Document:

Exhibit 10.86

 

AMENDMENT

 

TO

 

ACQUISITION AND STOCK PURCHASE AGREEMENT

 

This Amendment to Acquisition and Stock Purchase Agreement (“Amendment”) is entered into as of December 7, 2013 (“Effective Date”), by and among RiceBran Technologies, a California corporation (“Purchaser”), H&N Distribution, Inc., a Nevada corporation (the “Company”), Mark S. McKnight (“McKnight”), Nicole McKnight (“Nicole”), Renee S. Ellis (“Renee”) and Management Associates International, Inc., a Nevada corporation (“MA Corp”, and together with McKnight, Nicole and Renee, the “Shareholders”).

 

RECITALS

 

A.            Purchaser, the Company and the Shareholders entered into an Acquisition and Stock Purchase Agreement on September 24, 2013 (“Purchase Agreement”).

 

B.            The parties desire to amend the Purchase Agreement as provided in this Amendment.

 

C.            Capitalized terms used herein that are not defined herein shall have the meaning ascribed to such terms in the Purchase Agreement.

 

NOW, THEREFORE, in consideration of the promises and the mutual representations, warranties, covenants and agreements set forth in this Amendment and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

AGREEMENT

 

1.            Amendment to Section 1.  Section 1 of the Purchase Agreement hereby is amended in its entirety to read as follows:

 

1.  Acquisition and Sale of Common Stock.

 

1.1         Purchase and Sale of Company Stock.  Subject to all the terms and conditions of this Agreement, at the Closing (as hereinafter defined), each Shareholder shall sell, transfer and deliver to Purchaser, and the Purchaser shall purchase from each Shareholder, all the shares of the Company Stock owned by such Shareholder, free and clear of any Encumbrances (as defined in Section 2.5). The Company Stock comprises 40,000 shares of Common Stock owned by McKnight that represents 40% of the Company Stock, 40,000 shares of Common Stock owned by Nicole that represents 40% of the Company Stock, 18,000 shares of Common Stock owned by MA Corp that represents 18% of the Company Stock and 2,000 shares of Common Stock owned by Renee that represents the remaining 2% of the Company Stock.  The agreements of Purchaser with each of the Shareholders are separate agreements and sales, but it is a condition of the Closing, as provided in Section 5.3, that all of the Shareholders sell all of their Company Stock and other equity interests to Purchaser.

 

Amendment to Acquisition and Stock Purchase Agreement

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1.2         Determination of Purchase Price.  The purchase price for the Company Stock (“Purchase Price”) shall be paid in cash and promissory notes (“Notes”) in the form attached hereto as Exhibit A, and shall equal $5,250,000, unless adjusted for Closing Date Net Cash as provided in Section 1.6 in this Agreement.

 

1.2.1       Subject to adjustment for Closing Date Net Cash as provided in Section 1.6  in this Agreement, the Purchase Price shall be allocated between cash and Notes as follows:

 

	
Purchase Price

	 	 	
Cash Portion

	 	 	
Total Principal Amount of Notes

	 
	
$

	
5,250,000

	 	 	
$

	
2,000,000

	 	 	
$

	
3,250,000

	 

1.2.2       Definitions.  For purposes of this Agreement, the following capitalized terms shall have the meanings set forth below:

 

“Closing Date Current Ratio” shall mean, as of the Closing Date, the ratio of the Company’s current assets to the Company’s current liabilities.  For purpose of this definition, current assets and current liabilities shall be determined in accordance with GAAP, except that current liabilities shall include all indebtedness for borrowed money, regardless of the time at which such indebtedness must be repaid and shall exclude any balance due to be paid on a certain All Fill 24 head rotary filling machine that the Company has already made partial payment on and which is expected to be delivered to the Company only after Closing.

 

“GAAP” means those generally accepted accounting principles and practices that are recognized as such by the Financial Accounting Standards Board (or any generally recognized successor), consistently applied, as such principles exist from time to time.

 

 “Closing Cash Consideration” means an amount equal to the difference between (i) the $2,000,000 and (ii) the Holdback Amount.

 

“Closing Note Amount” shall mean $3,250,000.

 

“Purchaser Common Stock” shall mean the Common Stock of Purchaser.

 

“Share Price” shall mean the arithmetic average of the VWAP of the Purchaser Common Stock on each of the thirty (30) consecutive Trading Days ending on the second business day immediately before the date that Purchaser delivers an Election Notice pursuant to Section 1.11.1 hereof; provided, however, that (i) if the Share Price as so calculated is less than $6.00, then the Share Price shall be deemed to equal $6.00 and (ii) if the Share Price as so calculated is greater than $12.00, then the Share Price shall be deemed to be $12.00.  Each of the share prices set forth in this definition are subject to adjustment for stock splits, stock dividends, recapitalizations and the like.

 

“Subdebt Issuance” shall mean the issuance by the Purchaser of Purchaser Common Stock pursuant to that certain Warrant Exchange Agreement (a true copy of which has been provided to the Shareholders before the execution of this Amendment), dated November 13, 2013, by and among Purchaser and certain holders of secured subordinated debt of Purchaser and which relates to outstanding loans to the Purchaser of at least $6 million.

 

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“Trading Day” means any day on which the Purchaser Common Stock is traded on the principal securities exchange or securities market on which the Purchaser Common Stock is then tradable.

 

“VWAP” means, for any date, the dollar volume-weighted average price of Purchaser Common Stock on the principal market in which it trades during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time.

 

1.3        Payment for Company Stock as Closing.  Subject to the terms and conditions of this Agreement, at the Closing, in exchange for the Company Stock, Purchaser shall make the following payments and deliveries:

 

1.3.1      Cash Payment.  An aggregate amount of cash equal to the Closing Cash Consideration shall be delivered to the Shareholders as follows:  (A) MA Corp shall be entitled to receive $424,000, (B) Renee shall be entitled to receive $36,000, (C) Nicole shall be entitled to receive $670,000, and (D) McKnight shall be entitled to receive $670,000.

 

1.3.2      Note Payment.  Notes with aggregate principal amount equal to the Closing Note Amount shall be delivered to the Shareholders, with each Shareholder receiving a Note with an original principal amount as set forth below:

 

	
Closing Note 

Amount

	 	  	
 

	 	 	
Original Principal Amount of Notes

	 
	

	 	 	
Nicole

	 	 	
McKnight

	 	 	
MA Corp

	 	 	
Renee

	 
	
$

	
3,250,000

	 	 	
$

	
1,350,000

	 	 	
$

	
1,350,000

	 	 	
$

	
485,000

	 	 	
$

	
65,000

	 

1.4          Intentionally Omitted.

 

1.5          Intentionally Omitted.

 

1.6          Purchase Price Adjustment.  The Purchase Price shall be adjusted as provided in this Section 1.6.

 

1.6.1       Determination of Post-Closing Adjustments.  As promptly as practicable, but no later than fifteen (15) days after the later of (i) December 31, 2013 and (ii) the Closing Date, Purchaser shall cause the Company to:

 

determine the Closing Date Net Cash and the Closing Date Current Ratio; and

 

(a)            send notice to the Shareholders of the Company’s determination of Closing Date Net Cash, along with the calculations used by the Company to determine such amounts (“Adjustment Notice”).

 

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1.6.2       Payment of the Purchase Price Adjustment.  Promptly following the determination of the Closing Date Net Cash pursuant to Section 1.6.1(a), but no more than ten (10) business days following the date the Adjustment Notice is sent to the Shareholders, the following shall occur:

 

 (a)          If the Closing Date Net Cash as determined pursuant to Section 1.6 is greater than zero dollars ($0.00) and the Closing Date Current Ratio, after taking into consideration payments made pursuant to this Section 1.6.2(a), does not violate the terms and of this Agreement, then the Company shall promptly pay to the Shareholders an amount cash equal to the Closing Date Net Cash.

 

 (b)          If the Closing Date Net Cash as determined pursuant to Section 1.6 is less than $0.00, then the Purchaser shall deduct from the Holdback Account (as defined in Section 1.7 in this Agreement) and/or the Promissory Note  an amount of cash equal to the amount equal to the absolute value of such negative dollar amount; provided, however, that if the Company has failed to pay or accrue any Taxes (as defined in Section 2.12.1) with respect to any period prior to the Closing, then the Shareholders shall promptly pay to the Purchaser the full amount of any such unpaid or unaccrued Taxes.

