Document:

Exhibit 4.3

 

THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS DOCUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER AND REASONABLY APPROVED BY THE COMPANY), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

SECURED PROMISSORY NOTE

October 27, 2015

$250,000.00

FOR VALUE RECEIVED, Fresh Healthy Vending International, Inc., a Nevada corporation (the “Company”), with an address of 2620 Financial Court, Suite 100, San Diego, CA 92117, hereby promises to pay to the order of Socially Responsible Brands Inc, having an address at 187 E. Warm Springs Road, Suite B276, Las Vegas, Nevada  89119, or its successors or assigns (the “Holder”), the principal amount of two Hundred Fifty Thousand and 00/100 United States Dollars (US$250,000.00) on or prior to the one (1) year anniversary of the date hereof (the “Maturity Date”), and to pay interest in accordance with the terms hereof. This Secured Promissory Note (this note, and all modifications, extensions, future advances, supplements, and renewals thereof, and any substitutions therefor, hereinafter referred to as the “Note”) shall be payable in accordance with the terms set forth below.  This Note is “Note 2” referenced in that certain Security Agreement executed on the date hereof by and between the Company and the Holder (the “Security Agreement”), and that certain Subordination Agreement among the Holder of this Note and certain lien holders of the Company (the “Subordination Agreement”).  This Note is subject to the terms and conditions contained in the Security Agreement.   All capitalized terms not otherwise defined herein shall have the meanings set forth in the Security Agreement.

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		1.	Payments of Principal and Interest.

(a)            Payment of Principal and Interest.  This Note is secured by an interest in, among other things, franchise royalties pursuant to the Company’s various agreements with its franchisees, as further described in the Security Agreement.  The principal amount of this Note together with interest thereon shall be paid to the Holder on or prior to the Maturity Date at the rate of Five Hundred Dollars ($500.00) for each Combo Vending machine unit (each, a “Unit”) sold by the Company to franchisees, payable on a monthly basis (provided that the first monthly period shall begin on the date hereof, and shall end on November 31, 2015, and each successive monthly period shall begin on the first day of the applicable calendar month) within five (5) days following the end of each calendar month; provided, that at least Seventy Five Thousand Dollars ($75,000) will be payable hereunder during each three-month period following the issuance hereof.1 Such payments will continue until such time as the Company remits Three Hundred Thousand Dollars ($300,000) to the Holder (representing the sale of 600 Units).

(b)            Payment of Default Interest.  Any amount of principal or interest on this Note which is not paid when due shall bear interest from the date due until such past due amount is paid at a rate of interest equal to four percent (4%) per annum (the “Default Rate”).

(c)            General Payment Provisions.  All payments of principal and interest on this Note shall be made in lawful money of the United States of America by bank check or wire transfer to such account as the Holder may designate by written notice to the Company in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding Business Day. For purposes of this Note, “Business Day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the State of Nevada are authorized or required by law or executive order to remain closed.

(d)            Prepayment.  At any time prior to the Maturity Date, the Company may pre-pay this Note in full or in part without penalty upon receiving the written consent of the Holder; provided, however, that such prepayment includes all principal and interest evidenced hereby, including, without limitation, the amounts due under Section 1(a) above.  Upon prepayment of this Note in full, the Holder shall have no further rights under this Note (except for such rights that may specifically survive the payment of the Note).

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1 For example, if the Company sells 50 units in month one, 40 units is month two and 50 units in month three, the monthly remittance would be as follows: Month one - $25,000 (50 X $500); Month two - $20,000 (40 X $500); Month three - $30,000 (50 X $500 + 10 X 500).

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2.                     Voting Rights. The Holder shall have no voting rights under this Note, except as required by applicable law, including, but not limited to, the Nevada Corporations Law, and as expressly provided in this Note.

		3.	Defaults and Remedies.

(a)            Events of Default. The occurrence of any of the following events shall constitute an “Event of Default” hereunder:

(1)            Nonpayment of Obligations. Any amount due and owing on the Note, whether by its terms or as otherwise provided herein, is not paid on the date such amount is due.

