Amendment to Subordination Agreement (Debt and Security Interest)

Exhibit 10.4

Amendment to

Subordination Agreement

(Debt and Security Interest)

Date:September 30, 2016

This Amendment to Subordination Agreement (this “Amendment”) is executed, jointly and severally, by the above-named Creditors (collectively referred to herein as “Creditor”) and HORIZON TECHNOLOGY FINANCE CORPORATION (“Horizon”), whose address is 312 Farmington Avenue, Farmington, CT 06032, with respect to the above-named Borrower (collectively referred to herein as “Borrower” or “the Borrower”).  Creditor and Horizon are parties to a certain Subordination Agreement, dated September 13, 2106 (as amended, restated, supplemented, or otherwise modified from time to time, the “Subordination Agreement”).  Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Subordination Agreement.

The parties hereto agree to amend the Subordination Agreement as follows, effective as of the date hereof, unless otherwise indicated below, subject to the terms and conditions set forth below.

1.  Payments in the Event of a Sale or Liquidation of Borrower’s Assets.   That portion of Section 4 of the Subordination Agreement which currently reads:

“Horizon agrees that, in the event of a sale or liquidation of Borrower's assets, to the extent loaned to Borrower by Creditor and used by Borrower as permitted under the terms of the Eleventh Amendment of Venture Loan and Security Agreement, dated on or about the date hereof, Creditor shall be permitted to receive the following amounts in repayment of the Subordinated Debt prior to Horizon receiving any repayment on the Senior Debt:

(a)up to $500,000 for Borrower’s Payroll Expenses and Non-Budgeted Non-Payroll Expenses incurred and paid during the period of September 1 through September 15, 2016 (the “September 1-15 Combined Non-Budgeted Expenses”);

(b)up to the sum of the following (collectively, the “September 16-30 Combined Non-Budgeted Expenses”): (i) $500,000 for Borrower’s Payroll Expenses incurred and paid during the period of September 16 through September 30, 2016 (the “September 16-30 Payroll Expenses”) and Borrower’s Non-Budgeted Non-Payroll Expenses incurred and paid during the period of September 16 through September 30, 2016, plus (ii) the difference between $500,000 and the amount of September 1-15 Combined Non-Budgeted Expenses actually incurred and paid; and

Exhibit 10.4

(c)up to $500,000 for Budgeted Non-Payroll Expenses paid during the period of September 16 through September 30, 2016. 

Notwithstanding the foregoing, upon the Horizon transmitting to Creditor and copying to Borrower, by e-mail which shall be deemed received by Creditor and Borrower when transmitted by Horizon, a written notice of Horizon's termination of its payment obligations hereunder, which Horizon may send in its sole and absolute discretion, Horizon shall only be obligated to pay (i) New Lender Indebtedness properly incurred pursuant hereto prior to Creditor's receipt of such notice, and (ii) any September 16-30 Payroll Expenses incurred during the three Business Days following the giving of such notice.”

is hereby amended to read:

“Horizon agrees that, in the event of a sale or liquidation of Borrower's assets, to the extent loaned to Borrower by Creditor and used by Borrower as permitted under the terms of the Eleventh Amendment of Venture Loan and Security Agreement, dated on or about the date hereof, Creditor shall be permitted to receive the following amounts in repayment of the Subordinated Debt prior to Horizon receiving any repayment on the Senior Debt:

2.  General. The parties hereto hereby ratify and confirm the continuing validity, enforceability and effectiveness of the Subordination Agreement, and all terms and provisions thereof, as amended herein. Without limiting the generality of the foregoing, the provisions of Section 14 (titled “Governing Law; Jurisdiction; Venue; Arbitration”) and Section 15 (titled “Mutual Waiver of Jury Trial”) shall apply equally to this Amendment, and the same are incorporated herein by this reference.

[Signatures on Next Page]

Horizon Technology Finance CorporationAmendment to Subordination Agreement

Creditor:

Creditor:

Creditor:

Creditor:

Accepted:

Horizon:

Horizon Technology Finance CorporationAmendment to Subordination Agreement

CONSENT AND AGREEMENT OF BORROWER

The undersigned Borrower hereby approves of, agrees to and consents to all of the terms and provisions of the foregoing Amendment to Subordination Agreement and agrees to be bound thereby, and further agrees that any default or event of default by the Borrower under any present or future instrument or agreement between the Borrower and Creditor shall constitute an immediate default and event of default under all present and future instruments and agreements between the Borrower and Horizon.  The Borrower further agrees that, at any time and from time to time, the foregoing Amendment to Subordination Agreement may be altered, modified or amended by Horizon and Creditor without notice to or the consent of the Borrower.

Borrower: