions thereof, (iii) agrees to and with the Senior Lenders that it shall make no payment on the Subordinated Indebtedness that the Subordinated Creditors would not be entitled to receive under the provisions of the Agreement, (iv) agrees that any such payment will constitute a default under the Senior Lender Debt, and (v) agrees to mark its books conspicuously to evidence the subordination of the Subordinated Indebtedness effected hereby.

 

	
RICEBRAN TECHNOLOGIES

	 
	 	 	 
	
By:

	
/s/ Robert Smith

	 
	
Name:  

	Robert Smith	 
	
Title:

	
Chief Executive Officer

	 

 

ACKNOWLEDGMENT BY SUBSIDIARY GRANTORS

 

Each of the undersigned hereby (i) acknowledges receipt of a copy of the Subordination Agreement dated as of February 13, 2017 made by and among Gregory J. Vislocky, Brian Rick Delamarter, Harold Guy Delamarter, Baruch Halpern and Shoshana Halpern as trustees for The Shoshana Shapiro Halpern Revocable Trust UA June 13, 2006, Weintraub Partners, W. John Short and Karen A. Wilson, and Pensco Trust Co., FBO Baruch Halpern IRA (collectively the “Subordinated Creditors”) and the Senior Lenders (as defined in the Agreement)  (the “Agreement”), (ii) agrees to all of the terms and provisions of the Agreement, (iii) agrees to and with the Senior Lender that it shall make no payment on the Subordinated Indebtedness that the Subordinated Creditors would not be entitled to receive under the provisions of the Agreement, (iv) agrees that any such payment will constitute a default under the Senior Lender Debt, and (v) agrees to mark its books conspicuously to evidence the subordination of the Subordinated Indebtedness effected hereby.

NUTRACEA, LLC,

SRB-IP, LLC,

SRB-MERM, LLC,

SRB-LC, LLC,

SRB-MT, LLC,

SRB-WS, LLC,

RICEX COMPANY,

RICEX NUTRIENTS, INC.,

RICE SCIENCE, LLC,

RICE RX, LLC

HEALTHY NATURALS, INC.

	
Each by:  

	
/s/ J. Dale Belt

	 
	
Name:

	
J. Dale Belt

	 
	
Title:

	
Secretary

	 

 

EXHIBIT A

 

Legend

 

“THIS INSTRUMENT IS SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENT BY _____________ IN FAVOR OF ___________, DATED FEBRUARY 13, 2017.”

 

 

Exhibit A - 1Exhibit 10.9

AMENDMENT NUMBER TWO

TO

LOAN DOCUMENTS

 

This Amendment Number Two to Loan Documents (“Amendment”), dated as of February 9, 2017 (“Effective Date”), is entered into by and among RiceBran Technologies, a California corporation (the “Company”), and the persons and entities listed on the schedule of investors attached hereto as Exhibit A (each an “Investor” and, collectively, the “Investors”). The parties agree as follows:

 

RECITALS

 

A.           The Company and those Investors listed on Exhibit A hereto are parties to a Note and Warrant Purchase Agreement, originally dated January 17, 2012 (as amended thereafter, “Purchase Agreement”), pursuant to which the Investors purchased from the Company convertible promissory notes (as amended, the “Original Notes”).

 

B.            The Investors are parties to an Amendment to Loan Documents, dated as of May 12, 2015 (“First Amendment”), pursuant to which (i) all the Original Notes held by the Investors were amended and restated (as amended and restated, the “Notes”) and (ii) warrants to purchase 289,669 shares of the Company’s common stock were issued to the Investors (“2015 Warrants”).

 

C.            The Company and the Investors are parties to a Third Amended and Restated Security Agreement, dated as of May 12, 2015 (“Security Agreement”), which secures the Company’s obligations under the Notes.

 

D.            The Company has entered into a Securities Purchase Agreement of even date herewith with the lending parties thereto (“Loan Agreement”) relating to the issuance at a closing thereunder (“Closing”) of original issue discount senior secured debentures and warrants to purchase Company common stock (“Credit Facility”).  The Credit Facility is a “Replacement Credit Facility” and a “Senior Debt Facility”, and the lenders under the Credit Facility are “Senior Lenders”, under the terms of the Security Agreement.

