Document:

EXHIBIT 10.2

 

INDEMNIFICATION AGREEMENT

 

THIS AGREEMENT is made as of the
       day of
                  ,
200  , between S&W SEED
COMPANY, a Delaware corporation (the “Company”), and
                      ,
an officer, member of the Board of Directors and/or key employee of the Company
or a subsidiary thereof (“Indemnitee”), with reference to the following facts:

 

RECITALS:

 

WHEREAS,
the Board of Directors has determined that the inability to attract and retain
qualified persons as directors and officers is detrimental to the best
interests of the Company’s stockholders and that the Company should act to
assure such persons that there shall be adequate certainty of protection
through insurance and indemnification against risks of claims and actions
against them arising out of their service to and activities on behalf of the
Company; and

 

WHEREAS,
the Company has adopted provisions in its Certificate of Incorporation and
By-laws providing for indemnification and advancement of expenses of its
directors and officers to the fullest extent permitted by the Delaware General
Corporation Law, and the Company wishes to clarify and enhance the rights and
obligations of the Company and Indemnitee with respect to indemnification and
advancement of expenses; and

 

WHEREAS,
in order to induce and encourage highly experienced and capable persons such as
Indemnitee to serve and continue to serve as directors and officers of the
Company and in any other capacity with respect to the Company, and to otherwise
promote the desirable end that such persons shall resist what they consider
unjustified lawsuits and claims made against them in connection with the good
faith performance of their duties to the Company, with the knowledge that
certain costs, judgments, penalties, fines, liabilities and expenses incurred
by them in their defense of such litigation are to be borne by the Company and
they shall receive the maximum protection against such risks and liabilities as
may be afforded by law, the Board of Directors of the Company has determined
that the following Agreement is reasonable and prudent to promote and ensure
the best interests of the Company and its stockholders; and

 

WHEREAS,
the Company desires to have Indemnitee continue to serve as a director or
officer of the Company and in such other capacity with respect to the Company
as the Company may request, as the case may be, free from undue concern for
unpredictable, inappropriate or unreasonable legal risks and personal
liabilities by reason of Indemnitee acting in good faith in the performance of
Indemnitee’s duty to the Company; and Indemnitee desires to continue so to
serve the Company, provided, and on the express condition, that he or she is
furnished with the indemnity set forth hereinafter;

 

Now,
therefore, in consideration of Indemnitee’s continued service as a director or
officer of the Company, the parties hereto agree as follows:

 

1.                                       Service by Indemnitee.
Indemnitee shall serve and/or continue to serve as a director or officer of the
Company faithfully and to the best of Indemnitee’s ability so long as  Indemnitee is duly elected or appointed and until such time
as Indemnitee is removed as permitted by law or tenders a resignation in
writing.

 

 

2.                                       Indemnification and Advancement of Expenses. The Company shall indemnify Indemnitee, and shall pay to
Indemnitee in advance of the final disposition of any Proceeding all Expenses
incurred by Indemnitee, to the fullest extent permitted by the Delaware General
Corporation Law in effect on the date of this Agreement or as such law may from
time to time be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Company to provide broader rights than
said law permitted the Company to provide prior to such amendment). Without
diminishing the scope of the rights provided by this Section, the rights of
Indemnitee to indemnification and advancement of Expenses provided hereunder
shall include but shall not be limited to those rights hereinafter set forth,
except that no indemnification or advancement of Expenses shall be paid to
Indemnitee:

 

(a)                                  to the extent expressly
prohibited by Delaware law or the Certificate of Incorporation and By-laws of
the Company;

 

(b)                                 for which payment is actually made to Indemnitee under a
valid and collectible insurance policy or under a valid and enforceable
indemnity clause, provision of the certificate of incorporation or by-laws, or
agreement of the Company or any other company or organization where Indemnitee
is serving at the request of the Company, except in respect of any indemnity
exceeding the payment under such insurance, indemnity clause, provision of the
certificate of incorporation or by-laws, or agreement; or

 

(c)                                  in connection with an action, suit or proceeding, or part
thereof (including claims and counterclaims) initiated by Indemnitee, except a
judicial proceeding or arbitration pursuant to Section 10 to enforce
rights under this Agreement, unless the action, suit or proceeding (or part
thereof) was authorized by the Board of Directors of the Company; or

 

(d)                                 with respect to any Proceeding brought by or on behalf of
the Company against Indemnitee that is authorized by the Board of Directors of
the Company, except as provided in Sections 4, 5 and 6 below.

