FIRST AMENDMENT TO SUBORDINATE LOAN AND SECURITY AGREEMENT

Execution Version

 

 

FIRST AMENDMENT TO

SUBORDINATE LOAN AND SECURITY AGREEMENT

This FIRST AMENDMENT TO SUBORDINATE LOAN AND SECURITY AGREEMENT, dated as of October 28, 2022 (this “Amendment”), is entered into by and between S&W SEED COMPANY, a Nevada corporation (the “Borrower”), and MFP PARTNERS, L.P., a Delaware limited partnership the “Lender”).

WHEREAS, the Borrower and the Lender are parties to that certain Subordinate Loan and Security Agreement, dated as of September 22, 2022 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Loan Agreement”); and

WHEREAS, pursuant to Section 12.7 of the Loan Agreement, the parties hereto have agreed to amend certain terms of the Loan Agreement as hereinafter provided in Section 2 to, among other items, establish and give effect to the First Amendment Available Amount and the incurrence of Term Advances equal to the First Amendment Available Amount, subject to the satisfaction of the conditions precedent to effectiveness set forth in Section 3 hereof.

NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:

Section 1. Definitions. Except as otherwise defined in this Amendment, terms defined in the Loan Agreement are used herein as defined therein.

Section 2. Amendment. Subject to the satisfaction of the conditions precedent set forth in Section 3 of this Amendment, but effective as of the date hereof:

(a) the Loan Agreement is hereby amended as set forth in Annex A hereto (stricken text shall be deleted from the Loan Agreement (indicated textually in the same manner as the following example: stricken text) and double-underlined text shall be added to the Loan Agreement (indicated textually in the same manner as the following examples: double-underlined text or double-underlined text)).

(b) Annex B hereto is hereby appended to the Loan Agreement as Exhibit B-3 thereof.

Section 3. Conditions Precedent. The amendments set forth in Section 2 shall become effective upon receipt by the Lender of counterparts of this Amendment executed by the Borrower and Lender (such date of receipt, the “First Amendment Effective Date”).

Section 4. Miscellaneous.

(a) References in the Loan Agreement (including references to the Loan Agreement as amended hereby) to “this Agreement” (and indirect references such as “hereunder”, “hereby”, “herein” and “hereof”) shall be deemed to be references to the Loan Agreement as amended by this Amendment.

(b) This Amendment shall constitute a Loan Document for purposes of the Loan Agreement and the other Loan Documents, and except as specifically modified by this Amendment, the Loan Agreement, and the other Loan Documents shall remain unchanged and shall remain in full force and effect and are hereby ratified and confirmed.

(c) The execution, delivery and performance of this Amendment shall not constitute a forbearance, waiver, consent or amendment of any other provision of, or operate as a forbearance or waiver of any right, power or remedy of the Lender under the Loan Agreement or any of the other Loan Documents, all of which are ratified and reaffirmed in all respects and shall continue in full force and effect. This Amendment does not constitute a novation of rights, obligations and liabilities of the respective parties existing under the Loan Documents.

1

---

 

(d) This Amendment shall be governed by, and construed in accordance with, the law of the State of New York.

(e) This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Amendment in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Amendment. Each party hereto agrees and acknowledges that (i) the transaction consisting of this Amendment may be conducted by electronic means, (ii) it is such party’s intent that, if such party signs this Amendment using an electronic signature, it is signing, adopting and accepting this Amendment and that signing this Amendment using an electronic signature is the legal equivalent of having placed its handwritten signature on this Amendment on paper and (iii) it is being provided with an electronic or paper copy of this Amendment in a usable format.

(f) This Amendment, the Loan Agreement and the other Loan Documents represent the final agreement between the parties hereto and thereto and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties.

[Signature Pages Follow]

 

 

2.

---

Execution Version

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to the Loan Agreement to be duly executed and delivered as of the day and year first above written.