 

 (c)          If the Company is required to pay to the Shareholders any cash pursuant to  Section 1.6.2(a), then the Company shall allocate the amount paid to each Shareholder based upon the number of shares of Company Stock owned by such Shareholder at Closing relative to the total number of shares of Company Stock that are outstanding at Closing.

 

1.6.3       Definitions.  For purposes of this Agreement, the following capitalized terms shall have the meanings set forth below:

 

“Closing Date Net Cash” shall mean, as of the Closing Date, the difference between (i) the amount of cash held by the Company and (ii) the sum of (A) the total amount of all customer deposits, (B) income taxes and ad valorum taxes of the Company incurred or relating to periods on or prior to the Closing that have not be paid before the Closing; and (C) the note of the Company to Sovereign Bank, a true copy of such note and the amount outstanding thereunder has been delivered and disclosed to Purchaser.

 

1.7         Holdback.  At Closing, Purchaser shall withhold and retain a fraction of the cash portion of the Purchase Price (“Holdback Amount”) that otherwise would be paid to the Shareholders, and pay such portion of the Purchase Price as described in this Section.  The Holdback Amount shall be $200,000.  The Shareholders understand and agree that the Holdback Amount shall be held in a separate account of Purchaser (“Holdback Account”) to completely secure the Purchaser’s indemnification and Setoff rights pursuant to Section 7 (other than those specifically provided for in the amended Section 7.3 below).  Subject to the rights of the Purchaser set forth herein, the Company shall deliver to the Shareholders one half of the amount remaining in the Holdback Account that is not subject to Purchaser’s indemnification and Setoff rights under Section 7 on the first anniversary of the Closing and the balance of the amount remaining in the Holdback Account that is not subject to Purchaser’s indemnification and Setoff rights under Section 7 on the second anniversary of the Closing.  Notwithstanding the foregoing provisions of this Section 1.7, the Shareholders shall not be entitled to receive any portion of the Holdback Amount unless on the first anniversary of the Closing McKnight is an employee of Purchaser or one of Purchaser’s subsidiaries and the Shareholders shall not be entitled to receive any portion of the Holdback Amount on the second anniversary of the Closing or thereafter unless on such date McKnight is an employee of Purchaser or one of Purchaser’s subsidiaries; provided, however, that at either on or before the first or second anniversary of the Closing, if the Purchaser shall have terminated McKnight without Cause, then the Shareholders shall be entitled to receive the relevant payments from the Holdback Account.  Any portion of the Holdback Amount that is paid by Purchaser to the Shareholders shall be allocated among the Shareholders as follows:  (i) 40% to McKnight, (ii) 40% to Nicolle, (iii) 18% to MA Corp and (iv) 2% to Renee.

 

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1.8         The Closing.  The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Weintraub Tobin Chediak Coleman Grodin Law Corporation, 400 Capitol Mall, Eleventh Floor, Sacramento, CA 95814, at 10:00 a.m., as soon as practicable, but not later than fifteen (15) days after all the conditions set forth in Section 5 hereof have been satisfied or waived, or on such other date, time and place as Purchaser and the Shareholders may mutually agree (“Closing Date”).  Subject to satisfaction of the conditions to Closing set forth in Section 5 hereof, the parties intend that Closing occur on January 1, 2014.  At the Closing (i) each Shareholder shall deliver to the Purchaser certificates representing the Company Stock owned by such Shareholder, duly endorsed for transfer or accompanied by duly executed stock powers with all requisite state and federal transfer stamps affixed thereto, (ii) the Shareholders shall execute and deliver the Notes to Purchaser, (iii) Purchaser shall wire the cash amounts described in Section 1.3.1 to the accounts designated by the Shareholders, (iv) Purchaser shall execute and deliver to the Shareholders the Notes described in Section 1.3.2, (v) Purchaser shall deliver the Holdback Amount to a specially designated account of Purchaser and (vi) the Company, Shareholders and the Purchaser, as applicable, shall deliver the certificates and other documents and instruments required to be delivered by or on behalf of such party.

 

1.9        Withholding Taxes.  Any amounts payable to any Shareholder pursuant to this Section 1 shall be subject to, and reduced by an amount equal to, the amount of any state, federal and foreign withholding taxes incurred (and not previously paid by or on behalf of such Shareholder) in connection with the acquisition of such Shareholder’s Company Stock.

 

1.10     Lost, Stolen or Destroyed Certificates.  In the event any certificates evidencing Company Stock shall have been lost, stolen, destroyed or not otherwise issued, Purchaser shall issue in exchange for such lost, stolen or destroyed certificates, upon the making of an affidavit of that fact by the holder thereof the consideration required pursuant to Article I hereof; provided, however, that Purchaser may, in its reasonable discretion and as a condition precedent to the issuance thereof, require the shareholder to whom a certificate was not issued or who is the owner of such lost, stolen or destroyed certificates to enter into a customary indemnification agreement with Purchaser, pursuant to which such shareholder shall agree to indemnify Purchaser and its transfer agent against any claim that may be made against Purchaser or its transfer agent with respect to the certificates alleged to have been lost, stolen, destroyed, or never issued.

 

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1.11     Exchange of Notes.

 

1.11.1  Exchange Election.  At the Purchaser’s election, the Purchaser may cause the Shareholders to exchange their Notes for shares of Purchase Stock (“Exchange Election”).  The shares of Purchaser Common Stock that are issuable to the Shareholder pursuant to an Exchange Election are referred to herein as the “Exchange Shares”.  The number of Exchange Shares that the Purchaser will issue to each Shareholder in exchange for the Note held by such Shareholder will equal the quotient obtained by dividing (i) the principal and accrued but unpaid interest on such Note by (ii) the Share Price. To exercise the Exchange Election, the Purchaser shall send written notice to each Shareholder (“Election Notice”), which Election Notice shall state the number Exchange Shares that will be issued to the Shareholder and the date that the exchange will take place, which exchange date must be a date within ten (10) business days after the date the Election Notice is delivered (the date of the exchange, the “Exchange Date”).  The Purchaser covenants and undertakes to not engage in any Subdebt Issuance or issue any Purchaser Common Stock pursuant to the Warrant Exchange Agreement described in Section 1.2.2 (or any successor or similar agreement among the parties thereto) unless the Purchaser has issued or simultaneously issues to the Shareholders all of the Exchange Shares and thereby fully redeems the Promissory Note.

 

1.11.2    Issuance of Certificates; Cancellation of Notes.  On the Exchange Date, the Purchaser shall deliver a share certificate to each Shareholder for the number of Exchange Shares that such Shareholder is entitled pursuant to Section 1.11.1.  On or before the Exchange Date, each Shareholder shall cause the Note issued to the Shareholder hereunder to be delivered to the Purchaser for cancellation on the Exchange Date.  Whether or not such Note is delivered to the Purchaser for cancellation, such Note and the obligations of the Purchaser thereunder shall terminate on the Exchange Date.

 

1.11.3    Fractional Shares.  No fraction of a share of Purchaser Common Stock will be issued to a Shareholder pursuant to the Exchange Election, but in lieu thereof, each Shareholder who would otherwise be entitled to a fraction of a share of Purchaser Common pursuant to an Exchange Election shall be entitled to receive from Purchaser a full share of Purchaser Common Stock.

 

1.11.4    Legends.  The Exchange Shares to be issued hereunder shall be issued in a private placement as “restricted securities” as defined under Rule 144 of the Securities Act of 1933, as amended (“Securities Act”) and will be subject to the following legend (and any other legends required under state securities laws):

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS (A) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT COVERING SUCH SECURITIES, OR (B) A VALID EXEMPTION THEREFROM AND THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT.”

 

Amendment to Acquisition and Stock Purchase Agreement

 

6

1.11.5  Securities Law Representations.  Each of the Shareholders, with respect only to such Shareholder individually and no other person or entity, represents and warrants to Purchaser that each of the representations and warranties set forth below is true and correct in all respects as of the date hereof:

 

  (a)            The Shareholder understands that (i) the Exchange Shares that may be issued to the Shareholder hereunder will not been registered under the Securities Act, nor qualified under the securities laws of any other jurisdiction, (ii) the Exchange Shares cannot be resold unless they subsequently are registered under the Securities Act and qualified under applicable state securities laws or foreign securities laws, unless exemptions from such registration and qualification requirements are available, and (iii) the Shareholder has no right to require such registration or qualification.