 

3.                                       Action or Proceedings Other than an Action by or in the
Right of the Company. Except
as limited by Section 2 above, Indemnitee shall be entitled to the
indemnification rights provided in this Section if Indemnitee is a party
or is threatened to be made a party to any Proceeding (other than an action by
or in the name of the Company) by reason of the fact that Indemnitee is or was
a director, officer, employee, agent or fiduciary of the Company, or is or was
serving at the request of the Company as a director, officer, employee, agent
or fiduciary of any other entity (including, but not limited to, another
corporation, partnership, joint venture or trust); or by reason of anything
done or not done by Indemnitee in any such capacity. Pursuant to this Section,
Indemnitee shall be indemnified against all costs, judgments, penalties, fines,
liabilities, amounts paid in settlement and Expenses, actually and reasonably
incurred by Indemnitee in connection with such Proceeding, if Indemnitee acted
in good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, and with respect to any criminal
Proceeding, had no reasonable cause to believe his or her conduct was unlawful.

 

4.                                       Indemnity in Proceedings by or in the Name of the Company. Except as limited by Section 2 above, Indemnitee
shall be entitled to the indemnification rights provided in this

 

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Section if Indemnitee
was or is a party or is threatened to be made a party to any Proceeding brought
by or in the name of the Company to procure a judgment in its favor by reason
of the fact that Indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company, or is or was serving at the request of the Company as
a director, officer, employee, agent or fiduciary of any other entity
(including, but not limited to, another corporation, partnership, joint venture
or trust); or by reason of anything done or not done by Indemnitee in any such
capacity. Pursuant to this Section, Indemnitee shall be indemnified against all
costs, judgments, penalties, fines, liabilities, amounts paid in settlement and
Expenses, actually and reasonably incurred by Indemnitee in connection with
such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company; provided, however, that no such indemnification shall be made in
respect of any claim, issue, or matter as to which Delaware law expressly
prohibits such indemnification by reason of any adjudication of liability of
Indemnitee to the Company, unless and only to the extent that the Court of
Chancery of the State of Delaware or the court in which such Proceeding was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, Indemnitee is
entitled to indemnification for such costs, judgments, penalties, fines,
liabilities, amounts paid in settlement and Expenses as such court shall deem
proper.

 

5.                                       Indemnification for Costs, Charges and Expenses of
Successful Party.
Notwithstanding the limitations of Section 2(d), 3 and 4 above, to the
extent that Indemnitee has been successful, on the merits or otherwise, in
whole or in part, in defense of any Proceeding or in defense of any claim,
issue or matter therein, including, without limitation, the dismissal of any
action without prejudice, or if it is ultimately determined, after all appeals
by a court of competent jurisdiction, that Indemnitee is otherwise entitled to
be indemnified against Expenses, Indemnitee shall be indemnified against all
Expenses actually and reasonably incurred in connection therewith.

 

6.                                       Partial Indemnification.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the costs, judgments,
penalties, fines, liabilities, amounts paid in settlement or Expenses, actually
and reasonably incurred in connection with any Proceeding, or in connection
with any judicial proceeding or arbitration pursuant to Section 10 to
enforce rights under this Agreement, but not, however, for all of the total
amount thereof, the Company shall nevertheless indemnify Indemnitee for the
portion of such costs, judgments, penalties, fines, liabilities, amounts paid
in settlement and Expenses, actually and reasonably incurred to which
Indemnitee is entitled.

