Document:

Exhibit 10.10

August 10, 2009

 

NRDC Acquisition Corp.

3 Manhattanville Road

Purchase, NY 10577

 

Banc of America Securities LLC

9 West 57th Street

New York, NY 10019

 

	
     
 	
  Re: NRDC Acquisition Corp. Conversion
 

 

Gentlemen:

 

This letter (the “Letter Agreement”) is being delivered to you for the purposes of amending the terms of the Letter Agreement (the “Insider Letter”) that you entered into in connection with the Underwriting Agreement, dated October 17, 2007 (the “Underwriting Agreement”), by and between Banc of America Securities LLC, as representative of the several underwriters named in Schedule A thereto, and NRDC Acquisition Corp. (the “Company”), relating to an underwritten initial public offering (the “IPO”) of 41,400,000 of the Company’s Units (including the underwriter’s option to purchase 5,400,000 Units),
each comprised of one share of the Company’s common stock, par value $0.0001 per share (“Common Stock”), and one warrant exercisable for one share of Common Stock (a “Warrant”) and cancelling your Shares (as defined below). 

 

Background

 

On August 7, 2009, the Company entered into a Framework Agreement (the “Framework Agreement”) by and between the Company and NRDC Capital Management, LLC (the “Sponsor”), pursuant to which, upon the terms and subject to the conditions set forth therein, the Company will convert from a special purpose acquisition corporation into a corporation that will be qualified as a real estate investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”).  In order to consummate the transactions contemplated by the Framework Agreement, the Company must amend its amended and restated certificate of incorporation, as described in more detail
herein, and is seeking the affirmative vote of a majority of the outstanding shares of common stock entitled to vote thereon to approve such amendment (the “Stockholder Approval”). 

 

Amendments to Insider Letter

 

1.            Upon receipt of the Stockholder Approval, Paragraph 7 of the Insider Letter relating to the Company obtaining an opinion from an independent investment banking firm that such transaction is fair to the Company’s stockholders from a financial perspective shall be terminated and be of no force and effect as if it was never originally included in the Insider Letter.  

 

2.            Upon receipt of the Stockholder Approval, Paragraph 10 of the Insider Letter relating to recommending or taking any action to amend or waive any provisions of Article Fifth or Sixth of the Company’s Second Amended and Restated Certificate of Incorporation shall be terminated and be of no force and effect as if it was never originally included in the Insider Letter.

 

3.            Upon consummation of the transactions contemplated by the Framework Agreement (the “Closing”), Paragraph 6 of the Insider Letter shall be amended in its entirety and replaced with the following:

 

 

 

 

 

	
             
 	
            “6.
 	
            Neither the undersigned, any family member of the undersigned, nor any affiliate of the undersigned will be entitled to receive, and no such person will accept (a) any compensation, finder’s fee, reimbursement or cash payment from the Company for services rendered to the Company prior to or in connection with the consummation of a Business Combination and (b) any finder’s fee, consulting fee or any other compensation or fees from the Company or any other person or entity in the event the undersigned, any family member of the undersigned, or any affiliate of the undersigned originates a Business Combination; provided, that the undersigned and any affiliate of the undersigned will be entitled to reimbursement from the Company for the undersigned’s reasonable out-of-pocket expenses related to
identifying, investigating and consummating a Business Combination.”
 

 

4.            Upon the Closing, Paragraph 11 of the Insider Letter shall be amended in its entirety and replaced with the following:

 

	
             
 	
            “11.
 	