 

E.             The Company also has entered into a separate Securities Purchase Agreement, dated on or about the date hereof, with the investor parties thereto (“Purchase Agreement”) relating to the issuance of shares of the Company’s Series G Convertible Preferred Stock (“Preferred Stock”) and warrants (“Purchase Warrants”, and together with the Preferred Stock, the “Purchase Securities”) to purchase shares of the Company Common Stock (“Series G Financing”).  One or more of the Investors may participate in the Series G Financing by cancelling a portion of the amounts outstanding under their Notes as consideration for the Purchase Securities.

 

F.             As a condition to closing the transactions contemplated by the Credit Facility, the lenders require that the Investors agree to (i) subordinate their Notes and their security interests under the Security Agreement to the obligations and security interests relating to the Credit Facility, (ii) extend the maturity date of the Notes and (iii) reduce the interest rate of the Notes, all on the terms describe herein.

 

G.            As consideration for the actions described above in Recital E, the undersigned Investors require that the Company (i) issue to the Investors new warrants to purchase shares of the Company’s common stock, (ii) reduce the per share exercise price of the 2015 Warrants and (iii) amend the Security Agreement, all on the terms described herein.

 

H.            Pursuant to Section 7 of the Notes that constitute Early Investor Restated Notes (as defined in the First Amendment), the Early Investor Restated Notes may be amended or waived with the written consent of the Company and the holders of a Majority in Interest, as defined in such Notes.

 

I.             Pursuant to Section 11(c) of the Security Agreement, the Security Agreement may be amended with a written instrument executed by the Company and a Majority in Interest, as defined in the Security Agreement.

 

J.             Pursuant to Section 16 of the 2015 Warrants, each 2015 Warrant may be amended with the written consent of the Company and the holders of 2015 Warrants representing a majority of the shares of Company common stock issuable under the 2015 Warrants then outstanding.

 

K.            The undersigned Investors constitute (i) a “Majority in Interest” (as defined in the Notes), (ii) a “Majority in Interest” (as defined in the Security Agreement), (iii) all the holders of Notes that constitute Subsequent Investor Restated Notes (as defined in the First Amendment), and (iv) the holders of 2015 Warrants representing a majority of the shares of Company common stock issuable under the 2015 Warrants outstanding on the Effective Date.  Accordingly, the Company and the undersigned may amend the terms of Notes, the Security Agreement and the 2015 Warrants without the need to obtain the consent or approval from other Investors or other holders of Notes or 2015 Warrants or parties to the Security Agreement.

 

L.             Capitalized terms used herein that are not defined herein shall have the meanings given to them in the Purchase Agreement.

 

AGREEMENT

 

In consideration of the above recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

 

1.             Amendment of Notes.

 

(a)          Amendment to Legend.  Effective as of the Closing, the last sentence of the restrictive legend on the face of each Note shall be amended and restated in its entirety to read as follows:

 

“THIS NOTE IS SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENT IN FAVOR OF THE PURCHASERS OF ORIGINAL ISSUE DISCOUNT SENIOR SECURED DEBENTURES THAT WERE ISSUED BY THE COMPANY ON OR ABOUT FEBRUARY 13, 2017.”

 

2

(b)          Amendment to Interest Rate.  The second full paragraph of each of the Notes hereby is amended, effective as of the Closing, to provide that as of the date of the Closing interest shall accrue on the unpaid principal amount of each Note at a rate equal to 7.00% per annum.

 

(c)          Amendment to Maturity Date.  The second full paragraph of each of the Notes hereby is amended, effective as of the Closing, to provide that the “Maturity Date” of each Note shall be May 10, 2019.

 

(d)          Amendment to Repayment Terms.  Section 2 of each of the Notes hereby is amended and restated in its entirety, effective as of the Closing, to read as follows:

 

“2.          Interest Repayment.  Beginning in April 2017, on the last business day of each of the 1st, 4th, 7th and 10th month in a calendar year (each, a “Payment Date”), all interest on this Note that accrues during the calendar quarter ending immediately before the month of a Payment Date shall be paid to Investor. On the Maturity Date, all unpaid principal and accrued but unpaid interest on this Note shall be due and payable.”