BORROWER:

S&W SEED COMPANY

By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Financial Officer

 

[Signature Page to First Amendment to Subordinate Loan and Security Agreement]

---

 

LENDER:
 

MFP PARTNERS, L.P.

By: MFP Investors LLC, its General Partner

By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Portfolio Manager, Vice President

 

[Signature Page to First Amendment to Subordinate Loan and Security Agreement]

---

Execution Version

ANNEX A

Amended Loan Agreement

[see attached]

 

[Signature Page to First Amendment to Subordinate Loan and Security Agreement]

---

Execution VersionAs amended by the First Amendment, dated as of October 28, 2022.

THE OBLIGATIONS EVIDENCED BY THIS SUBORDINATE LOAN AND SECURITY AGREEMENT ARE SUBORDINATED TO THE PRIOR PAYMENT IN FULL OF THE “SENIOR DEBT” AND THE TERMINATION OF THE “SENIOR COMMITMENT” (AS SUCH TERMS ARE DEFINED IN THE SUBORDINATION AGREEMENT HEREINAFTER REFERRED TO) PURSUANT TO, AND TO THE EXTENT PROVIDED IN, THE SUBORDINATION AGREEMENT DATED AS OF SEPTEMBER 22, 2022, BY AND AMONG CIBC BANK USA, AS ADMINISTRATIVE AGENT FOR THE SENIOR CREDITOR, THE SENIOR LENDER PARTY THERETO, AND MFP PARTNERS, L.P., A DELAWARE LIMITED PARTNERSHIP (THE “CIBC SUBORDINATION AGREEMENT”).

SUBORDINATE LOAN AND SECURITY AGREEMENT

THIS SUBORDINATE LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of September 22, 2022 (the “Effective Date”) between MFP PARTNERS, L.P., a Delaware limited partnership (“Lender”), and S&W SEED COMPANY, a Nevada corporation (“Borrower”), provides the terms on which Lender shall lend to Borrower and Borrower shall repay Lender. The parties agree as follows:

Accounting terms not defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP. Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section 13. All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein.

 

---

2

---

i. On the Effective Date, Borrower shall issue the Initial Warrant to Lender, to purchase 500,000 shares of the Borrower’s common stock (subject to adjustment as set forth in the Initial Warrant).

ii. On the First Amendment Effective Date, Borrower shall issue the First Amendment Warrant to Lender, to purchase 166,700 shares of the Borrower’s common stock.

iii. ii. Within five business days of each Bank Draw, the Borrower shall issue Lender an Additional Warrant to purchase shares of the Borrower’s common stock, for such number of shares of the Borrower’s common stock as is equal to (A) the product of: (x) the amount of such Bank Draw multiplied by (y) 40%, divided by (B) $1.60. Upon the issuance of each Additional Warrant, the Initial Warrant shall become exercisable for a lesser number of shares as provided in the Initial Warrant.

3

---

with proof reasonably satisfactory to Lender indicating that Borrower has made such withholding payment; provided, however, that Borrower need not make any withholding payment if the amount or validity of such withholding payment is contested in good faith by appropriate and timely proceedings and as to which payment in full is bonded against by Borrower. The agreements and obligations of Borrower contained in this Section 2.6 shall survive the termination of this Agreement.

If this Agreement is terminated, ▇▇▇▇▇▇’s Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity obligations, but, for the avoidance of doubt, including indemnity obligations owing from Borrower on the date of such termination pursuant to Section 12.3) are repaid in full in cash. Upon payment in full in cash of the Obligations and at such time as ▇▇▇▇▇▇’s obligation to make Credit Extensions has terminated, Lender shall, at Borrower’s sole cost and expense, release its Liens in the Collateral and all rights therein shall revert to Borrower.