 

  (b)            The Exchange Shares that may be received by the Shareholder pursuant to this Agreement will be acquired for the Shareholder’s own account and not with a view to, or intention of, distribution thereof in violation of the Securities Act, any applicable state securities laws or foreign securities laws, and the Exchange Shares will not be disposed of in contravention of the Securities Act or any applicable state securities laws or foreign securities laws.

 

  (c)            The Shareholder understands that the number of Exchange Shares that may be issued by Purchaser under this Agreement is dependent of the trading price of the Purchaser Common Stock.  Such trading price could fluctuate significantly.  The Shareholder understands that Purchaser can unilaterally take actions that could negatively influence such trading price, including without limitation completing a reverse stock split or raising capital on terms that are unfavorable to Shareholder.

 

2.            Amendment to Section 2 of the Purchase Agreement.

2.1.            Initial Paragraph.  The initial paragraph of Section 2 of the Purchase Agreement (prior to Section 2.1) is amended in its entirety to read as follows:

“The Company and the Shareholders, jointly and severally, hereby represent and warrant to Purchaser that each of the representations and warranties contained in Sections 2.1, 2.2, 2.3, 2.4, 2.6 and 2.12 (“Special Representations”) is true and correct in all respects as of the Closing and each of the other representations contained in this Section 2 is, to the Knowledge of such representing party, true and correct in all material respects as of the Closing, except, in the case of all the representations and warranties contained in Section 2, as otherwise disclosed in a letter separately delivered to Purchaser by the Shareholders and the Company (the “Disclosure Letter”).  As used herein, the term “Knowledge” shall mean actual knowledge upon reasonable investigation of any Shareholder and any officer of the Company.  “Material Adverse Effect” shall mean with respect to the Company or the Business, any change, event, violation, inaccuracy, circumstance or effect that is materially adverse to the Business, whether by impacting the Business directly or by effecting the assets (including intangible assets), capitalization, condition, prospects or results of operations of such entity or person, provided, however, that in no event shall changes generally affecting the industry in which the Company currently operates or conducts the Business, or changes generally affecting the United States economy constitute a Material Adverse Effect.  Notwithstanding the foregoing provisions of this paragraph, any qualification  as to “Knowledge” or “materiality” in the first sentence of this paragraph shall not be effective unless the Closing occurs.

 

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2.2.            New Representation.  A new sentence hereby is added to Section 2.12 and shall read in its entirety as follows:

 

“There will be no obligation to withhold taxes in connection with the acquisition of the Shareholders’ Common Stock.”

 

3.            Amendment to Section 4.4.  Section 4.4 of the Purchase Agreement hereby is amended in its entirety to read as follows:

 

“4.4      Purchaser Common Stock.  If Purchaser makes an Exchange Election, all Exchange Shares will be duly authorized, and upon consummation of the Exchange, will be validly issued, fully paid and nonassessable.

 

4.            Amendment to Section 5.5.1.  Section 5.5.1 of the Purchase Agreement hereby is amended in its entirety to read as follows:

 

“5.1.1  Capital.  Purchaser shall have raised at least $7,000,000 in capital net of transaction expenses.”

 

5.            Amendment to Section 7.1.  The second sentence of Section 7.1 of the Purchase Agreement hereby is amended in its entirety to read as follows:

“All representations and warranties the Company and/or the Shareholders in this Agreement and any other certificate or document delivered by the Company and/or the Shareholders pursuant to this Agreement shall survive the Closing and continue in full force and effect; provided that all the representations and warranties of the Company and the Shareholders in Section 2 hereof other than those contained in Sections 2.2, 2.3 and 2.12 (Taxes) shall terminate on the six month anniversary of the Closing Date.”

6.            Amendment to Section 7.3.  Section 7.3 of the Purchase Agreement hereby is amended by adding the following sentence to the end of such Section:

 

 “If the Closing occurs, the total liability of the Indemnifying Parties for breaches of representations or warranties made in Section 2 or of any other breach of this Agreement shall be limited to the monies in the Holdback Account, except (a) the liability of the Indemnifying Parties hereunder for Damages resulting from breaches of representation and warranties contained in the Special Representations with respect to which Purchaser may go against the Holdback Account or the Promissory Note (to the full extent of the Promissory Note); (b) liability to pay any deficit in the Closing Date Net Cash with respect to which Purchaser may go against only up to $500,000 of the Promissory Note less any amounts that may have already been claimed against the Promissory Note under this or any other provision; (c) liability under the representations and warranties made in Section 2  other than the Special Representations with respect to which Purchaser may also go against only up $500,000 of the Promissory Note less any amounts that may have already been claimed against the Promissory Note under this or any other provision; and (d) there shall be no limit the liability of the Indemnifying Parties for claims involving fraud or intentional misconduct.  For the avoidance of doubt, the Parties agree that if the Closing occurs, then other than for a claim relating to the Special Representations or a claim involving fraud or willful misconduct, the full liability that Shareholders might have under this Agreement will be the amount in the Holdback Account and up to $500,000 of the Promissory Note.  Furthermore, if the Closing occurs, Purchaser shall make no claims pursuant to this indemnification provision or any other provision of this Agreement (i) until the aggregate amount of Damages that have been suffered or incurred, or to which any one of more Indemnified Parties has or have otherwise become subject, exceeds $50,000 and (ii) unless the amount of money claimed for any individual cause or basis exceeds $25,000; provided, however, that the foregoing limitations shall not apply to claims involving the Special Representations or claims involving fraud or willful misconduct.

 

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7.            Deletion of Section 1.9.  Section 1.9 of the Purchase Agreement hereby is deleted in its entirety.

8.            Miscellaneous.

8.1         Full Force and Effect.  As amended by this Amendment, the Agreement shall remain in full force and effect.

8.2         Conflict.  If the terms of this Amendment conflict with the terms of any of the Agreement, the terms of this Amendment shall control.

8.3         Counterparts.  This Amendment may be executed in one or more counterparts, each of which shall be an original and all of which shall together constitute one and the same document.

8.4         Governing Law.  This Amendment shall be governed by the laws of the State of California, notwithstanding its conflict of laws provisions.

8.5         Necessary Action.  The parties agree to take all action necessary or useful to complete and accomplish the intentions of this Amendment.

8.6          Severability.   If any provision of this Amendment is held to be invalid, void or unenforceable for any reason, the remaining provisions shall nevertheless continue in full force and effect.

 

[remainder of this page intentionally blank - signature pages follow]

 

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The parties have executed this Amendment to Acquisition and Stock Purchase Agreement as of the date first written above.

 

	
THE PURCHASER:

		
SHAREHOLDERS:

	
	 			
	
RICEBRAN TECHNOLOGIES

			
	 		/s/ Mark S. McKnight   	
	 		
Mark S. McKnight

	
	 			
	
/s/ W. John Short

			
	
W. John Short, Chief Executive Officer

			
	 		
/s/ Nicole McKnight

	
	 		
Nicole McKnight

	
	 			
	THE COMPANY:		
/s/ Renee S. Ellis

	
	 		
Renee S. Ellis

	
	
H&N DISTRIBUTION, INC.

			
	 			
	 		
MANAGEMENT ASSOCIATES INTERNATIONAL, INC.

	
	/s/ Mark S. McKnight			
	
Mark S. McKnight, CEO

		
/s/ Richard A. Ellis

	
	 		
Richard A. Ellis, President

	
	 			
	 		
SHAREHOLDER REPRESENTATIVE:

	
	 			
	 		/s/ Mark S. McKnight	
	 		
Mark S. McKnight

	

 

Amendment to Acquisition and Stock Purchase Agreement

 

EXHIBIT A

Form of Promissory Note

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS.  IT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AND QUALIFICATION AS TO THE SECURITIES UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO MAKER THAT SUCH REGISTRATION AND QUALIFICATION IS NOT REQUIRED.

PROMISSORY NOTE

 

	
$________ 

	
 

	
January 1, 2014

	
 

	
 

	
___________, Arizona

 

FOR VALUE RECEIVED, RiceBran Technologies, a California corporation ("Maker"), promises to pay to [INSERT NAME OF SHAREHOLDER], a ________________ ("Holder"), or its registered assigns, at such address as Holder may from time to time designate, the principal sum of ________ Dollars ($___), or such lesser amount as shall equal the outstanding principal amount hereof (“Principal”), together with interest on the outstanding Principal balance, accruing at a fixed annual rate equal to one percent (1.00%) (as may be adjusted herein, “Interest”).