 

2.             Consideration for Amendment to Notes.

 

(a)          Prepayment of Notes.  Within five business days after the date of the Closing, the Company shall pay to each holder of a Note with respect to that Note an amount equal to the product of (i) $500,000 and (ii) the fraction obtained by dividing (A) the principal amount outstanding on a Note as of the date of the Closing (after reduction for the portion of the principal amount of the Note that will be cancelled in connection with an Investor’s participation in the Series G Financing) by (B) the total principal amount outstanding on all Notes as of the date of the Closing (after reduction for principal amounts on the Notes that are cancelled if any Investors participate in the Series G Financing).  The parties understand that a portion of this payment shall constitute payment of accrued but unpaid interest on the Notes and a portion of this payment shall constitute a prepayment of principal on the Notes.  Exhibit A hereto sets forth, as of February 10, 2017, (i) the outstanding principal amount of each Note, (ii) the accrued but unpaid interest on each Note and (iii) the principal amount of each Note that will be outstanding immediately after the Company makes the $500,000 payment contemplated by this Section 2(a), in each case assuming that no Investor participates in the Series G Financing, the payment on the Notes occurs on February 10, 2017 and the Closing occurs on February 10, 2017.

 

(b)          Issuance of Warrants.  Effective as of the date of the Closing, but subject to Section 2(c) below, the Company shall issue to each Investor a warrant to purchase shares of the Company’s common stock in the form attached hereto as Exhibit B (each, a “Warrant”, and collectively, the “Warrants”).  The per share exercise price for each Warrant shall be $0.96 (“Exercise Price”).  The number of shares of the Company’s common stock that will underlie each Warrant to be issued to an Investor shall equal the product of (i) 0.5625 and (ii) the fraction obtained by dividing (A) the principal amount of the Note(s) held by an Investor, after reducing the principal amounts by the portion of the principal amount that will be prepaid pursuant to Section 2(a) hereof or cancelled in connection with the Series G Financing, by (B) the Exercise Price.  Each Warrant shall have a term of five (5) years.  The Company shall deliver the Warrants to the Investors within five (5) business days after the date of the Closing.

 

3

(c)          Amendment of 2015 Warrants.  Each 2015 Warrant hereby is amended, effective as of the Closing, to reduce the “Exercise Price” thereunder from $5.25 per share to $0.96 per share. The parties understand and agree that the number of shares underlying the 2015 Warrants will not change as a result of this amendment to the 2015 Warrants.

 

3.             Amendment to Security Agreement.  The Security Agreement hereby is amended, effective as of the Closing, as provided below in this Section 3.

 

(a)          Removal of NutraSA.  The defined terms “NutraSA Liquidity Transaction” and “NutraSA Proceeds” and all of Section 10 hereby are deleted from the Security Agreement.

 

(b)          Addition of Defined Term.  The following defined term hereby is added to the Security Agreement:

 

““Debenture Credit Facility” shall mean the original issued discount senior secured debenture credit facility entered into by the Company on or about February 9, 2017.”

 

(c)          Reference to New Credit Facility in Subordination.  All references in Section 3 of the Security Agreement to “FCC Credit Facility” hereby are changed, effective as of the Closing, to references to “Debenture Credit Facility”.

 

(d)          Reference to Subordination Agreement.  The “Terms of Subordination” referenced in Section 3 of the Security Agreement hereby is amended, effective as of the Closing, to mean the Terms of Subordination attached to this Amendment as Exhibit C.

 

(e)          Release of Releasable Assets.  Section 4 of the Security Agreement hereby is amended and restated in its entirety, effective as of the Closing, to read as follows:

 

“4.          Release of Releasable Assets.  Notwithstanding any other provision of this Agreement, if the Company or any of the Company’s subsidiaries sell or agree to sell any of their assets, whether real property or personal property, outside the ordinary course of their businesses, the Collateral Agent shall take all actions reasonably required to release and terminate the Collateral Agent’s Lien and Mortgage (as defined in the Purchase Agreement) on any of such assets.  Such release and termination shall be effective immediately upon such sale, and the proceeds thereof shall be deemed not to constitute “Collateral” for purposes of Section 8 hereof.  RBT may take all necessary actions to reflect the foregoing, including without limitation the filing of any termination statements and the recording of any modification to a Mortgage.  The Collateral Agent and the Investors shall cooperate with RBT and execute any documents reasonably requested by RBT to effect the foregoing.”

 

4

(f)           Remedies Only for Collateral Agent.   The following language hereby is added to the end of Section 8(b) of the Security Agreement, effective as of the Closing,:

 

“Unless requested by the Company and Collateral Agent in writing, (i) no Investor may exercise any remedy hereunder or with respect to the Collateral other than through the Collateral Agent and (ii) no Investor shall take any action with respect to the Collateral (other than to subordinate their interests as provided in Section 3 hereof or to release liens on the Collateral as provided in Section 4 hereof) or to enforce the rights of an Investor or the Collateral Agent hereunder or with respect to the Collateral other than through the Collateral Agent.”