(2)            Misrepresentation. Any written warranty, representation, certificate or statement of the Company in this Agreement, the Security Agreement or any other agreement with Holder (including the Subordination Agreement) (collectively, “Loan Documents”) shall be false or misleading in any material respect when made or deemed made.

(3)            Nonperformance. Any failure to perform or default in the performance of any nonmonetary covenant, condition or agreement contained in this Note or any other Loan Document, which failure to perform or default in performance continues for a period of fifteen (15) days after the Company receives notice or knowledge from any source of such failure to perform or default in performance (provided that if the failure to perform or default in performance is not capable of being cured, in Holder’s sole discretion, then the cure period set forth herein shall not be applicable and the failure or default shall be an immediate Event of Default hereunder).

(4)            Default under Loan Documents. Any failure to perform or default in the performance by the Company that continues after applicable grace and cure periods under any covenant, condition or agreement contained in any other Loan Document, all of which covenants, conditions and agreements are hereby incorporated in this Agreement by express reference.

(5)            Assignment for Creditors. The Company makes an assignment for the benefit of creditors, fails to pay, or admits in writing its inability to pay its debts as they mature; or if a trustee of any substantial part of the assets of the Company is applied for or appointed, and in the case of such trustee being appointed in a proceeding brought against the Company, the Company by any action or failure to act indicates its approval of, consent to, or acquiescence in such appointment and such appointment is not vacated, stayed on appeal or otherwise shall not have ceased to continue in effect within sixty (60) days after the date of such appointment.

(6)            Bankruptcy. Any proceeding involving the Company is commenced by or against the Company under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law or statute of the federal government or any state government, and in the case of any such proceeding being instituted against the Company: (i) the Company, by any action or failure to act, indicates its approval of, consent to or acquiescence therein; or (ii) an order shall be entered approving the petition in such Proceedings and such order is not vacated, stayed on appeal or otherwise shall not have ceased to continue in effect within sixty (60) days after the entry thereof.

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(7)            Collateral Impairment. The entry of any judgment, decree, levy, attachment, garnishment or other process, or the filing of any lien against, any of the Collateral or any collateral under a separate security agreement securing any of the obligations hereunder, and such judgment or other process shall not have been, within thirty (30) days from the entry thereof: (i) bonded over to the satisfaction of Holder and appealed; (ii) vacated; or (iii) discharged, or the loss, theft, destruction, seizure or forfeiture, or the occurrence of any material deterioration or impairment of any of the Collateral or any of the Collateral under any security agreement securing any of the obligations hereunder, or any material decline or depreciation in the value or market price thereof (whether actual or reasonably anticipated), which causes the Collateral, in the sole opinion of Holder acting in good faith, to become unsatisfactory as to value or character, or which causes Holder to reasonably believe that it is insecure and that the likelihood for repayment of the obligations hereunder is or will soon be impaired, time being of the essence. The cause of such deterioration, impairment, decline or depreciation shall include, but is not limited to, the failure by the Company to do any act deemed reasonably necessary by Holder to preserve and maintain the value and collectability of the Collateral.

(8)            Other Note.  Any Event of Default (as defined therein) under that certain Secured Promissory Note, of even date herewith, evidencing an original principal obligation from Company to Holder in the amount of $250,000 (“Other Note”), which is also secured by the Security Agreement.