            As used herein, (a) a “Business Combination” shall mean (i) the Company’s initial acquisition of one or more operating businesses, through a merger, capital stock exchange, stock purchase, asset acquisition or other similar business combination, having an aggregate fair market value of at least 80% of the balance held in the Trust Account (excluding the amount held in the Trust Account representing the deferred underwriting discounts and commissions and taxes payable) at the time of such acquisition or (ii) consummation of substantially all of the transactions contemplated by the Framework Agreement, dated as of August 7, 2009, by and between the Company and NRDC Capital Management, LLC; (b) “Founders” shall mean NRDC Capital Management, LLC, William L. Mack, Robert C. Baker, Richard A. Baker and Lee Neibart; (c) “Insiders” shall mean the Founders and all other officers, directors and stockholders of the Company immediately prior to the Offering; (d) “Insiders Shares” shall mean all of the shares of Common Stock owned by an Insider prior to the Offering (and shall include any shares of Common Stock issued as dividends with respect to such shares); (e) “Public Stockholders” shall mean the holders of securities issued in the Offering; (f) “Second Restated Certificate” shall mean the Company’s Second Amended and Restated Certificate of Incorporation, as the same may be amended
from time to time; and (g) “Trust Account” shall mean the trust account established for the benefit of the Public Stockholders into which a portion of the net proceeds of the Offering will be deposited.”
 

 

5.            On or prior to the Closing, the undersigned shall cause the Company to instruct its transfer agent to cancel the number of issued and outstanding shares of Common Stock set forth opposite the undersigned’s name on Attachment A hereto, which number shall not include any shares of Common Stock directly or indirectly acquired by the undersigned after the IPO (the “Shares”), except that after the Closing, the undersigned will continue to hold its Warrants, subject to the revision of the terms of such Warrants pursuant to the Supplement & Amendment to Warrant Agreement, substantially in the form attached hereto as Attachment B. On the Closing
the transfer agent shall cancel such Shares in accordance with Section 2.7 of the Framework Agreement, if not previously cancelled.  The undersigned hereby agrees to execute such additional documents and to provide the Company or its transfer agent with any further assurances as may be necessary to effect the cancellation of the Shares.

 

 

 

 

 

6.            The validity, interpretation, and performance of this Letter Agreement shall be governed in all respects by the laws of the State of New York, without giving effect to conflicts of law principles. The parties agree that all actions and proceedings arising out of this Letter Agreement or any of the transactions contemplated hereby shall be brought in the United States District Court for the Southern District of New York or in a New York State Court in the County of New York and that, in connection with any such action or proceeding, submit to the jurisdiction of, and venue in, such court. Each of the parties hereto also irrevocably waives all right to trial by jury in any action, proceeding or counterclaim arising out of this Letter Agreement or the transactions contemplated
hereby.

 

7.            This Letter Agreement shall be binding on the undersigned and such person’s respective successors, heirs, personal representatives and assigns.  This Letter Agreement shall terminate upon the termination of the Framework Agreement.

 

 

 

 

 

The undersigned have executed this Letter Agreement as of this 10th day of August, 2009.

 

By: /s/ Ronald W. Tysoe

       Ronald
W. Tysoe

 

Agreed and acknowledged, this 10th day of August, 2009:

 

NRDC ACQUISITION CORP.

 

By: /s/ Richard A. Baker

	
    Name:  
 	
  Richard A. Baker
 
	
      Title:  
 	
  Chief Executive Officer
 

 

 

Agreed and acknowledged, this 13th day of August, 2009:

 

BANC OF AMERICA SECURITIES LLC

 

By: /s/ Douglas E. Neal

	
    Name:  
 	
  Douglas E. Neal
 
	
      Title:  
 	
  Managing Director
 

 

 

Signature Page to Letter Amendment Agreement

 

 

 

Attachment A

 

Number of Shares to Be Cancelled

 

	
    Name
 	
  Number of Shares to Be Cancelled
 
	
      William L. Mack
 	
  0
 
	
      Robert C. Baker
 	
  0
 
	
      Richard A. Baker
 	
  0
 
	
      Lee S. Neibart
 	
  0
 
	
      Michael J. Indiveri
 	
  20,000
 
	
      Edward H. Meyer
 	
  20,000
 
	
      Laura
          Pomerantz
 	
  20,000
 
	
      Ronald W. Tysoe
 	
  20,000
 
	
      Vincent
           Tese
 	
  20,000
 
	
      NRDC Capital Management, LLC
 	
  10,125,000
 

 