 

4.             Representations and Warranties of the Company. The Company represents and warrants to each Investor, as follows:

 

(a)          Authority. The execution, delivery and performance by the Company of this Amendment and the consummation of the transactions contemplated hereby (i) are within the power of the Company and (ii) have been duly authorized by all necessary actions on the part of the Company.

 

(b)          Enforceability.  This Amendment has been duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.

 

(c)          Non-Contravention. The authorization, execution and delivery by the Company of this Amendment and the performance and consummation of the transactions contemplated thereby do not and will not (i) violate the Company’s Articles of Incorporation or Bylaws (“Charter Documents”) or any material judgment, order, writ, decree, statute, rule or regulation applicable to the Company; or (ii) violate any provision of, or result in the breach or the acceleration of, or entitle any other Person to accelerate (whether after the giving of notice or lapse of time or both), any material mortgage, indenture, agreement, instrument or contract to which the Company is a party or by which it is bound.

 

(d)          Solvency.  Based on the consolidated financial condition of the Company as of the Effective Date, after giving effect to the receipt by the Company of the proceeds from the sale of the debentures under the Loan Agreement and preferred stock under the Purchase Agreement: (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, consolidated and currently planned capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid.  The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).  The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Effective Date.

 

5

5.             Representations and Warranties of Investors. Each undersigned Investor, for that Investor alone, represents and warrants to the Company as follows:

 

(a)          Information on Company.   The Investor has received such information concerning the Company’s operations, financial condition and other matters as the Investor has requested in writing, and considered all factors the Investor deems material in deciding on the advisability of entering into the transactions contemplated hereby.

 

(b)          Review of Amendment.  The Investor has carefully read this Amendment and the Exhibits hereto, as applicable to such Investor, and understands how the terms of the Notes and 2015 Warrants will be affected by the amendments described herein.

 

(c)          Priority; Consent.  The Investor has read and understands the terms of the Security Agreement, as amended hereby, and understands that the Notes and the security interests granted to the Investors under the Security Agreement with respect to the Notes are junior to the security interests granted to the investors in the Credit Facility.  By entering into this Amendment, the Investor consents to such prior interests of the lenders under the Credit Facility.

 

(d)          Accredited Investor.  The Investor is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended (“Securities Act”).  Such Investor is experienced in investments and business matters and, with its representatives, has such knowledge and experience in financial, tax and other business matters as to enable the Investor to utilize the information made available by the Company to evaluate the merits and risks of and to make an informed investment decision with respect to the proposed transactions contemplated hereby.

 

(e)          Investment.  The Investor will acquire a Warrant (and accept the amendments to the 2015 Warrants and Notes as provided herein) as principal for its own account for investment only and not as a nominee or agent and not with a view towards or for resale in connection with the distribution thereof.

 

(f)           Compliance with Securities Act.  The Investor understands and agrees that any security of the Company acquired by the Investor hereunder and the underlying securities thereof are “restricted securities” and have not been registered under the Securities Act or any applicable state securities laws, by reason of their issuance in a transaction that does not require registration under the Securities Act (based in part on the accuracy of the representations and warranties of Investor contained herein), and that such securities must be held indefinitely unless a subsequent disposition is registered under the Securities Act or any applicable state securities laws or is exempt from such registration.  Such Investor is aware that the Company is under no obligation to effect any such registration with respect to the Notes, the 2015 Warrants, the Warrants, or the securities underlying such instruments.

 

6

(g)          Outstanding Amounts.  The aggregate amounts of principal and accrued but unpaid interest outstanding under the Note(s) held by such Investor as of February 10, 2017 are accurately described on Exhibit A hereto.  The number of shares of the Company’s common stock underlying the Investor’s 2015 Warrant(s), both immediately before and immediately after the amendment effected pursuant to Section 2(c) hereof, is accurately described on Exhibit A hereto.

 

(h)          Organization; Authority.  If an entity, such Investor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by this Amendment and otherwise to carry out its obligations hereunder.

 

(i)           Authority; Enforceability.  This Amendment has been duly authorized, executed and delivered by the Investor and is a valid and binding agreement, enforceable against Investor in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights generally and to general principles of equity; and Investor has full corporate power and authority necessary to enter into this Amendment and to perform its obligations hereunder.