(b)            Remedies.  Upon the occurrence of an Event of Default, Holder shall have all rights, powers and remedies set forth in this Note, the Security Agreement, and any other Loan Document, in any written agreement or instrument relating to any of the obligations or any security therefor, or as otherwise provided at law or in equity. Without limiting the generality of the foregoing, Holder may, at its option and without further notice, demand or presentment for payment to the Company or others, may declare the then outstanding principal balance of this Note, together with all other sums due under the Note, including, without limitation, the amounts due under Section 1(a) above, immediately due and payable, together with all accrued and unpaid interest thereon and thereafter all such sums shall bear interest at the Default Rate, and all other sums due by the Company hereunder, all without any relief whatsoever from any valuation or appraisement laws and payment thereof may be enforced and recovered in whole or in part at any time by one or more of the remedies provided to the Holder at law, in equity, under this Note, and/or any other Loan Document. No Event of Default shall be waived by Holder, except and unless such waiver is in writing and signed by Holder. No failure or delay on the part of Holder in exercising any right, power or remedy hereunder shall operate as a waiver of the exercise of the same or any other right at any other time; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. There shall be no obligation on the part of Holder to exercise any remedy available to Holder in any order. The remedies provided for herein are cumulative and not exclusive of any remedies provided at law or in equity. The Company agrees that in the event that the Company fails to perform, observe or discharge any of its Obligations or liabilities under this Note, the Security Agreement, and/or any other Loan Document, at Holder’s option, no remedy of law will provide adequate relief to Holder, and further agrees that Holder shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.

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		6.	Security for the Note.  To secure the payment and performance by the Company of the obligations hereunder, the Company grants, under and pursuant to the Security Agreement executed by the Company dated as of the date hereof, to Holder, its successors and assigns, a continuing, first-priority security interest in, and does hereby assign, transfer, mortgage, convey, pledge, hypothecate and set over to Holder, its successors and assigns, all of the right, title and interest of the Company in and to the Collateral (as defined in the Security Agreement), whether now owned or hereafter acquired, and all proceeds (including, without limitation, all insurance proceeds) and products of any of the Collateral. At any time upon Holder’s request, the Company shall execute and deliver to Holder any other documents, instruments or certificates requested by Holder for the purpose of properly documenting and perfecting the security interests of Holder in and to the Collateral granted hereunder, including any additional security agreements, mortgages, control agreements, and financing statements.

		7.	Lost or Stolen Note. Upon notice to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of an indemnification undertaking by the Holder to the Company in a form reasonably acceptable to the Company and customary for similar circumstances in commercial borrower circumstances, and, in the case of mutilation, upon surrender and cancellation of the Note, the Company shall execute and deliver a new Note of like tenor and date and in substantially the same form as this Note.

		8.	Cancellation. After all principal, accrued interest and all other sums at any time owed on this Note have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be re-issued.

		9.	Governing Law. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the laws of the State of Nevada, without giving effect to provisions thereof regarding conflict of laws. Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the State of Nevada for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper, provided, however, nothing contained herein shall limit the Holder’s ability to bring suit or enforce this Note in any other jurisdiction. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by sending by certified mail or overnight courier a copy thereof to such party at the address indicated in the preamble hereto and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

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		10.	Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies of the Holder as provided herein shall be cumulative and concurrent and may be pursued singly, successively or together, at the sole discretion of the Holder, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof.

		11.	Specific Shall Not Limit General; Construction. No specific provision contained in this Note shall limit or modify any more general provision contained herein. This Note shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any person as the drafter hereof.

		12.	Failure or Indulgence Not Waiver. Holder shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder, unless such waiver is in writing and signed by Holder, and then only to the extent specifically set forth in the writing.  A waiver on one event shall not be construed as continuing or as a bar to or waiver of any right or remedy to a subsequent event.

		13.	Notice.  Notice shall be given to each party at the address indicated in the preamble hereto or at such other address as provided to the other party in writing.

		14.	Usury Savings Clause.  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 Holder hereof, with the same force and effect as though the Company had specifically designated such excess sums to be so applied to the reduction of such outstanding principal balance and the Holder hereof had agreed to accept such sums as a penalty-free payment of principal; provided, however, that the Holder of this Note may, at any time and from time to time, elect, by notice in writing to the Company, 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 Company does not intend or expect to pay nor does the Holder intend or expect to charge or collect any interest under this Note greater than the highest non-usurious rate of interest that may be charged under applicable law.

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		15.	Binding Effect.  This Note shall be binding upon the Company and the successors and assigns of the Company and shall inure to the benefit of Holder and the successors and assigns of Holder.