4

---

Borrower represents and warrants as follows:

The execution, delivery and performance by Borrower of the Loan Documents and Specified Letter of Credit to which it is a party have been duly authorized, and do not (i) conflict with any of Borrower’s organizational documents, (ii) contravene, conflict with, constitute a default under or violate any material Requirement of Law, (iii) contravene, conflict or violate any applicable order, writ, judgment, injunction, decree, determination or award of any Governmental Authority by which Borrower or any of its Subsidiaries or any of their property or assets may be bound or affected, (iv) require any action by, filing, registration, or qualification with, or Governmental Approval from, any Governmental Authority (except such Governmental Approvals which have already been obtained and are in full force and effect or (v) conflict with, contravene, constitute a default or breach under, or result in or permit the termination or acceleration of, any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which it is a party or by which it is bound in which the default could reasonably be expected to have a Material Adverse Change.

5

---

contributions owed by Borrower except (a) to the extent such taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor, or (b) if such taxes, assessments, deposits and contributions, individually or in the aggregate, would not reasonably be expected to cause a Material Adverse Change.

To the extent Borrower defers payment of any contested taxes, Borrower shall (i) notify Lender in writing of the commencement of, and any material development in, the proceedings, and (ii) post bonds or take any other steps required to prevent the governmental authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is other than a “Permitted Lien.” Borrower is unaware of any claims or adjustments proposed for any of ▇▇▇▇▇▇▇▇’s prior tax years which could result in additional taxes becoming due and payable by Borrower, which would reasonably be expected to have a Material Adverse Change.

Borrower shall do all of the following:

6

---

appropriate certificates attesting to such payments, and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms.

Borrower shall not do any of the following without ▇▇▇▇▇▇’s prior written consent, which consent may be withheld in ▇▇▇▇▇▇’s sole and absolute discretion:

7

---

only as to discreet geographical areas outside of the United States and (g) any other Transfers permitted under the CIBC Loan Documents.

Any one of the following shall constitute an event of default (an “Event of Default”) under this Agreement:

8

---

and payable (which three (3) Business Day cure period shall not apply to payments due on the Maturity Date). During the cure period, the failure to make or pay any payment specified under clause (b) hereunder is not an Event of Default (but no Credit Extension will be made during the cure period);

9

---

in clause (a) above, and such decision or such revocation, rescission, suspension, modification or non-renewal (i) cause, or could reasonably be expected to cause, a Material Adverse Change, or (ii) adversely affects the legal qualifications of Borrower or any of its Subsidiaries to hold such Governmental Approval in any applicable jurisdiction and such revocation, rescission, suspension, modification or non-renewal could reasonably be expected to affect the status of or legal qualifications of Borrower or any of its Subsidiaries to hold any Governmental Approval in any other jurisdiction.

10

---

and powers, coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed and Lender’s obligation to provide Credit Extensions terminates.

All notices, consents, requests, approvals, demands, or other communication by any party to this Agreement or any other Loan Document must be in writing and shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the U.S. mail, first class, registered or certified mail return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by electronic mail; (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address or email address indicated below. Lender or Borrower may change its mailing or electronic mail address by giving the other party written notice thereof in accordance with the terms of this Section 10.

11

---

If to Borrower: S&W Seed Company
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Chief Financial Officer
Email: ▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇

If to Lender: MFP Partners, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, General Counsel and VP
Email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇

This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York. The parties hereby submit to the non-exclusive jurisdiction of the state and federal courts located in New York, New York. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

This Section 11 shall survive the termination of this Agreement.

12

---

This Section 12.3 shall survive until all statutes of limitation with respect to the Claims, losses, and expenses for which indemnity is given shall have run.

Lender Entities may use anonymous forms of confidential information for aggregate datasets, for analyses or reporting, and for any other uses not expressly prohibited in writing by Borrower. The provisions of the immediately preceding sentence shall survive termination of this Agreement.

13

---

“Account” is any “account” as defined in the Code with such additions to such term as may hereafter be made, and includes, without limitation, all accounts receivable and other sums owing to Borrower.

“Account Debtor” is any “account debtor” as defined in the Code with such additions to such term as may hereafter be made.