 

(j)           No Tax or Legal Advice.  Such Investor understands that nothing in this Amendment, any other agreement or any other materials presented to such Investor in connection with the transactions contemplated hereby constitutes legal, tax or investment advice.  Such Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its decision to enter into this Amendment.

 

(k)          No Prior Transfer.  No person other than such Investor has any rights to payment under any Notes issued to such Investor, and such Investor has not transferred or assigned, or agreed to transfer or assign, any of such Investor’s rights under any Note or 2015 Warrant acquired by such Investor.

 

6.             Consent to Loan.  The Investors hereby consent to the Credit Facility.

 

7.             Confidentiality.  The Investors understand that the existence and terms of the Loan Agreement constitute nonpublic information that is confidential and that the Investors will not disclose such information to third parties who are not under duties of confidentiality (such as attorneys) or use such information in violation of law.

 

8.             Miscellaneous.

 

(a)          No Further Amendment.  The parties hereto acknowledge and agree that there are no other amendments, changes, waivers of modifications to the Purchase Agreement, the 2015 Warrants, the Security Agreement or the Notes other than as set forth in this Amendment, and all other terms of such agreements and instruments shall remain in full force and effect except as expressly modified or waived herein.

 

7

(b)          Waivers and Amendments.  Except as expressly provided otherwise herein, this Amendment may not be amended, waived, discharged or terminated other than by a written instrument referencing this Amendment and signed by the Company and Investors holding a Majority in Interest.  Any such amendment, waiver, discharge or termination effected in accordance with this paragraph shall be binding upon each current and future holder of any of the Notes, the 2015 Warrants or the Warrants and upon any current or future assignee of rights under the Purchase Agreement or the Security Agreement.

 

(c)          Governing Law. This Amendment and all actions arising out of or in connection with this Amendment shall be governed by and construed in accordance with the laws of the State of California, without regard to the conflicts of law provisions of the State of California or of any other state.

 

(d)          Survival. The representations, warranties, covenants and agreements made herein shall survive the execution and delivery of this Amendment.

 

(e)          Successors and Assigns. The rights and obligations of the Company and the Investors shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

 

(f)           Assignment by the Company. The rights, interests or obligations hereunder may not be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior written consent of Investors holding a Majority in Interest.

 

(g)          Entire Agreement. This Amendment together with the Notes, the Purchase Agreement and the Security Agreement constitute and contain the entire agreement among the Company and Investors regarding the subject matter hereof and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof.

 

(h)          Notices. All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and faxed, mailed or delivered to each party as provided in the Purchase Agreement.

 

(i)           Separability of Agreements; Severability of this Amendment. Any invalidity, illegality or limitation on the enforceability of the Amendment or any part thereof, by any Investor whether arising by reason of the law of the respective Investor’s domicile or otherwise, shall in no way affect or impair the validity, legality or enforceability of this Amendment with respect to other Investors.  If any provision of this Amendment shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

(j)           Counterparts. This Amendment may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will constitute the same agreement.  Electronic copies of signed signature pages will be deemed binding originals.

 

8

(k)          Legal Fees.  Each Party shall be responsible for its own fees and expenses incurred in connection with the negotiation, execution and effectuation of this Amendment and the transactions contemplated hereby.  Notwithstanding the foregoing provisions of this Section 8(k),  within two business days after the date of the Closing, the Company shall pay to Greg Vislocky’s legal counsel a total of $17,500, which amount shall be paid by wire transfer to any account designated by Greg Vislocky.

[Signature Page Follows]

 

9

The undersigned parties have caused this Amendment Number Two to Loan Documents to be duly executed and delivered as of the date and year first written above.

	
COMPANY:

	 	
INVESTORS

	 
	 	 	 	 
	
RICEBRAN TECHNOLOGIES

	 	 	 	 
	
a California corporation

	 	
/s/ Gregory J. Vislocky

	 
	 	 	 	
Gregory J. Vislocky

	 
	 	 	 	 	 	 
	
By:

	
/s/ J. Dale Belt

	 	 	 	 
	 	
Jerry Dale Belt, Chief Financial Officer

	 	
The Shoshana Shapiro Halpern

	 	 	 	
Revocable Trust UA June 13, 2006

	 	 	 	 	 	 
	 	 	 	
By:

	
/s/ Baruch Halpern

	 
	 	 	 	 	
Baruch Halpern, Trustee

	 
	 	 	 	 	 	 
	 	 	 	
By:

	
/s/ Shoshana Halpern

	 
	 	 	 	 	