		16.	Severability.  In the event any one or more of the provisions of this Note shall for any reason be held to be invalid, illegal, or unenforceable, in whole or in part, in any respect, or in the event that any one or more of the provisions of this Note operates or would prospectively operate to invalidate this Note, then and in any of those events, only such provision or provisions shall be deemed null and void and shall not affect any other provision of this Note.  The remaining provisions of this Note shall remain operative and in full force and effect and shall in no way be affected, prejudiced, or disturbed thereby.

		17.	Participations.  Holder may from time to time sell or assign, in whole or in part, or grant participations in this Note and/or the obligations evidenced hereby.  The holder of any such sale, assignment or participation, if the applicable agreement between Holder and such holder so provides, shall be: (a) entitled to all of the rights, obligations and benefits of Holder (to the extent of such holder’s interest or participation); and (b) deemed to hold and may exercise the rights of setoff or banker’s lien with respect to any and all obligations of such holder to the Company (to the extent of such holder’s interest or participation), in each case as fully as though the Company was directly indebted to such holder.  Company may not assign any of its rights or obligations hereunder and any attempt to do so shall be null and void and of no force or effect whatsoever.

		18.	Amendments.  The provisions of this Note may be changed only by a written agreement executed by the Company and Holder.

		19.	Time.  Time is hereby declared of the essence with respect to each term and condition hereof.

		20.	Collection Costs.  Company shall pay any and all expenses and costs incurred or paid by Holder in the collection of amounts due hereunder, preservation and enforcement of the rights and remedies of Holder, and the duties and liabilities of Company hereunder, including, but not by way of limitation, attorneys' fees, court costs, witness fees, expert witness fees, collection costs, and costs and expenses paid by Holder in performing for Company’s account any obligation of Company under this instrument or under any other Loan Document.  The foregoing obligation shall be applicable regardless of whether an Event of Default has occurred or whether or not a lawsuit if filed.

		21.	Waiver.  Company hereby irrevocably waives presentment, demand or protest, or other notice of any kind, anything contained herein to the contrary notwithstanding.

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IN WITNESS WHEREOF, the Company has caused this Note to be executed on and as of the date set forth above.

 

	 	
FRESH HEALTHY VENDING INTERNATIONAL, INC.

	 
	 	
By: /s/ Nicholas Yates

	 
	 	
Name: Nicholas Yates

	 
	 	
Title: Chairman

	 

[  signature page to Promissory Note  ]

8Exhibit 4.4

 

SUBORDINATION AGREEMENT

This Subordination Agreement (this “Agreement”) is made and entered into as of October 27, 2105, by and among the secured lenders set forth on the signature page hereof (each, a “Creditor” and collectively, the “Creditors”) and the secured lender set forth on the signature page hereof (the “Priority Lender”), and acknowledged and consented to by Fresh Healthy Vending International, Inc., a Nevada corporation (“Debtor”).

WITNESSETH:

WHEREAS, the Creditors have made certain loans and other financial accommodations to Debtor which are or may be from time to time secured by assets and property of Debtor.

WHEREAS, pursuant to two (2) Secured Promissory Notes and a Security Agreement, by and between Debtor and the Priority Lender, each dated as of the date hereof (the “Transaction Documents”), the Priority Lender has made or will make certain loans and other financial accommodations to Debtor in the original principal amount of $500,000.

WHEREAS, in order to induce the Priority Lender to extend credit to Debtor pursuant to the Transaction Documents, the Creditors and the Priority Lender desire to agree on the relative priority of their respective security interests in and liens on the Collateral and Priority Collateral (defined below) and certain other rights, priorities and interests;

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereby agree as follows:

1.            Subordination; Priority of Liens.

(a)            The Creditors, and each of them, hereby jointly and severally subordinate to the Priority Lender any security interest or lien that the Creditors may have in any assets or personal property of Debtor, including, without limitation, the fifty (50) Debtor owned micro-markets and Debtor’s franchise royalties pursuant to the Debtor’s agreements with its franchisees, pursuant to the Security Agreement (the “Collateral").  Notwithstanding the respective dates of attachment or perfection of the security interest of the Priority Lender and the security interest of the Creditors, the security interest of the Priority Lender in the Collateral shall at all times be prior to the security interest of the Creditors.  No Creditor will exercise any remedy with respect to the Collateral until such time as all the Senior Debt is fully paid in cash.