“Additional Warrant” is a warrant delivered pursuant to this Agreement, evidenced by an instrument substantially the form of Exhibit B-2, as amended, replaced or otherwise modified pursuant to the terms thereof.

“Affiliate” is, with respect to any Person, each other Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person’s managers and members.

“Agreement” is defined in the preamble hereof.

“Available Amount” is NineTwelve Million Dollars ($9,000,00012,000,000).

“Bank Draw” is any draw down by CIBC under the terms of the Specified Letter of Credit.

“Borrower” is defined in the preamble hereof.

14

---

“Borrower’s Books” are all Borrower’s books and records including ledgers, federal and state tax returns, records regarding ▇▇▇▇▇▇▇▇’s assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information.

“Borrowing Resolutions” are, with respect to any Person, those resolutions substantially in the form attached hereto as Exhibit A.

“Business Day” is any day that is not a Saturday, Sunday or a day on which Lender is closed.

“Cash Equivalents” means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after its creation and having the highest rating from either Standard & Poor’s Ratings Group or ▇▇▇▇▇’▇ Investors Service, Inc.; and (c) money market funds at least ninety-five percent (95%) of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) and (b) of this definition.

“Change of Control” means any event, transaction, or occurrence as a result of which any “person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Exchange Act), other than MFP Partners, L.P. or a trustee or other fiduciary holding securities under an employee benefit plan of Borrower, is or becomes a beneficial owner (within the meaning Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of Borrower, representing more than forty percent (40%) or more of the combined voting power of Borrower’s then outstanding securities; provided that if Borrower and CIBC amend the definition of Change of Control in the CIBC Loan Documents with the purpose or effect of waiving a Change of Control with respect to a particular investor, event, transaction, or occurrence, upon the written request of Lender, the definition of Change of Control in this Agreement shall be waived or amended in a similar manner.

“CIBC” is CIBC Bank USA.

“CIBC Loan Documents” are that certain Loan and Security Agreement, dated as of December 26, 2019, among the Borrower and certain of its Subsidiaries, as borrowers, the other loan parties party thereto, the various financial institutions party thereto as lenders, and CIBC, as administrative agent for the lenders, together with all other documents, instruments and other agreements entered into in connection therewith, all as amended, restated, amended and restated, supplemented or otherwise modified from time to time.

“Claims” is defined in Section 12.3.

“Code” is the New York Uniform Commercial Code.

“Collateral” is all of ▇▇▇▇▇▇▇▇’s right, title and interest in and to the Collateral (as defined in the CIBC Loan Documents).

“Conforming Changes” is defined in Section 2.3.

“Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation, in each case, directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation” does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under any guarantee or other support arrangement.

15

---

“Copyrights” are any and all copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret.

“Credit Extension” is any Term Advance or any other extension of credit by ▇▇▇▇▇▇ for Borrower’s benefit.

“Daily Simple SOFR” is the Daily Secured Overnight Financing Rate for any day (i) if such day is a U.S. Government Securities Business Day, published on such day or (ii) if such day is not a U.S. Government Securities Business Day, published on the U.S. Government Securities Business Day immediately preceding such day, in each case, as published by the Federal Reserve Bank of New York (or successor administrator) and displayed by Bloomberg LP (or any successor thereto, or replacement thereof, as approved by ▇▇▇▇▇▇) and as determined by ▇▇▇▇▇▇.

“Default Rate” is defined in Section 2.3(b).

“Determination Date” is, with respect to a Term SOFR-based Advance, the day such Term SOFR-based Advance is made or the last day of the Interest Period of a Term SOFR-based Advance, as applicable; provided that if any Determination Date is not a U.S. Government Securities Business Day, the rate applicable on such Determination Date shall be the rate for the immediately preceding U.S. Government Securities Business Day.

“Disclosure Letter” is that certain Disclosure Letter of even date herewith, delivered to Lender by Borrower on the date hereof.