Maker and Holder are parties to an Acquisition and Stock Purchase Agreement, dated as of September 24, 2013 (as amended by that certain Amendment to Acquisition and Stock Purchase Agreement dated as of December 6, 2013, and as may be further amended, “Purchase Agreement”).  This Note is being issued pursuant to the Purchase Agreement.  Capitalized terms contained herein but not defined herein shall have the meaning ascribed to such terms in the Purchase Agreement.

1.            Payment of Principal and Interest.  Subject to the terms and conditions of this Note, Principal and Interest shall be paid as follows.

(i)            If Maker exercises its Exchange Election under the Purchase Agreement, all obligations of Maker under this Note, including all obligations to pay Principal and Interest, shall be satisfied in full by the issuance to Holder of shares of Maker’s common stock as provided in the Purchase Agreement.

 

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(i)            If Maker does not make an Exchange Election under the Purchase Agreement, then, on the last business day of each calendar quarter, beginning on March 31, 2015, Maker shall pay to Holder 1/16th of the original principal amount of this Note (as adjusted as provided in the Purchase Agreement and this Note), together with all accrued but unpaid Interest through the end of the month in which such payment is made.

(ii)            Maker shall make a balloon payment of all outstanding Principal and accrued but unpaid Interest on or before December 31, 2018 (the “Maturity Date, and together with the Interest Payment Dates, the Payment Dates”).

2.            Interest.  If Maker does not exercise its Exchange Election under the Purchase Agreement and issue the Exchange Shares to Holder on or before the earlier of (i) by January 31, 2015 and (ii) the fifth (5th) business day following the Subdebt Issuance Date, Interest shall thereafter accrue on the outstanding principal hereof at a fixed annual rate equal to five percent (5%); provided that if Maker does not exercise its Exchange Election under the Purchase Agreement and issue the Exchange Shares to Holder by January 31, 2016, Interest shall thereafter accrue on the outstanding principal hereof at a fixed annual rate equal to ten percent (10%) per annum.

3.            Tendering Payment.  Maker shall make all payments in lawful money of the United States of America and in immediately available funds.

4.            Computation of Interest.  All computations of Interest shall be based upon a year of three hundred sixty (360) days for actual days elapsed.

5.            Application of Payments.  Any payment received by Holder shall be credited first to any late fees due, then Interest accrued and the remainder to Principal.

6.            Prepayment.  Maker may not prepay this Note before February 1, 2015.  Thereafter, Maker may prepay all or any portion of this Note without the consent of Holder and without penalty.

7.            Severability.  If any provision or any word, term, clause or part of any provision of this Note shall be invalid for any reason, the same shall be ineffective, but the remainder of this Note and of the provision shall not be affected and shall remain in full force and effect.

8.            Governing Law.  This Note shall be governed by and construed under the laws of the State of Arizona, excluding its conflicts of laws rules.

9.            Waiver.  Any of the terms or conditions of this Note intended to benefit a party hereto may be waived by such party (a “Waiving Party”), but no such waiver shall affect or impair the rights of the Waiving Party to require observance, performance, or satisfaction, either of that term or condition as it applies on a subsequent occasion or of any other term or condition of this Note.

10.            Amendment.  This Note may only be amended, modified or terminated by an agreement in writing signed by Maker and Holder.

 

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11.            Successors and Assigns.  This Note will apply to, be binding in all respects upon and inure to the benefit of the successors and permitted assigns of the parties.

12            Disposition of Note in Compliance with Securities Laws.  With respect to any offer, sale, assignment or other disposition (each, a “Transfer”) of this Note, Holder hereof agrees to give written notice to Maker prior thereto, describing briefly the manner thereof, together with a written opinion of Holder's counsel, or other evidence, if requested by Maker, to the effect that such offer, sale or other disposition may be effected without registration or qualification (under the Act as then in effect or any federal or state securities law then in effect).  Upon receiving such written notice and reasonably satisfactory opinion or other evidence, if so requested, Maker, as promptly as practicable, shall notify Holder that Holder may Transfer this Note, all in accordance with the terms of the notice delivered to Maker.  Prior to the Transfer of this Note, the Transferee must execute this Note, make the representations contained in this Note that were made by Holder and agree to be bound by the terms of this Note.  Any Transfer in violation of this Section shall be void and Maker shall have no obligations to the Transferee under this Note.

13            Prior Consent of Maker.  In addition to any other restriction on Transfer contained herein, neither this Note nor the rights of a Holder under this Note may be Transferred before January 31, 2015 without the prior written consent of Maker.

 

[Remainder of Page Intentionally Left Blank.  Signature Page Follows]

 

Amendment to Acquisition and Stock Purchase Agreement

13

This Promissory Note is executed by Maker and Holder as of the first date set forth above:

	
 

	
MAKER

	
 

	
 

	
 

	
RiceBran Technologies, a

	
 

	
California Corporation

	
 

	
 

		
By:

	
 

	
 

		
W. John Short, Chief Executive Officer

	
HOLDER

	
 

	 	
	 	
	
 

	
 

	
 

	
By:

	
 

	
 

 

	
Name:

	
 

	
 

 

	
Title:

	
 

	
 

[SIGNATURE PAGE FOR PROMISSORY NOTE:  [NAME OF HOLDER]

Amendment to Acquisition and Stock Purchase Agreement

 

14Exhibit 10.87

AMENDMENT NO. 3 TO

SENIOR SECURED REVOLVING CREDIT FACILITY AGREEMENT

THIS AMENDMENT NO. 3 TO SENIOR SECURED REVOLVING CREDIT FACILITY AGREEMENT (this “Amendment”) is made as of December 11, 2013 (the “Effective Date”), by and among (i) RICEBRAN TECHNOLOGIES, a corporation incorporated under the laws of the State of California, as borrower (the “Borrower”), (ii) NUTRACEA, LLC, a limited liability company organized and existing under the laws of the State of Delaware, SRB-IP, LLC, limited liability company organized and existing under the laws of the State of Delaware, SRB-MERM, LLC, a limited liability company organized and existing under the laws of the State of Delaware, SRB-LC, LLC, a limited liability company organized and existing under the laws of the State of Delaware, SRB-MT, LLC, a limited liability company organized and existing under the laws of the State of Delaware, SRB-WS, LLC, a limited liability company organized and existing under the laws of the State of Delaware, RICEX COMPANY, a corporation incorporated under the laws of the State of Delaware, RICEX NUTRIENTS, INC., a corporation incorporated under the laws of the State of Montana, RICE SCIENCE, LLC, a limited liability company organized and existing under the laws of the State of Delaware, and RICE RX, LLC, a limited liability company organized and existing under the laws of the State of Delaware, as joint and several guarantors (together, jointly and severally, the “Guarantors” and together with the Borrower, the “Credit Parties”), and (iii) TCA GLOBAL CREDIT MASTER FUND, LP, a limited partnership organized and existing under the laws of the Cayman Islands, as lender (the “Lender”).

RECITALS

B.                  The parties hereto are parties to a senior secured revolving credit facility agreement, dated as of April 30, 2013, which agreement was amended on July 18, 2013 and October 11, 2013 (as amended, the “Credit Agreement”)

B.                  Pursuant to the Credit Agreement, the Company issued to Lender a Revolving Convertible Promissory Note, dated as of October 11, 2013 and in the principal amount of Two Million Eight Hundred Thousand Dollars ($2,800,000) (“Note”).

C.                 The Company has filed with the United States Securities and Exchange Commission a registration statement on Form S-1 (Registration Number 333-191448) relating to the proposed offering and sale of the Company securities (“Proposed Offering”)

D.                  In order to facilitate the Proposed Offering, which would benefit the Company, the parties desire to amend the Credit Agreement as set forth herein to provide that, among other things, following the Trigger Date (as hereinafter defined) the Lender may not convert the Note without the mutual agreement of Lender and the Company.