 

 

 

 

Attachment B

 

Form of Supplement & Amendment to Warrant AgreementExhibit 10.1

 

 

August 13, 2009

Moore, Oklahoma

THIS NOTE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW (COLLECTIVELY, THE "SECURITIES LAWS"), AND HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLESS IT (I) IS REGISTERED OR QUALIFIED UNDER ALL APPLICABLE SECURITIES LAWS OR (II) IS EXEMPT FROM REGISTRATION OR QUALIFICATION UNDER SUCH LAWS AND THE ISSUER IS PROVIDED WITH AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED. 

PROMISSORY NOTE

FOR VALUE RECEIVED, Vaughan Foods, Inc., an Oklahoma corporation (“Debtor”), promises to pay to Herbert B. Grimes (“Lender”), at the offices of the Debtor, on the dates listed in Schedule A (the “Maturity Dates”) the principal sum of EIGHT HUNDRED EIGHTY TWO THOUSAND, SEVEN HUNDRED FIFTY DOLLARS ($882,750.00), together with interest thereon at the rate of ten percent (10%) per annum, compounded daily.  Lender may, at his option, elect to defer some or all of any scheduled payments listed in Schedule A. This Promissory Note replaces that certain Promissory Note dated June 30, 2008 in the amount of $802,500.00, and is given in satisfaction of that Promissory Note dated, June 30, 2008. This Promissory Note is executed on the date noted above and is effective as of June 30, 2009.

Lender understands and agrees that the scheduled payments listed Schedule A include negative amortization provisions, such that some payments are not sufficient to satisfy all accrued interest through the dates of the payments, and that such insufficiencies shall be added to the principal balances, as necessary.

If this Note, or any payment hereunder, falls due on a Saturday, Sunday or a day that is a public holiday in the State of Oklahoma, this Note shall become due or such payment hereunder, shall be made on the next succeeding business day and such additional time shall be included in the computation of any interest payable hereunder.

Debtor may at its option prepay all or any part of the unpaid principal amount of this Note and accrued interest thereon, without premium or penalty. Any partial prepayment shall be applied first to interest and the remaining balance of such payment, if any, to principal.  If any provision of this Note would require Debtor to pay interest hereon at a rate exceeding the highest rate allowed by applicable law, Debtor shall instead pay interest under this Note at the highest rate permitted by applicable law.  

Further agreed that the Lender and Debtor will review the review the prospects, liquidity position, projected cash flows and EBITDA position of the Debtor by June 1, 2010, for the purpose of evaluating the Debtor’s ability to meet the payments referred to in Schedule A without undue burden on the ability of the Debtor to continue as a going concern. If it is mutually determined that the Debtor is unable to meet the payment plan referred to in Schedule A, then the Lender and Debtor hereby agree to mutually determine an alternative payment plan. 

“EBITDA” means (a) Net Income, plus (b) Interest Expense, plus (c) to the extent deducted in the calculation of Net Income, depreciation expense and amortization expense, plus (d) income tax expense, if any. Income tax benefit shall not be considered in the determination of EBITDA.

This Note and the indebtedness evidenced thereby is and shall be junior and subordinate in all respects to the payment of all indebtedness of the Debtor for borrowed money, including without limitation, indebtedness evidenced by that certain Loan And Security Agreement  entered into as of March 6, 2009, by and between Peninsula Bank Business Funding, a division of The Private Bank of the Peninsula (“Bank”) and Vaughan Foods, Inc. and Wild About Food – Oklahoma LLC., and related loan agreements, as the same may be renewed, amended or extended after the date hereof.

Lender has represented that he has treated the sale of Allison’s on the installment method of accounting for income tax purposes. Under the installment method, Lender would be taxed when he receives the principal payment s for the sale. At the time of the sale in 2007, the long term capital gains tax rate was 15%. However, if capital gains tax rates are adjusted such that , Lender would be assessed a higher tax due solely to the deferral, then Debtor agrees to  “gross up” to Lender to make him whole for the additional potential taxes.  