“Dollars,” “dollars” or use of the sign “$” are only lawful money of the United States and not any other currency, regardless of whether that currency uses the “$” sign to denote its currency or may be readily converted into lawful money of the United States.

“Effective Date” is defined in the preamble hereof.

“ERISA” is the Employee Retirement Income Security Act of 1974, and its regulations.

“Event of Default” is defined in Section 8.

“Exchange Act” is the Securities Exchange Act of 1934, as amended.

“First Amendment” means that certain First Amendment to Subordinate Loan and Security Agreement, dated as of the First Amendment Effective Date, by and between the Borrower and the Lender.

“First Amendment Effective Date” is October 28, 2022.

“First Amendment Warrant” is a warrant delivered pursuant to this Agreement, evidenced by an instrument substantially the form of Exhibit B-3, as amended, replaced or otherwise modified pursuant to the terms thereof.

“Funding Date” is any date on which a Credit Extension is made to or for the account of Borrower.

“GAAP” is generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other Person as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination; provided, that with respect to the accounting for leases as either operating leases or capital leases and the impact of such accounting in accordance with FASB ASC 840 on the definitions and covenants herein, GAAP as in effect on December 31, 2018 shall be applied.

“General Intangibles” is all “general intangibles” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation, all Intellectual Property, claims, income and other tax refunds, security and other deposits, payment intangibles, contract rights, options to purchase

16

---

or sell real or personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and business interruption insurance), payments of insurance and rights to payment of any kind.

“Governmental Approval” is any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.

“Governmental Authority” is any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization.

“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations, and (d) Contingent Obligations.

“Indemnified Person” is defined in Section 12.3.

“Index” is defined in the definition of “Term SOFR Rate.”

“Initial Warrant” is a warrant delivered pursuant to this Agreement, evidenced by an instrument substantially the form of Exhibit B-1, as amended, replaced or otherwise modified pursuant to the terms thereof.

“Insolvency Proceeding” is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.

“Intellectual Property” is, with respect to any Person, means all of such Person’s right, title, and interest in and to the following:

(a) its Copyrights, Trademarks and Patents;

(b) any and all trade secrets and trade secret rights, including, without limitation, any rights to unpatented inventions, know-how, operating manuals;

(c) any and all source code;

(d) any and all design rights which may be available to such Person;

(e) any and all claims for damages by way of past, present and future infringement of any of the foregoing, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the Intellectual Property rights identified above; and

(f) all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents.

“Interest Period” is, for each Term SOFR-based Advance, a period of three (3) months; provided that Borrower may at any time elect any other Interest Period then available in the SOFR market (e.g., a period of one (1) month) by written notice to Lender, which election shall take effect commencing with the immediately following Interest Period; provided, further, that the last day of each Interest Period shall be determined in accordance with the practices of the SOFR market as from time to time in effect. Any Term SOFR-based Advances shall automatically continue for the same Interest Period upon the last day of the applicable Interest Period, unless the Borrower otherwise elects in accordance with the first proviso of the preceding sentence.

17

---

“Inventory” is all “inventory” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without limitation such inventory as is temporarily out of Borrower’s custody or possession or in transit and including any returned goods and any documents of title representing any of the above.

“Investment” is any beneficial ownership interest in any Person (including stock, partnership interest or other securities), and any loan, advance or capital contribution to any Person.

“Key Person” is ▇▇▇▇▇▇▇▇’s Chief Financial Officer, who is ▇▇▇▇▇ ▇▇▇▇▇▇ as of the Effective Date.

“Lender” is defined in the preamble hereof.

“Lender Entities” is defined in Section 12.9.

“Lender Expenses” are all audit fees and expenses, costs, and expenses (including reasonable attorneys’ fees and expenses) for preparing, amending, negotiating, administering, defending and enforcing the Loan Documents and Specified Letter of Credit (including, without limitation, those incurred in connection with appeals or Insolvency Proceedings) or otherwise incurred with respect to Borrower.