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 to Credit Agreement.  In the event that the Borrower receives proceeds exceeding Seven Million Dollars ($7,000,000) in the Proposed Offering (the date such proceeds are raised, the “Trigger Date”), then, effective as of the Trigger Date, the Credit Agreement shall be amended to delete Section 2.1(d)(i) in its entirety and replace it with the following:

Mandatory Principal Repayments; Overadvances.  Beginning January 31, 2014 and continuing on the fifteenth (15th) day of each subsequent month (or the immediately subsequent business day if such day is not a business day), the Borrower shall make principal payments to the Lender in the following amounts:

		January 2014	$675,000

		February 2014	$175,000

		March 2014	$200,000

		April 2014	$225,000

		May 2014	$250,000

		June 2014	$275,000

		July 2014	$300,000

		August 2014	$300,000

		September 2014	$300,000

		October 2014	$200,000 plus any and all amounts which remain outstanding as of such date

(such amount each month, the “Mandatory Principal Repayment Amount”)

In addition to Borrower’s obligation to make principal payments hereunder, Lender is permitted to use amounts in the Lock Box Account toward the payment of the outstanding principal balance of all Revolving Loans, provided, however, that the use of funds in the Lock Box Account toward principal repayments shall not be in excess of the amounts provided in the payment schedule above in any given month.  All Revolving Loans hereunder shall be repaid by Borrower as provided in this Section, on or before the Revolving Loan Maturity Date, unless payable sooner pursuant to the provisions of this Agreement.  In the event the aggregate outstanding principal balance of all Revolving Loans hereunder exceed the Revolving Loan Availability, Borrower shall, upon notice or demand from Lender, immediately make such repayments of the Revolving Loans or take such other actions as shall be necessary to eliminate such excess.

2.                  Issuance of Amended and Restated Revolving Convertible Promissory Note.  Subject to the terms and conditions of this Amendment, the Borrower shall and does hereby agree to issue to the Lender (consented and agreed to by each of the Guarantors), simultaneously with the execution of this Amendment, an original promissory note in the principal amount of Eight Million and No/100 United States Dollars (US$8,000,000), or such lesser principal amount as may be outstanding from time to time, dated as of the Effective Date, in the form attached hereto as Exhibit A (the “Amended and Restated Promissory Note”).

3.                  Cancellation of Existing Promissory Note.  By the Credit Parties’ execution and delivery to the Lender of the Amended and Restated Promissory Note, the Note shall be hereby immediately and irrevocably cancelled without further action on the part of the Lender or the Credit Parties.  It is the intention of the parties that while the Amended and Restated Promissory Note amends, restates, replaces and supersedes the existing Note, in its entirety, the issuance of the Amended and Restated Promissory Note is not in payment or satisfaction of the existing Note, but rather is the substitute of one evidence of debt for another without any intent to extinguish the existing debt.

4.                   Representations and Warranties of the Credit Parties.  The Credit Parties each represent and warrant to the Lender that immediately after giving effect to this Amendment, the representations and warranties of each Credit Party set forth in the Credit Agreement, as further amended hereby, are true and correct in all material respects and no Default or Event of Default shall have occurred and be continuing.

5.                  Security Interest Confirmation.  The Credit Parties each hereby represent, warrant and covenant that (i) the Lender’s security interests in all of the “Collateral” (as such term is defined in each Security Agreement executed by each of the Credit Parties in connection with the Credit Agreement) are and remain valid, perfected, security interests in such Collateral, (ii) the fees which the Borrower has agreed to pay to the Lender in connection with this Amendment and the Amended and Restated Promissory Note and any and all additional obligations incurred by the Credit Parties in connection therewith constitute Obligations (as defined in the Credit Agreement) and such fees constitute additional principal amount and additional obligations and are each secured by Lender’s security interests in all of the Collateral, and (iii) the Credit Parties have not granted any other encumbrances or security interests of any nature or kind in favor of any other Person affecting any of such Collateral, other than Permitted Liens.

6.                   No Defaults.  Each Credit Party hereby represents and warrants that as of the Effective Date there exists no Event of Default or any condition which, with the giving of notice or passage of time, or both, would constitute an Event of Default.

7.                   Covenants.  Each Credit Party hereby reaffirms that each has duly performed and observed the covenants and undertakings set forth in the Credit Agreement and each Loan Document, and each covenants and undertakes to continue to duly perform and observe such covenants and undertakings, as amended hereby, so long as the Credit Agreement, as further amended hereby, shall remain in effect.

8.                   No Other Amendment.  All other terms and conditions of the Credit Agreement shall remain in full force and effect and the Credit Agreement shall be read and construed as if the terms of this Amendment were included therein by way of addition or substitution, as the case may be.

9.                   Ratification. The Credit Parties hereby acknowledge, represent, warrant and confirm to the Lender that: (i) the Credit Agreement, as further amended hereby, and each of the Loan Documents executed by the Credit Parties are valid and binding obligations of the Credit Parties, enforceable against the Credit Parties in accordance with their respective terms; (ii) all obligations of the Credit Parties under the Credit Agreement, as further amended hereby, and each of the Loan Documents are, shall be and continue to be secured by and under the respective Security Agreements entered into by the Credit Parties in connection with the Credit Agreement and all other Loan Documents; (iii) there are no defenses, setoffs, counterclaims, cross-actions or equities in favor of the Credit Parties to or against the enforcement of the Credit Agreement, as further amended hereby, or any of the Loan Documents, and to the extent the Credit Parties have any defenses, setoffs, counterclaims, cross-actions or equities against the Lender and/or against the enforceability of the Credit Agreement, as further amended hereby, or any of the Loan Documents, the Credit Parties acknowledge and agree that same are hereby fully and unconditionally waived; and (iv) no oral representations, statements, or inducements have been made by the Lender or any agents or representatives of the Lender with respect to the Credit Agreement, as further amended hereby, or any of the Loan Documents.

10.                Fees and Expenses.  The Borrower agrees to pay to the Lender, upon the execution hereof, an amendment fee equal to One Hundred Thousand and No/100 United States Dollars (US$100,000) in consideration of the Lender’s execution of this Amendment, which such amount shall be immediately added to the principal amount outstanding under and pursuant to the Credit Agreement and the Amended and Restated Promissory Note, (ii) a legal fee equal to Four Thousand Five Hundred United States Dollars (US$4,500), which such amount shall be payable upon the execution of this Amendment and (iii) all costs and expenses of the Lender and Lender's counsel in connection with the preparation and execution of this Amendment, which such amount shall be payable upon the execution of this Amendment.

11.                Conditions Precedent.  The effectiveness of this Amendment shall be expressly subject to the following conditions precedent, each in a form satisfactory to the Lender in its sole discretion:

		(a)	Amendment.  Each Credit Party shall have executed and delivered to the Lender this Amendment;

		(b)	Amended and Restated Promissory Note.  Each Credit Party shall have executed and delivered to the Lender the Amended and Restated Promissory Note;

		(c)	Corporate Documents.  The Lender shall have received such evidence as it may require as to the authority of the officers executing this Amendment and such other corporate documents it may request, including, but not limited to, approval of the board of directors or managers of each of the Credit Parties in form and substance satisfactory to the Lender in its sole discretion; and

		(d)	Fees Paid.  The Lender or its counsel shall have received payment in full of all fees and expenses due under this Amendment.

12.                Execution in Counterparts.  This Amendment may be executed in one or more counterparts, all of which taken together shall be deemed and considered one and the same Amendment, and same shall become effective when counterparts have been signed by each party and each party has delivered its signed counterpart to the other party. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format file or other similar format file, such signature shall be deemed an original for all purposes and shall create a valid and binding obligation of the party executing same with the same force and effect as if such facsimile or “.pdf” signature page was an original thereof.

13.                Authority and Approval of Agreement; Binding Effect.  The execution and delivery by the Credit Parties of this Amendment, and the documents executed and delivered in connection herewith, and the performance by Credit Parties of all of its obligations hereunder and thereunder, have been duly and validly authorized and approved by the Credit Parties and its boards of directors pursuant to all applicable laws, and other than the corporate action or resolutions delivered by the Credit Parties in connection with this Amendment, no other corporate action or consent on the part of the Credit Parties, its board of directors, stockholders or any other Person is necessary or required by the Credit Parties to execute this Amendment, and the documents executed and delivered in connection herewith and therewith, to consummate the transactions contemplated herein and therein, or perform all of the Credit Parties’ obligations hereunder and thereunder.  This Amendment, and each of the documents executed and delivered in connection herewith and therewith, have been duly and validly executed by the Credit Parties (and the officer executing this Amendment and all such other documents is duly authorized to act and execute same on behalf of the Credit Parties) and constitute the valid and legally binding agreements of the Credit Parties, enforceable against the Credit Parties in accordance with their respective terms.