(b)            All of Debtor's indebtedness and obligations to the Creditors, whether presently existing or arising in the future (the “Subordinated Debt”) is subordinated in right of payment to all obligations of Debtor to the Priority Lender under the Transaction Documents, together with all costs of collecting such obligations (including attorneys' fees), including, without limitation, all interest accruing after the commencement by or against Debtor of any bankruptcy, reorganization or similar proceeding (the “Senior Debt”).  The foregoing notwithstanding, each Creditor shall be entitled to receive each regularly scheduled payment of interest or principal that constitutes Subordinated Debt, provided that a default under the Senior Debt has not occurred and is not continuing and would not exist immediately after such payment.  Nothing in the foregoing paragraph shall prohibit any Creditor from converting all or any part of the Subordinated Debt into equity securities of Debtor.

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(c)            No Creditor shall contest the validity, perfection, priority or enforceability of any lien or security interest granted to the Priority Lender by Debtor, and each of the Creditors hereby agrees to cooperate in the defense of any action contesting the validity, perfection, priority or enforceability of such liens or security interest.

2.            Bankruptcy.

(a)            In the event of Debtor's insolvency, reorganization or any case or proceeding under any bankruptcy or insolvency law or laws relating to the relief of debtors, these provisions shall remain in full force and effect, and Priority Lender's claims against Debtor and the estate of Debtor shall be paid in full before any payment is made to any Creditor. For the avoidance of any doubt, Senior Debt includes, without limitation, the Priority Lender's claims against Debtor and the estate of Debtor arising from the granting of credit under Section 364 or the use of cash collateral under Section 363 of the United States Bankruptcy Code, and each Creditor agrees that it will raise no objection thereto.

(b)            Until the Senior Debt is fully paid in cash, and all of Priority Lender’s obligations owing to Debtor have been terminated, each Creditor irrevocably appoints Priority Lender as such Creditor's attorney-in-fact, and grants to Priority Lender a power of attorney with full power of substitution, in the name of Creditor or in the name of Priority Lender, for the use and benefit of Priority Lender, without notice to Creditor, to perform at Priority Lender's option the following acts in any bankruptcy, insolvency or similar proceeding involving Debtor: (i) to file the appropriate claim or claims in respect of the Subordinated Debt on behalf of Creditor if Creditor does not do so prior to 30 days before the expiration of the time to file claims in such proceeding and if Priority Lender elects, in its sole discretion, to file such claim or claims; and (ii) to accept or reject any plan of reorganization or arrangement on behalf of Creditor and to otherwise vote Creditor's claims in respect of any Subordinated Debt in any manner that Priority Lender deems appropriate for the enforcement of its rights hereunder. 

(c)            Nothing contained herein shall limit or restrict the independent right of any Creditor to initiate actions in any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment or debt, dissolution or liquidation or similar proceeding in its individual capacity and to appear or be heard on any matter before the bankruptcy or other applicable court in any such proceeding.  This Agreement shall be and remain enforceable notwithstanding any bankruptcy or other insolvency proceeding by or against Debtor.

3.            Sale of Collateral.  Until the Senior Debt is fully paid in cash, and all of Priority Lender's obligations owing to Debtor have been terminated, each Creditor agrees that it will not object to or oppose the sale of the Collateral, if Priority Lender has consented to such sale. If requested by Priority Lender, each Creditor shall affirmatively consent to such sale or disposition and shall take all necessary actions and execute such documents and instruments as Priority Lender may reasonably request in connection with and to facilitate such sale or disposition.