The following is an example of a gross up scenario, assuming a capital gains rate of 20% and a combined marginal income tax rate and Medicare tax rate of 50% - this table is shown as an example only, and does not necessarily represent the actual gross up that would be paid to Lender, but merely serves to illustrate the methodology under which a gross up would be paid. 

Prior to any gross up being paid by Debtor, Lender agrees to engage a Certified Public Accountant that is competent in federal tax law and who understands Lender’s tax situation that will provide written representation to Debtor that the proposed gross up is materially correct, and generally serves to make Lender whole as a result of any adjustments to the federal capital gains tax rates. 

Herb Grimes Pro Forma Tax Gross Up Example for Allison's Transaction 

	 	 	 	 
	Tax
    gain on sale of Allison's interest that has been deferred	$	802,500
	 
	Long
    term capital gains rate at transaction time - 2007	 	15
	%
	Pro
        forma tax - as if tax was paid at the time of the transaction - tax year
    2007	 	120,375
	 
	Pro
    forma (adjusted) capital gains rate at payment time	 	20
	%
	Pro
    forma tax that would be paid under adjusted tax rate	 	160,500
	 
	Difference
    in tax	 	40,125
	 
	 	 	
	 
	Additional
    net amount to be paid to Grimes to pay the difference in taxes	 	40,125
	 
	Assumed
    combined income tax and medicare tax rate at time of payment	 	50
	%
	Amount
        to be paid to Mr. Grimes to get net amount required to pay additional
    taxes	$	    80,250
	 
	 	 	
	 
	Proof	 	
	 
	Gross
    amount to be paid to Grimes	$	    80,250
	 
	Tax
    on gross amount	 	(40,125
	)
	Net
    amount to Mr. Grimes to pay additional capital gains taxes	$	    40,125
	 

 

 

IN WITNESS WHEREOF, Debtor has executed this Promissory Note as of the date first above written.  

Vaughan Foods, Inc. (“Debtor”)

/s/ Gene P. Jones

_______________________

By: Gene P. Jones

Secretary, Treasurer and Chief Financial Officer

Schedule A

	
    Payment

    Date
 	
    Payment

    Amount
 	
    Interest

    Applied
 	
    Principal

    Applied
 	
  Principal

  Balance
 
	 	 	 	 	 
	7/1/2009
	
	
	
	882,750

	
      8/14/2009
 	
      7,500
 	
      10,641
 	
      3,141.37-
 	
  885,891
 
	
      8/21/2009
 	
      5,000
 	
      1,699
 	
      3,301.00  
 	
  882,590
 
	
      8/28/2009
 	
      5,000
 	
      1,693
 	
      3,307.00  
 	
  879,283
 
	
      9/4/2009
 	
      5,000
 	
      1,686
 	
      3,314.00  
 	
  875,969
 
	
      9/11/2009
 	
      5,000
 	
      1,680
 	
      3,320.00  
 	
  872,649
 
	
      9/18/2009
 	
      1,500
 	
      1,674
 	
      173.57-
 	
  872,823
 
	
      9/25/2009
 	
      1,500
 	
      1,674
 	
      173.91-
 	
  872,997
 
	
      10/2/2009
 	
      1,500
 	
      1,674
 	
      174.24-
 	
  873,171
 
	
      10/9/2009
 	
      1,500
 	
      1,675
 	
      174.57-
 	
  873,346
 
	
      10/16/2009
 	
      1,500
 	
      1,675
 	
      174.91-
 	
  873,520
 
	
      10/23/2009
 	
      1,500
 	
      1,675
 	
      175.24-
 	
  873,696
 
	
      10/30/2009
 	
      1,500
 	
      1,676
 	
      175.58-
 	
  873,871
 
	
      11/6/2009
 	
      1,500
 	
      1,676
 	
      175.92-
 	
  874,047
 
	
      11/13/2009
 	
      1,500
 	
      1,676
 	
      176.25-
 	
  874,223
 
	
      11/20/2009
 	
      1,500
 	
      1,677
 	
      176.59-
 	
  874,400
 
	
      11/27/2009
 	
      1,500
 	
      1,677
 	
      176.93-
 	
  874,577
 
	
      12/4/2009
 	
      1,500
 	
      1,677
 	
      177.27-
 	
  874,754
 
	
      12/11/2009
 	
      1,500
 	
      1,678
 	
      177.61-
 	
  874,932
 
	
      12/18/2009
 	
      1,500
 	
      1,678
 	
      177.95-
 	
  875,110
 
	
      12/25/2009
 	
      1,500
 	
      1,678
 	
      178.29-
 	
  875,288
 
	
      1/1/2010
 	
      1,500
 	
      1,679
 	
      178.63-
 	
  875,467
 
	
      1/8/2010
 	
      1,500
 	
      1,679
 	
      178.98-
 	
  875,646
 
	
      1/15/2010
 	
      1,500
 	
      1,679
 	
      179.32-
 	
  875,825
 
	
      1/22/2010
 	
      1,500
 	
      1,680
 	
      179.66-
 	
  876,005
 
	
      1/29/2010
 	
      1,500
 	
      1,680
 	
      180.01-
 	
  876,185
 
	
      2/5/2010
 	
      1,500
 	
      1,680
 	
      180.35-
 	
  876,365
 
	
      2/12/2010
 	
      1,500
 	
      1,681
 	
      180.70-
 	
  876,546
 
	
      2/19/2010
 	
      1,500
 	
      1,681
 	
      181.05-
 	
  876,727
 
	
      2/26/2010
 	
      1,500
 	
      1,681
 	
      181.39-
 	
  876,908
 
	
      3/5/2010
 	
      1,500
 	
      1,682
 	
      181.74-
 	
  877,090
 
	
      3/12/2010
 	
      1,500
 	
      1,682
 	
      182.09-
 	
  877,272
 
	
      3/19/2010
 	
      1,500
 	
      1,682
 	
      182.44-
 	
  877,454
 
	
      3/26/2010
 	
      1,500
 	
      1,683
 	
      182.79-
 	
  877,637
 
	
      4/2/2010
 	
      1,500
 	
      1,683
 	
      183.14-
 	
  877,820
 
	
      4/9/2010
 	
      1,500
 	
      1,683
 	
      183.49-
 	
  878,004
 
	
      4/16/2010
 	
      1,500
 	
      1,684
 	
      183.84-
 	
  878,188
 
	
      4/23/2010
 	
      1,500
 	
      1,684
 	
      184.20-
 	
  878,372
 
	
      4/30/2010
 	
      1,500
 	
      1,685
 	
      184.55-
 	
  878,556
 
	
      5/7/2010
 	
      1,500
 	
      1,685
 	
      184.90-
 	
  878,741
 
	
      5/14/2010
 	
      1,500
 	
      1,685
 	
      185.26-
 	
  878,927
 
	
      5/21/2010
 	
      1,500
 	
      1,686
 	
      185.61-
 	
  879,112
 
	
      5/28/2010
 	
      1,500
 	
      1,686
 	
      185.97-
 	
  879,298
 
	
      6/4/2010
 	
      1,500
 	
      1,686
 	
      186.33-
 	
  879,484
 
	
      6/11/2010
 	
      1,500
 	
      1,687
 	
      186.68-
 	
  879,671
 
	
      6/18/2010
 	
      1,500
 	
      1,687
 	
      187.04-
 	
  879,858
 
	
      6/25/2010
 	
      1,500
 	
      1,687
 	
      187.40-
 	
  880,046
 
	
      6/30/2010
 	
      881,251
 	
      1,206
 	
      880,045.61  
 	
  0

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