14.                GOVERNING LAW.  EXCEPT IN THE CASE OF THE MANDATORY FORUM SELECTION CLAUSE SET FORTH HEREIN, THIS AMENDMENT, THE AMENDED CREDIT AGREEMENT, AS FURTHER AMENDED HEREBY, THE LOAN DOCUMENTS AND THE AMENDED AND RESTATED PROMISSORY NOTE SHALL BE SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.

15.                MANDATORY FORUM SELECTION.  ANY DISPUTE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH THE AMENDMENT OR RELATED TO ANY MATTER WHICH IS THE SUBJECT OF OR INCIDENTAL TO THE AMENDMENT (WHETHER OR NOT SUCH CLAIM IS BASED UPON BREACH OF CONTRACT OR TORT) SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS LOCATED IN BROWARD COUNTY, FLORIDA.  THIS PROVISION IS INTENDED TO BE A “MANDATORY” FORUM SELECTION CLAUSE AND GOVERNED BY AND INTERPRETED CONSISTENT WITH FLORIDA LAW.

16.                Amendment Effective Date.  All references in any Loan Document to the Credit Agreement on and after the date hereof shall be deemed to refer to the Credit Agreement as further amended hereby, and the parties hereto agree that on and after the Effective Date, the Credit Agreement, as further amended hereby, is in full force and effect.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their duly authorized officers as of the Effective Date.

BORROWER:

RICEBRAN TECHNOLOGIES

	By:	/s/ W. John Short

	Name:	W. John Short

	Title:	Chief Executive Officer

LENDER:

TCA GLOBAL CREDIT MASTER FUND, LP

	By:	TCA Global Credit Fund GP, Ltd.

	Its:	General Partner

	By:	/s/ Robert Press

	Name:	Robert Press

	Title:	Director

EXHIBIT A

NEITHER THIS NOTE NOR THE SECURITIES THAT ARE ISSUABLE TO THE HOLDER UPON CONVERSION HEREOF (COLLECTIVELY, THE "SECURITIES") HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THE SECURITIES NOR ANY INTEREST OR PARTICIPATION THEREIN MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED: (I) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE 1933 ACT OR APPLICABLE STATE SECURITIES LAWS; OR (II) IN THE ABSENCE OF AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE ISSUER, THAT REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT OR; (Ill) UNLESS SOLD, TRANSFERRED OR ASSIGNED PURSUANT TO RULE 144 UNDER THE 1933 ACT.

BY ACCEPTING THIS OBLIGATION, THE HOLDER REPRESENTS AND WARRANTS THAT IT IS NOT A UNITED STATES PERSON (OTHER THAN AN EXEMPT RECIPIENT DESCRIBED IN SEC 6049(B)(4) OF THE INTERNAL REVENUE CODE AND REGULATIONS THEREUNDER) AND THAT IT IS NOT ACTING FOR OR ON BEHALF OF A UNITES STATES PERSON (OTHER THAN AN EXEMPT RECIPIENT DESCRIBED IN SEC. 6049(B)(4) OF THE INTERNAL REVENUE CODE AND THE REGULATIONS THEREUNDER).

AMENDED AND RESTATED REVOLVING CONVERTIBLE PROMISSORY NOTE

		Issuance Date:  December 11, 2013	US$8,000,000

Effective Date:  December 11, 2013

FOR VALUE RECEIVED, RICEBRAN TECHNOLOGIES, a corporation incorporated under the laws of the State of California, whose address is 6720 North Scottsdale Road, Suite 390, Scottsdale, AZ 85253 (the “Borrower”), promises to pay to the order of TCA GLOBAL CREDIT MASTER FUND, LP (hereinafter, together with any holder hereof, “Lender”), whose address is 1404 Rodman Street, Hollywood, Florida 33020, on or before October 15, 2014 or such later date as agreed upon after the date hereof in a signed writing by the Lender (the “Revolving Loan Maturity Date”), the lesser of: (i) Eight Million and No/100 United States Dollars (US$8,000,000); or (ii) the aggregate principal amount outstanding under and pursuant to that certain senior secured revolving credit facility agreement, dated as of April 30, 2013, as amended by amendment no. 1 thereto dated as of July 18, 2013, amendment no. 2 dated as of October 11, 2013, and as further amended by amendment no. 3, dated as of the Effective Date (“Amendment No. 3”), executed by and among the Borrower, as borrower, certain subsidiaries of the Borrower, as joint and several guarantors, and the Lender, as lender (as amended, restated, supplemented or modified from time to time, the “Credit Agreement”), together with interest (computed on the actual number of days elapsed on the basis of a 360 day year) on the aggregate principal amount of all Revolving Loans outstanding from time to time, fees and expenses, as provided in the Credit Agreement. Capitalized words and phrases not otherwise defined herein shall have the meanings assigned thereto in the Credit Agreement.

This revolving convertible promissory note (the “Note”) amends, restates, replaces and supercedes, in its entirely, that certain revolving convertible promissory note, issued and effective as of October 10, 2013 (the “Original Note”), issued by the Borrower in favor of the Lender, in the principal amount of Two Million Eight Hundred Thousand and No/100 United States Dollars (US$2,800,000).  The obligations contained in the Original Note shall be referred to herein as the “Original Obligations”.  It is the intention of the Borrower and Lender that while this Note amends, restates, replaces and supersedes the Original Note, in its entirety, it is not in payment or satisfaction of the Original Obligations, but rather is the substitute of one evidence of debt for another without any intent to extinguish the old.  Should there be any conflict between any of the terms of the Original Note, and the terms of this Note, the terms of this Note shall control.  This Note is not a novation.

This Note evidences a portion of the aggregate Revolving Loans incurred by Borrower under and pursuant to the Credit Agreement, to which reference is hereby made for a statement of the terms and conditions under which the Revolving Loan Maturity Date or any payment hereon may be accelerated.

As of the Effective Date, Two Million Eight Hundred Thousand and No/100 United States Dollars (US$2,800,000) has been advanced by the Lender to the Borrower, consisting of One Million Four Hundred Thousand and No/100 United States Dollars (US$1,400,000) advanced on May 24, 2013, Six Hundred Thousand and No/100 United States Dollars (US$600,000) advanced on July 18, 2013, and Eight Hundred Thousand and No/100 United States Dollars (US$800,000) advanced on the Effective Date.

The holder of this Note is entitled to all of the benefits and security provided for in the Loan Documents, of even date herewith. All Revolving Loans shall be repaid by Borrower, or any person liable for the payment of this Note, on the Revolving Loan Maturity Date, unless payable sooner pursuant to the provisions of the Credit Agreement.

Principal and interest shall be paid to Lender as set forth in the Credit Agreement, or at such other place as the holder of this Note shall designate in writing to Borrower. Each Revolving Loan evidenced hereby and made by Lender, and all payments on account of the principal and interest hereunder shall be recorded on the books and records of Lender and the principal balance as shown on such books and records, or any copy thereof certified by an officer of Lender, shall be rebuttable presumptive evidence of the principal amount owing hereunder.

This Note is being issued in connection with Amendment No. 3 and is also secured by the Security Agreements and all other Loan Documents.  All of the agreements, conditions, covenants, provisions, representations, warranties and stipulations contained in any of the Loan Documents which are to be kept and performed by the Borrower or any other Credit Party are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein, and the Borrower and each Credit Party covenants and agrees to keep and perform them, or cause them to be kept or performed, strictly in accordance with their terms.

Except for such notices as may be required under the terms of the Credit Agreement, the Borrower, or any person liable for the payment of this Note, waives presentment, demand, notice, protest, and all other demands, or notices, in connection with the delivery, acceptance, performance, default, or enforcement of this Note, and assents to any extension or postponement of the required time of payment or any other indulgence.

Borrower shall be solely responsible for the payment of any and all documentary stamps and other taxes applicable to the full face amount of this Note, but specifically excluding any income or capital gains taxes.

The Revolving Loan evidenced hereby has been made and/or issued and this Note has been delivered at Lender's main office set forth above. This Note shall be governed and construed in accordance with the laws of the State of Nevada, in which state it shall be performed, and shall be binding upon Borrower, or any person liable for the payment of this Note, and its legal representatives, successors, and assigns. Wherever possible, each provision of the Credit Agreement and this Note shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of the Credit Agreement or this Note shall be prohibited by or be invalid under such law, such provision shall be severable, and be ineffective to the extent of such prohibition or invalidity, without invalidating the remaining provisions of the Credit Agreement or this Note.

Nothing herein contained, nor in any instrument or transaction relating hereto, shall be construed or so operate as to require the Borrower, or any person liable for the payment of this Note, to pay interest in an amount or at a rate greater than the highest rate permissible under applicable law. By acceptance hereof, Lender hereby warrants and represents to Borrower that Lender has no intention of charging a usurious rate of interest.  Should any interest or other charges paid by Borrower, or any parties liable for the payments made pursuant to this Note result in the computation or earning of interest in excess of the highest rate permissible under applicable law, any and all such excess shall be and the same is hereby waived by the holder hereof. Lender shall make adjustments in the Note or Credit Agreement, as applicable, as necessary to ensure that Borrower will not be required to pay further interest in excess of the amount permitted by applicable law. All such excess shall be automatically credited against and in reduction of the outstanding principal balance.  Any portion of such excess which exceeds the outstanding principal balance shall be paid by the holder hereof to the Lender and any parties liable for the payment of this Note, it being the intent of the parties hereto that under no circumstances shall Borrower, or any party liable for the payments hereunder, be required to pay interest in excess of the highest rate permissible under applicable law.

17.               THE HOLDER IS A NON-U.S. PERSON AS THAT TERM IS DEFINED IN THE UNITED STATES INTERNAL REVENUE CODE. IT IS HEREBY AGREED AND UNDERSTOOD THAT THE OBLIGATIONS HEREUNDER MAY BE SOLD OR RESOLD ONLY TO NON­U.S. PERSONS. THE INTEREST PAYABLE HEREUNDER IS PAYABLE ONLY OUTSIDE THE UNITED STATES. ANY U.S. PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAW.

Notwithstanding any provision in this Note or the other Loan Documents, the total liability for payments of interest and payments in the nature of interest, including, without limitation, all charges, fees, exactions, or other sums which may at any time be deemed to be interest, shall not exceed the limit imposed by the usury laws of the jurisdiction governing this Note or any other applicable law. In the event the total liability of payments of interest and payments in the nature of interest, including, without limitation, all charges, fees, exactions or other sums which may at any time be deemed to be interest, shall, for any reason whatsoever, result in an effective rate of interest, which for any month or other interest payment period exceeds the limit imposed by the usury laws of the jurisdiction governing this Note, all sums in excess of those lawfully collectible as interest for the period in question shall, without further agreement or notice by, between, or to any party hereto, be applied to the reduction of the outstanding principal balance of this Note immediately upon receipt of such sums by the Lender, with the same force and effect as though the Borrower had specifically designated such excess sums to be so applied to the reduction of such outstanding principal balance and the Lender had agreed to accept such sums as a penalty-free payment of principal; provided, however, that the Lender may, at any time and from time to time, elect, by notice in writing to the Borrower, to waive, reduce, or limit the collection of any sums in excess of those lawfully collectible as interest rather than accept such sums as a prepayment of the outstanding principal balance. It is the intention of the parties that the Borrower do not intend or expect to pay nor does the Lender intend or expect to charge or collect any interest under this Note greater than the highest non-usurious rate of interest which may be charged under applicable law.

At any time and from time to time while this Note is outstanding, this Note may be, at the sole option of the Lender, convertible into shares of the common stock, no par value per share (the “Common Stock”) of Borrower, in accordance with the terms and conditions set forth below.

		(a)	Voluntary Conversion.

(1)            At any time while this Note is outstanding, the Lender may, upon the occurrence of an Event of Default or if mutually agreed upon by the parties, convert all or any portion of the outstanding principal, accrued and unpaid interest, and any other sums due and payable hereunder or under the Credit Agreement (such total amount, the “Conversion Amount”) into shares of Common Stock of the Borrower (the “Conversion Shares”) at a price equal to: (i) the Conversion Amount (the numerator); divided by (ii) the higher of (A) eighty-five percent (85%) of the lowest daily volume weighted average price of the Borrower's Common Stock during the five (5) Business Days immediately prior to the Conversion Date, which price shall be  indicated in the conversion notice (in the form attached hereto as Exhibit A, the “Conversion Notice”) and (B) $0.02 (as appropriately adjusted for stock splits, stock dividends, recapitalizations and the like) (the denominator) (the “Conversion Price”). The Lender shall submit a Conversion Notice indicating the Conversion Amount, the number of Conversion Shares issuable upon such conversion, and where the Conversion Shares should be delivered.

(2)            The Borrower has filed with the United States Securities and Exchange Commission a registration statement on Form S-1 (Registration Number 333-191448) relating to the proposed offering and sale of the Borrower’s  securities (“Proposed Offering”).  Notwithstanding anything contained in Section (a)(1) to the contrary, provided that the Borrower receives proceeds exceeding Seven Million Dollars ($7,000,000) in the Proposed Offering (the date such proceeds are raised, the “Trigger Date”), then, effective as of the Trigger Date, any conversion of the outstanding principal, accrued and unpaid interest, and any other sums due and payable hereunder or under the Credit Agreement shall be permitted only upon mutual agreement of the Lender and the Borrower.

(b)                The Lender's Conversion Limitations. The Borrower shall not affect any conversion of this Note, and the Lender shall not have the right to convert any portion of this Note, to the extent that after giving effect to the conversion set forth on the Conversion Notice submitted by the Lender, the Lender (together with the Lender's Affiliates and any Persons acting as a group together with the Lender or any of the Lender's Affiliates) would beneficially own shares of Common Stock in excess of the Beneficial Ownership Limitation (as defined herein). To ensure compliance with this restriction, prior to delivery of any Conversion Notice, the Lender shall have the right to request that the Borrower provide to the Lender a written statement of the number of outstanding shares of the Borrower's Common Stock as of a requested date. The Borrower shall, within three (3) Business Days of such request, provide Lender with such requested information in a written statement, and the Lender shall be entitled to rely on such written statement from the Borrower in issuing its Conversion Notice and ensuring that its ownership of the Borrower's Common Stock is not in excess of the Beneficial Ownership Limitation.  The restriction described in this Section may be waived by Lender, in whole or in part, upon notice from the Lender to the Borrower to increase such percentage.

For purposes of this Note, the “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note.  The limitations contained in this Section shall apply to a successor holder of this Note.  For purposes of this Note, “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization or a government or any department or agency thereof.

(c)                Mechanics of Conversion.  The conversion of this Note shall be conducted in the following manner, to the extent Lender has the right to convert this Note into shares of Common Stock:

(1)            To convert this Note into shares of Common Stock on any date set forth in the Conversion Notice by the Lender (the “Conversion Date”), the Lender shall transmit by facsimile or electronic mail (or otherwise deliver) a copy of the fully executed Conversion Notice to the Borrower (or, under certain circumstances as set forth below, by delivery of the Conversion Notice to the Borrower's transfer agent).