Shoshana Halpern, Trustee

	 
	 	 	 	 	 	 
	 	 	 	
Pensco Trust Co., FBO Baruch Halpern IRA

	 	 	 	 	 	 
	 	 	 	
/s/ Baruch Halpern

	 
	 	 	 	
Baruch Halpern

	 

[Signature Page to Amendment Number Two to Loan Documents]

 

Continued Signature Page for Investors

	 	/s/ Brian Rick Delamarter
	 	
(Brian Rick Delamarter)

[Signature Page to Amendment Number Two to Loan Documents]

 

Continued Signature Page for Investors

	 	/s/ Harold Guy Delamarter
	 	
(Harold Guy Delamarter)

[Signature Page to Amendment Number Two to Loan Documents]

 

Continued Signature Page for Investors

	 	
Walter John Short and Karen A. Wilson

	 	 
	 	
	 	
(W. John Short)

	 	 
	 	
	 	
(Karen A. Wilson)

[Signature Page to Amendment Number Two to Loan Documents]

 

Continued Signature Page for Investors

	 	
Weintraub Partners

	 
	 	 	 	 
	 	
By:

	
/s/ Chris Chediak

	 
	 	
Name: Chris Chediak

	 
	 	
Title: Partner

	 

[Signature Page to Amendment Number Two to Loan Documents]

 

EXHIBIT A

 

OUTSTANDING NOTE BALANCES; WARRANT INFORMATION

 

For each Investor, the table below sets forth the following information as of the end of the day on February 10, 2017 for the outstanding Notes held by such Investor:  (i) the total principal amount outstanding, (ii) the accrued but unpaid interest and (iii) the principal amount outstanding after the Company makes the $500,000 payment described in Section 2(a) of the Amendment to which this Exhibit A is attached, assuming such payment was made on February 10, 2017.  The table below also sets forth as of February 10, 2017 the number of shares of the Company’s common stock underlying the 2015 Warrants held by each Investor.

 

	
Investor

	 	
Principal 

Outstanding

	 	 	
Accrued but 

Unpaid 

Interest

	 	 	
Principal 

after $500K 

Payment(1)

	 	 	
Shares 

Underlying 

2015 Warrants

	 
	
The Shoshana Shapiro Halpern Revocable Trust UA June 13, 2006

	 	
$

	
2,637,500

	 	 	
$

	
112,925

	 	 	
$

	
2,541,415

	 	 	 	
114,775

	 
	
Gregory J. Vislocky (1)

	 	
$

	
2,099,205

	 	 	
$

	
89,878

	 	 	
$

	
2,022,731

	 	 	 	
96,374

	 
	
Brian Rick Delamarter

	 	
$

	
500,000

	 	 	
$

	
21,408

	 	 	
$

	
481,785

	 	 	 	
22,955

	 
	
Harold Guy Delamarter

	 	
$

	
500,000

	 	 	
$

	
21,408

	 	 	
$

	
481,785

	 	 	 	
22,955

	 
	
Weintraub Partners

	 	
$

	
282,041

	 	 	
$

	
12,076

	 	 	
$

	
271,766

	 	 	 	
12,948

	 
	
Alon Gibli

	 	
$

	
137,500

	 	 	
$

	
5,887

	 	 	
$

	
132,491

	 	 	 	
12,625

	 
	
Baruch Halpern IRA

	 	
$

	
100,000

	 	 	
$

	
4,282

	 	 	
$

	
96,357

	 	 	 	
4,591

	 
	
W. John Short and Karen A Wilson

	 	
$

	
53,281

	 	 	
$

	
2,281

	 	 	
$

	
51,340

	 	 	 	
2,446

	 
	
Total

	 	
$

	
6,309,527

	 	 	
$

	
270,143

	 	 	
$

	
6,079,670

	 	 	 	
289,669

	 

 

(1)           Assumes no Investor participates in the Series G Financing.  If an Investor participates in the Series G Financing by cancelling a portion of the Investor’s Note, (i) the principal outstanding on all Notes will be lower than dollar amount set forth in the “Principal after $500K Payment” column above and (ii) the number of shares of Company common stock that will underlie the Warrants issued to the Investors pursuant to Section 2(b) of the Agreement will be lower, in each case to reflect the lower principal amount outstanding under the affected Note due to the cancellation of principal and the increased portion of the $500K payment that will be allocated to the other Investors.

 

EXHIBIT B

FORM OF WARRANT

 

EXHIBIT C

TERMS OF SUBORDINATION

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