4.            Amendment of Subordinated Debt.  Each Creditor shall immediately affix a legend to the instruments evidencing the Subordinated Debt stating that the instruments are subject to the terms of this Agreement. No amendment of the documents evidencing or relating to the Subordinated Debt shall directly or indirectly modify the provisions of this Agreement in any manner which might terminate or impair the subordination of the Subordinated Debt or the subordination of the security interest or lien that such Creditor may have in any property of Debtor. By way of example, such instruments shall not be amended to (i) increase the rate of interest with respect to the Subordinated Debt, or (ii) accelerate the payment of the principal or interest or any other portion of the Subordinated Debt.

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5.            Enforcement.

(a)            This Agreement shall remain effective for so long as Debtor owes any amounts to Priority Lender.  If, at any time after payment in full of the Senior Debt, any payments of the Senior Debt must be disgorged by Priority Lender for any reason (including, without limitation, the bankruptcy of Debtor), this Agreement and the relative rights and priorities set forth herein shall be reinstated as to all such disgorged payments as though such payments had not been made and each Creditor shall immediately pay over to Priority Lender all payments received with respect to the Subordinated Debt to the extent that such payments would have been prohibited hereunder. At any time and from time to time, without notice to any Creditor, Priority Lender may take such actions with respect to the Senior Debt and the Collateral as Priority Lender, in its sole discretion, may deem appropriate, including, without limitation, terminating advances to Debtor, increasing the principal amount, extending the time of payment, increasing applicable interest rates, renewing, compromising or otherwise amending the terms of any documents affecting the Senior Debt and the Collateral, judicial foreclosure, nonjudicial foreclosure, exercise of a power of sale, and taking a deed, assignment or transfer in lieu of foreclosure as to any of the Collateral, and enforcing or failing to enforce any rights against Debtor or any other person. No such action or inaction shall impair or otherwise affect Priority Lender's rights hereunder. Each Creditor agrees not to assert against Priority Lender (a) any rights which a guarantor or surety could exercise; but nothing in this Agreement shall constitute Creditor a guarantor or surety; (b) the right, if any, to require Priority Lender to marshal or otherwise require Priority Lender to proceed to dispose of or foreclose upon any of the Collateral in any manner or order; and (c) any right of subrogation, contribution, reimbursement, or indemnity which it may have against Debtor arising directly or indirectly out of this Agreement. Creditor waives the benefits, if any, of California Civil Code Sections 2799, 2808, 2809, 2810, 2815, 2819, 2820, 2821, 2822, 2839, 2845, 2847, 2848, 2849, 2850, 2899 and 3433. Pursuant to Section 2856 of the California Civil Code, each Creditor waives all rights and defenses that Creditor may have because the Senior Debt may be secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure.

6.            Excluded Collateral Rights.

(a)            Subject only to any express provision of this Agreement that requires a Creditor to take or refrain from taking an action, each Creditor may exercise its good faith discretion with respect to exercising or refraining from exercising any of its rights and remedies or commencing the enforcement with respect to any property and interests in property of Debtor  other than the Collateral in which there is both a duly perfected lien or security interest and a duly perfected lien or security interest, whether or not perfected by the Creditors, or any of them (the “Excluded Collateral”) of any of the default remedies under any of applicable Creditor agreements (the “Creditor Documents”), the UCC or other applicable laws; or appropriating, setting off, or applying any part or all of such Excluded Collateral in the possession of, or coming into the possession of, a Creditor or its agent or bailee, to the obligations under the Creditor Documents.

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(b)            The Priority Lender and the Creditors agree that, so long as the proceeds for any sale, dispositions on collection of the Collateral are applied as required hereby, any UCC collection, sale or other disposition of any Excluded Collateral by any Creditor in accordance with the terms hereof shall be free and clear of any security interest, lien, claim or offset of the Priority Lender in such Excluded Collateral.  To the extent reasonably requested by any Creditor, the Priority Lender will cooperate in providing any necessary or appropriate releases to permit a collection, sale or other disposition of Excluded Collateral by a Creditor in accordance with the provisions hereof.