(2)            Upon receipt by the Borrower of a copy of a Conversion Notice, the Borrower shall as soon as practicable, but in no event later than two (2) Business Days after receipt of such Conversion Notice, send, via facsimile or electronic mail (or otherwise deliver) a confirmation of receipt of such Conversion Notice (the “Conversion Confirmation”) to the Lender indicating that the Borrower will process such Conversion Notice in accordance with the terms herein. In the event the Borrower fails to issue its Conversion Confirmation within said two (2) Business Day time period, the Lender shall have the absolute and irrevocable right and authority to deliver the fully executed Conversion Notice to the Borrower's transfer agent, and pursuant to the terms of the Credit Agreement, the Borrower's transfer agent shall issue the applicable Conversion Shares to Lender as hereby provided. Within five (5) Business  Days after the date of the Conversion Confirmation (or the date of the Conversion Notice, if the Borrower fails to issue the Conversion Confirmation), provided that the Borrower's transfer agent is participating in the Depository Trust Company’s (“DTC”) Fast Automated Securities Transfer (“FAST”) program, and legends are not required under the terms of the Credit Agreement, the Borrower shall, subject to Lender timely providing all information required regarding Lender’s prime broker with DTC, cause the transfer agent to (or, if for any reason the Borrower fails to instruct or cause its transfer agent to so act, then pursuant to the Irrevocable Transfer Agent Instructions, the Lender may request the Borrower's transfer agent to) electronically transmit the applicable Conversion Shares to which the Lender shall be entitled by crediting the account of the Lender's prime broker with DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system, and provide proof satisfactory to the Lender of such delivery. In the event that the Borrower's transfer agent is not participating in the DTC FAST program and is not otherwise DWAC eligible, within five (5) Business Days after the date of the Conversion Confirmation (or the date of the Conversion Notice, if the Borrower fails to issue the Conversion Confirmation), the Borrower shall instruct and cause its transfer agent to (or, if for any reason the Borrower fails to instruct or cause its transfer agent to so act, then pursuant to the Irrevocable Transfer Agent Instructions, the Lender may request the Borrower's transfer agent to) issue and surrender to a nationally recognized overnight courier for delivery to the address specified in the Conversion Notice, a certificate, registered in the name of the Lender, or its designees, for the number of Conversion Shares to which the Lender shall be entitled. To effect conversions hereunder, the Lender shall not be required to physically surrender this Note to the Borrower unless the entire principal amount of this Note, plus all accrued and unpaid interest thereon, has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Note in an amount equal to the applicable conversion. The Lender and the Borrower shall maintain records showing the principal amount(s) converted and the date of such conversion(s). The Lender, and any assignee by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may be less than the amount stated on the face hereof.

(3)              The Person(s) entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder(s) of such shares of Common Stock as of the Conversion Date.

(4)                If in the case of any Conversion Notice, the certificate or certificates required hereunder to be delivered are not delivered to or as directed by the Lender by the date required hereby, the Lender shall be entitled to elect by written notice to the Borrower at any time on or before its receipt of such certificate or certificates, to rescind such Conversion Notice, in which event the Borrower shall promptly return to the Lender any original  Note delivered to the Borrower and the Lender shall promptly return to the Borrower the Common Stock certificates representing the principal amount of this Note unsuccessfully tendered  for conversion to the Borrower.

(5)                The Borrower's obligations to issue and deliver the Conversion Shares upon conversion of this Note in accordance with the terms hereof are absolute and, unless specified otherwise herein, unconditional, irrespective of any action or inaction by the Lender to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any person or entity or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or  any breach or alleged breach by the Lender or any other person or entity of any obligation to  the Borrower or any violation or alleged violation of law by the Lender or any other person or entity, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Lender in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Borrower of any such action the Borrower may have against the Lender. In the event the Lender of this Note shall elect to convert any or all of the outstanding principal amount hereof and accrued but unpaid interest thereon in accordance with the terms of this Note, the Borrower may not refuse conversion based on any claim that the Lender or anyone associated or affiliated with the Lender has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Lender, restraining and or enjoining conversion of all or part of this Note shall have been sought and obtained, and the Borrower posts a surety bond for the benefit of the Lender in the amount of 150% of the outstanding principal amount of this Note, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to such Lender to the extent it obtains judgment.  In the absence of such injunction, the Borrower shall issue Conversion Shares upon a properly noticed conversion.  If the Borrower fails for any reason to deliver to the Lender such certificate or certificates representing Conversion Shares pursuant to timing and delivery requirements of this Note, the Borrower shall pay to such Lender, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $1.00 per Business Day for each Business Day after the date by which such certificates should have been delivered until such certificates are delivered. Nothing herein shall limit a Lender's right to pursue actual damages or declare an Event of Default pursuant to the Credit Agreement, this Note or any agreement securing the indebtedness under this Note for the Borrower's failure to deliver Conversion Shares within the period specified herein and such Lender shall have the right to pursue all remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Lender from seeking to enforce damages pursuant to any other Section hereof or under applicable law. Nothing herein shall prevent the Lender from having the Conversion Shares issued directly by the Borrower's transfer agent in accordance with the Irrevocable Transfer Agent Instructions, in the event for any reason the Borrower fails to issue or deliver, or cause its transfer agent to issue and deliver, the Conversion Shares to the Lender upon exercise of Lender's conversion rights hereunder.

(6)            The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Lender hereof for any documentary stamp or similar taxes, or any other issuance or transfer fees of any nature or kind that may be payable in respect of the issue or delivery of such certificates, any such taxes or fees, if payable, to be paid by the Borrower, provided that Borrower shall not be responsible for any income, capital gains or similar tax imposed on Lender.

(7)              Borrower shall take all action reasonably necessary to at all times have authorized, and reserved for the purpose of issuance, such number of shares of Common Stock as shall be necessary to effect the full conversion of the Note in accordance with its terms (the “Share Reserve”).  If at any time the Share Reserve is insufficient to effect the full conversion of the Note then outstanding, Borrower shall increase the Share Reserve accordingly.  If Borrower does not have sufficient authorized and unissued shares of Common Stock available to increase the Share Reserve, Borrower shall call and hold a special meeting of the shareholders within forty-five (45) days of such occurrence, or take action by the written consent of the holders of a majority of the outstanding shares of Common Stock, if possible, for the sole purpose of increasing the number of shares authorized to an amount of shares equal to three (3) times the Conversion Shares.  Borrower’s management shall recommend to the shareholders to vote in favor of increasing the number of shares of Common Stock authorized.

		(d)	Adjustments to Conversion Price.

(1)              If the Borrower, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on outstanding shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues, in the event of a reclassification of shares of Common Stock, any shares of capital stock of the Borrower, then the Conversion Price shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock (excluding any treasury shares of the Borrower) outstanding immediately before such event, and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination, or re-classification.

(2)            If, at any time while this Note is outstanding: (i) the Borrower effects any merger or consolidation of the Borrower with or into another Person, (ii) the Borrower effects any sale of all or substantially all of its assets in one transaction or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Borrower or another Person) is completed pursuant to which holders of Common Stock are permitted  to tender or exchange their shares for other securities, cash or property, or (iv) the Borrower effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then upon any subsequent conversion of this Note, the Lender shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of one (1) share of Common  Stock (the “Alternate Consideration”). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and the Borrower shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Lender shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Borrower or surviving entity in such Fundamental Transaction shall issue to the Lender a new note consistent with the foregoing provisions and evidencing the Lender's right to convert such note into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring (i) any such successor or surviving entity to comply with the provisions of this Section and insuring that this Note (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction or (ii) the satisfaction of all outstanding principal and interest hereunder.

(3)              Whenever the Conversion Price is adjusted pursuant to any provision of this Note, the Borrower shall promptly deliver to Lender a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

(4)            If: (A) the Borrower shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Borrower shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Borrower shall authorize the granting to all holders of  the Common Stock of rights or warrants  to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Borrower shall be required in connection with any reclassification of the Common Stock, any  consolidation  or merger to which the Borrower is a party, any sale or transfer of all or substantially all of the assets of the Borrower, of any compulsory share exchange whereby  the  Common Stock is converted into other securities, cash or property, or (E) the Borrower shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Borrower, then, in each case, the Borrower shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and shall cause to be delivered to the Lender at its last address as it shall appear upon the Borrower's records, at least ten (10) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating: (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined, or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice.

(e)                Make-Whole Rights. Upon liquidation by the Lender of Conversion Shares issued pursuant to any Conversion Notice, provided that the Lender realizes a net cash amount from such liquidation equal to less than the Conversion Amount specified in the relevant Conversion Notice (such net realized amount, the “Realized Amount”), the Borrower shall pay to Lender in immediately available funds an amount equal to: (i) the Conversion Amount specified in the relevant Conversion Notice; minus (ii) the Realized Amount, as evidenced by a reconciliation statement from the Lender (a “Sale Reconciliation”) showing the Realized Amount from the sale of the Conversion Shares.  Such payment shall be made within five (5) Business Days after Borrower’s receipt of the Sale Reconciliation and written notice from Lender seeking such funds.

[-signature page follows-]

IN WITNESS WHEREOF, the Borrower has executed this Note as of the date set forth above.

	
 

	
RICEBRAN TECHNOLOGIES

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
  

	
 

	
Name:

	
W. John Short

	
 

	
Title:

	
Chief Executive Officer

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