“Lien” is a claim, mortgage, deed of trust, ▇▇▇▇, charge, pledge, security interest or other encumbrance of any kind, whether voluntarily incurred or arising by operation of law or otherwise against any property.

“Loan Documents” are, collectively, this Agreement, any schedules, exhibits, certificates, notices, and any other documents related to this Agreement, the Specified Letter of Credit, any subordination agreement, including the Subordination Agreement, any note, or notes or guaranties executed by ▇▇▇▇▇▇▇▇, and any other present or future agreement by Borrower with or for the benefit of Lender in connection with this Agreement, all as amended, amended and restated, supplemented or otherwise modified.

“Material Adverse Change” is (a) a material impairment in the perfection or priority of ▇▇▇▇▇▇’s Lien in the Collateral or in the value of such Collateral; (b) a material adverse change in the business, operations, or financial condition of Borrower; or (c) a material impairment of the prospect of repayment of any portion of the Obligations.

“Maturity Date” is November 30, 2025.

“Obligations” are Borrower’s obligations to pay when due any debts, principal, interest, fees, Lender Expenses, and other amounts Borrower owes Lender now or later, whether under this Agreement, the other Loan Documents, or otherwise, including, without limitation, all obligations relating to letters of credit (including reimbursement obligations for drawn and undrawn letters of credit), cash management services, and foreign exchange contracts, if any, and including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Lender, and to perform Borrower’s duties under the Loan Documents.

“Operating Documents” are, for any Person, such Person’s formation documents, as certified by the Secretary of State (or equivalent agency) of such Person’s jurisdiction of organization on a date that is no earlier than thirty (30) days prior to the Effective Date, and, (a) if such Person is a corporation, its bylaws in current form, (b) if such Person is a limited liability company, its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or similar agreement), each of the foregoing with all current amendments or modifications thereto.

“Participant” is defined in Section 12.2.

“Patents” are all patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.

18

---

“Payment Date” is (i) March 31, June 30, September 30 and December 31 of each year (provided, that if such date is not a Business Day, then on the immediately preceding Business Day), and (ii) the Maturity Date.

“Permitted Indebtedness” is:

(a) ▇▇▇▇▇▇▇▇’s Indebtedness to Lender under this Agreement and the other Loan Documents;

(b) Indebtedness existing on the Effective Date and disclosed to ▇▇▇▇▇▇ in writing;

(c) Indebtedness owing to CIBC (and any co-lender under the CIBC Loan Documents) pursuant to the CIBC Loan Documents;

(d) All Indebtedness permitted under the CIBC Loan Documents; and

(e) Subordinated Debt.

“Permitted Investments” are:

(a) Investments (including, without limitation, Subsidiaries) existing on the Effective Date and disclosed to Lender in writing; and

(b) All Investments permitted under the CIBC Loan Documents.

“Permitted Liens” are:

(a) Liens existing on the Effective Date and disclosed to Lender in writing or arising under this Agreement and the other Loan Documents; and

(b) All Liens permitted under the CIBC Loan Documents.

“Person” is any individual, sole proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.

“PIK Interest” is defined in Section 2.3(a).

“Prime-based Advance” is a Term Advance which bears interest at the Prime-based Rate.

“Prime-based Rate” is, for any Interest Period for a Prime Rate-based Advanced, a rate per annum equal to the sum of (1) the Prime Rate for such Interest Period, plus (2) 6.25%.

“Prime Rate” is the greater of (i) highest rate published from time to time by the Wall Street Journal as the Prime Rate and (ii) 1.25%; provided, that in the event the Wall Street Journal ceases to publish the Prime Rate, the Lender and Borrower shall mutually agree on an alternative Prime Rate, which Prime Rate shall be the base, reference or other rate then recognized and utilized by the United States commercial loan market for general commercial loan reference purposes.