(c)            Each Creditor agrees that it will give the Priority Lender a written notice at least five (5) business days prior to commencing any enforcement action.  Each Creditor agrees to give to the Priority Lender (a) copies of any notice of the occurrence or existence of an event of default under any Creditor Document sent to Debtor simultaneously with the sending of such notice to Debtor, and (b) notice of any acceleration of any of any obligation thereunder, promptly after such acceleration, but the failure to give any such copy or notice shall not affect the validity of any such notice of event of default or such acceleration or create a cause of action against the party failing to give such copy or notice or create any claim or right on behalf of any third party.  The sending of any such copy of such notice of event of default shall not give the recipient the obligation to cure such event of default.

7.            Successors and Assigns.  This Agreement shall bind any successors or assignees of each Creditor and shall benefit any successors or assigns of Priority Lender. This Agreement is solely for the benefit of the Creditors and Priority Lender and not for the benefit of Debtor or any other party. Each Creditor further agrees that if Debtor is in the process of refinancing a portion of the Senior Debt with a new lender, and if Priority Lender makes a request of such Creditor, Creditor shall agree to enter into a new subordination agreement with the new lender on substantially the terms and conditions of this Agreement.

8.            Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

9.            Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without giving effect to conflicts of law principles. Each Creditor and Priority Lender submit to the exclusive jurisdiction of the state and federal courts located in Clark County, Nevada. EACH CREDITOR AND LENDER WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN.

10.            Entire Agreement.  This Agreement represents the entire agreement with respect to the subject matter hereof, and supersedes all prior negotiations, agreements and commitments. Each Creditor is not relying on any representations by Priority Lender or Debtor in entering into this Agreement, and each Creditor has kept and will continue to keep itself fully apprised of the financial and other condition of Debtor. This Agreement may be amended only by written instrument signed by each Creditor and Priority Lender.

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11.            Expenses.  In the event of any legal action to enforce the rights of a party under this Agreement, the party prevailing in such action shall be entitled, in addition to such other relief as may be granted, all reasonable costs and expenses, including reasonable attorneys' fees, incurred in such action.

12.            Representations and Warranties of the Creditors.  Each Creditor hereby represents and warrants to the Priority Lender that as of the date hereof: (a) Creditor is duly formed and validly existing under the laws of its jurisdiction of organization; (b) Creditor has the power and authority to enter into, execute, deliver and carry out the terms of this Agreement, all of which have been duly authorized by all proper and necessary action on the part of Creditor; (c) the execution of this Agreement by Creditor will not violate or conflict with any of its organizational documents, any material agreement binding upon Creditor or any law, regulation or order or require any consent or approval which has not been obtained; and (d) this Agreement is the legal, valid and binding obligation of Creditor, enforceable against Creditor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by equitable principles.

13.            Execution in Counterparts.  This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement.  This Agreement shall become effective upon the execution and delivery of a counterpart hereof by each of the parties hereto.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above.

	 	
CREDITORS:

	 
	 	 	 
	 	
CORONADO DEVELOPMENT LLC

	 
	 	 	 
	 	
By: /s/ Mark Trotter

	 
	 	
Name:  Mark Trotter

	 
	 	
Title:    Member

	 
	 	 	 
	 	
ROTH HOLDINGS LLC

	 
	 	 	 
	 	
By: /s/ Kristiann App

	 
	 	
Name:  Kristiann App

	 
	 	
Title:    Manager

	 
	 	 	 
	 	
KAY STRATEGIES INC.

	 
	 	 	 
	 	
By: /s/ Robert Wheat

	 
	 	
Name: Robert Wheat

	 
	 	
Title: President 

	 
	 	 	 
	 	 	 
	 	
PRIORITY LENDER:

	 
	 	 	 
	 	
SOCIALLY RESPONSIBLE BRANDS INC, a Nevada corporation

	 
	 	 	 
	 	
By: /s/ Nicholas Yates

	 
	 	
Name:  Nicholas

	 
	 	
Title: Shareholder  

	 

  

Acknowledged and Agreed:

DEBTOR:

FRESH HEALTHY VENDING INTERNATIONAL, INC.,

a Nevada corporation

By: /s/ Nicholas Yates                                        

Name:  Nicholas Yates

Title: Chairman

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