“Registered Organization” is any “registered organization” as defined in the Code with such additions to such term as may hereafter be made.

“Requirement of Law” is as to any Person, the organizational or governing documents of such Person, and any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

19

---

“Responsible Officer” is any of the Chief Executive Officer or Chief Financial Officer of Borrower.

“SEC” is the Securities and Exchange Commission, any successor thereto, and any analogous Governmental Authority.

“Specified Letter of Credit” is that certain Letter of Credit No. NUSCGS044349 issued by JPMorgan Chase Bank, N.A. for the account of the Lender, in the original amount of $9,000,000, as amended on the First Amendment Effective Date to increase such amount to $12,000,000.

“Specified Letter of Credit Maturity Date” is January 23, 2023.

“Subordination Agreement” is defined in Section 3.1(d).

“Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of ▇▇▇▇▇▇▇▇’s now or hereafter indebtedness to Lender (pursuant to a subordination, intercreditor, or other similar agreement in form and substance satisfactory to Lender entered into between Lender and the other creditor), on terms acceptable to Lender.

“Subsidiary” is, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless the context otherwise requires, each reference to a Subsidiary herein shall be a reference to a Subsidiary of Borrower.

“Term Advance” is defined in Section 2.2(ab).

“Term SOFR Rate” is, for any Interest Period for a Term SOFR-based Advance, the greater of (i) the Term Secured Overnight Financing Rate for such Interest Period, as administrated by CME Group Benchmark Administration Limited (or successor administrator) and displayed by Bloomberg LP (or any successor thereto, or replacement thereof, as reasonably selected by Bank) and as determined by Bank on each Determination Date (the “Index”) and (ii) 1.25%.

“Term SOFR-based Advance” is a Term Advance which bears interest at the Term SOFR-based Rate.

“Term SOFR-based Rate” is, for any Interest Period, a rate per annum equal to the sum of (1) the Term SOFR Rate for such Interest Period, plus (2) 9.25%.

“Trademarks” are any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.

“Transfer” is defined in Section 7.1.

“U.S. Government Securities Business Day” is any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.

[Signature page follows.]

 

20

---

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the Effective Date.

BORROWER:

S&W SEED COMPANY

By
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Financial Officer

LENDER:

MFP PARTNERS, L.P.

By: MFP Investors LLC, its General Partner

By:
Name:
Title:

 

21

---

EXHIBIT A

CORPORATE BORROWING CERTIFICATE

Borrower: S&W SEED COMPANY	Date: [•], 2022
LENDER: MFP PARTNERS L.P.

 

I hereby certify as follows, as of the date set forth above:

1. I am the Secretary, Assistant Secretary or other officer of ▇▇▇▇▇▇▇▇. My title is as set forth below.

2. ▇▇▇▇▇▇▇▇’s exact legal name is set forth above. Borrower is a corporation existing under the laws of the State of Nevada.

3. The following resolutions were duly and validly adopted by ▇▇▇▇▇▇▇▇’s Board of Directors at a duly held meeting of such directors (or pursuant to a unanimous written consent or other authorized corporate action). Such resolutions are in full force and effect as of the date hereof and have not been in any way modified, repealed, rescinded, amended or revoked, and MFP Partners, L.P. (“Lender”) may rely on them until ▇▇▇▇▇▇ receives written notice of revocation from Borrower.

Resolved, that any one of the following officers or employees of ▇▇▇▇▇▇▇▇, whose names, titles and signatures are below, may act on behalf of ▇▇▇▇▇▇▇▇:

Name	Title	Signature	Authorized to Add or Remove  Signatories
			□
			□
			□
			□
			□
			□

 

Resolved Further, that any one of the persons designated above with a checked box beside his or her name may, from time to time, add or remove any individuals to and from the above list of persons authorized to act on behalf of Borrower.

Resolved Further, that such individuals may, on behalf of ▇▇▇▇▇▇▇▇:

Borrow Money. Borrow money from Lender.

Execute Loan Documents. Execute any loan documents Lender requires.

Grant Security. ▇▇▇▇▇ ▇▇▇▇▇▇ a security interest in any of Borrower’s assets.

Negotiate Items. Negotiate or discount all drafts, trade acceptances, promissory notes, or other indebtedness in which Borrower has an interest and receive cash or otherwise use the proceeds.

Further Acts. Designate other individuals to request advances, pay fees and costs and execute other documents or agreements (including documents or agreement that waive Borrower’s right to a jury trial) they believe to be necessary to effect these resolutions.

Resolved Further, that all acts authorized by the above resolutions and any prior acts relating thereto are ratified.

 

22

---

5. The persons listed above are Borrower’s officers or employees with their titles and signatures shown next to their names.

*** If the Secretary, Assistant Secretary or other certifying officer executing above is designated by the resolutions set forth in paragraph 4 as one of the authorized signing officers, this Certificate must also be signed by a second authorized officer or director of Borrower.

I, the __________________________ of Borrower, hereby certify as to paragraphs 1 through 5 above, as of the date set forth above.

By:
Name:
Title:

 

23

---

ANNEX B

First Amendment Warrant

[see attached]

 

24

---

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (II) PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AS EVIDENCED BY A LEGAL OPINION OF COUNSEL SELECTED BY THE HOLDER TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY OR (III) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE WARRANT

S&W SEED COMPANY

Warrant Shares: 166,700	Issuance Date: October [__], 2022

 

This Common Stock Purchase Warrant (this “Warrant”) certifies that, for value received, the receipt and sufficiency of which is hereby acknowledged, MFP Partners, L.P. or its assigns (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the Issuance Date and on or prior to the close of business on the five-year anniversary of the Issuance Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from S&W Seed Company, a Nevada corporation (the “Company”), up to 166,700 fully paid, nonassessable shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock of the Company (“Common Stock”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b) of this Warrant.

1.

---

(A) = the arithmetic average of the VWAP of the Common Stock for the five consecutive Trading Days ending on the date immediately preceding the date of the applicable Notice of Exercise;

(B) = the Exercise Price of this Warrant then in effect at the time of exercise, as adjusted hereunder; and

(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

For purposes of Rule 144(d) promulgated under the Securities Act of 1933, as amended (the “Securities Act”), as in effect on the date hereof, it is intended that the Warrant Shares issued in a cashless exercise shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the Issuance Date. Notwithstanding anything herein to the contrary, on the

2.

---

Termination Date, any unexercised portion of this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:00 p.m. (New York City time)), (b) if the Common Stock is then listed or quoted on OTCQB or OTCQX, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX, as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company

3.

---

4.

---

5.

---

compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (C) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered via facsimile or electronic mail to the Holder at its last address as it shall appear upon the Warrant Register (as defined below), at least 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, or redemption 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. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

6.

---

Section 6. Miscellaneous.

7.

---

Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

8.

---

9.

---

**********************

(Signature Page Follows)

 

10.

---

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

S&W SEED COMPANY

By:
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title; Chief Financial Officer

 

 

11.

---

NOTICE OF EXERCISE

To: S&W Seed Company

(1) The undersigned hereby elects to purchase ___________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2) Payment shall take the form of (check applicable box):

[ ] in lawful money of the United States; or

[ ] if permitted, the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_________________________________________

The Warrant Shares shall be delivered to the following DWAC Account Number:

_________________________________________

_________________________________________

_________________________________________

 

(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

(Name of Investing Entity)

(Signature of Authorized Signatory of Investing Entity)

(Name of Authorized Signatory)

(Title of Authorized Signatory)

(Date)

 

12.

---

ASSIGNMENT FORM

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to Name:

Name:
		(Please Print)
Address:
		(Please Print)
Dated: ___________________________, _____
Holder’s Signature: ______________________
Holder’s Address: _______________________

 

13.

---