 

7.                                       Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to
the maximum extent permitted by the Delaware General Corporation Law,
Indemnitee shall be entitled to indemnification against all Expenses actually
and reasonably incurred or suffered by Indemnitee or on Indemnitee’s behalf if
Indemnitee appears as a witness or otherwise incurs legal expenses as a result
of or related to Indemnitee’s service as a director or officer of the Company,
in any threatened, pending or completed action, suit or proceeding, whether of
a civil, criminal, administrative, investigative, legislative or other nature,
to which Indemnitee neither is, nor is threatened to be made, a party.

 

8.                                       Determination of Entitlement to Indemnification. To receive indemnification under this Agreement,
Indemnitee shall submit a written request to the Secretary of the

 

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Company. Such request shall
include documentation or information that is necessary for such determination
and that is reasonably available to Indemnitee. Upon written request by
Indemnitee for indemnification pursuant to Sections 3, 4, 5, 6 or 7 the
entitlement of Indemnitee to indemnification, to the extent not provided
pursuant to the terms of this Agreement, shall be determined by the following
person or persons who shall be empowered to make such determination: (a) the
Board of Directors of the Company by a majority vote of Disinterested
Directors, whether or not such majority constitutes a quorum; (b) a
committee of Disinterested Directors designated by a majority vote of such
directors, whether or not such majority constitutes a quorum; (c) if there
are no Disinterested Directors, or if the Disinterested Directors so direct, by
Independent Counsel in a written opinion to the Board of Directors, a copy of
which shall be delivered to Indemnitee; (d) the stockholders of the
Company; or (e) in the event that a Change in Control has occurred, by
Independent Counsel in a written opinion to the Board of Directors, a copy of
which shall be delivered to Indemnitee. Such Independent Counsel shall be
selected by the Board of Directors and approved by Indemnitee, except that in
the event that a Change in Control has occurred, Independent Counsel shall be
selected by Indemnitee. Upon failure of the Board so to select such Independent
Counsel or upon failure of Indemnitee so to approve (or so to select, in the
event that a Change in Control has occurred), such Independent Counsel shall be
selected upon application to a court of competent jurisdiction. The
determination of entitlement to indemnification shall be made not later than 30
calendar days after receipt by the Company of a written request for
indemnification. Any amounts incurred by Indemnitee in connection with a
request for indemnification or payment of Expenses hereunder, under any other
agreement, any provision of the Company’s Certificate of Incorporation and
By-laws or any directors’ and officers’ liability insurance, shall be borne by
the Company. The Company hereby indemnifies Indemnitee for any such amounts and
agrees to hold Indemnitee harmless therefrom irrespective of the outcome of the
determination of Indemnitee’s entitlement to indemnification. If the person
making such determination shall determine that Indemnitee is entitled to
indemnification as to part (but not all) of the application for
indemnification, such person shall reasonably prorate such partial
indemnification among the claims, issues or matters at issue at the time of the
determination.

 

9                                          Presumptions and Effect of Certain Proceedings. The Secretary of the Company shall, promptly upon receipt
of Indemnitee’s written request for indemnification, advise in writing the
Board of Directors or such other person or persons empowered to make the
determination as provided in Section 8 that Indemnitee has made such
request for indemnification. Upon making such request for indemnification,
Indemnitee shall be presumed to be entitled to indemnification hereunder, and
the Company shall have the burden of proof in making any determination contrary
to such presumption. If the person or persons so empowered to make such determination
shall have failed to make the requested determination with respect to
indemnification within 30 calendar days after receipt by the Company of such
request, a requisite determination of entitlement to indemnification shall be
deemed to have been made and Indemnitee shall be absolutely entitled to such
indemnification, absent actual and material fraud in the request for
indemnification. The termination of any Proceeding described in Sections 3
or 4 by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall
not, of itself: (a) create a presumption that Indemnitee did not act in
good faith and in a manner which Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, or, with respect to any criminal
Proceeding, that Indemnitee had  reasonable
cause to believe that Indemnitee’s conduct was unlawful; or (b) otherwise
adversely affect the rights of Indemnitee to indemnification except as may be
provided herein.

 

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10.                                 Remedies of Indemnitee in Cases of Determination not to
Indemnify or to Advance Expenses.
In the event that a determination is made that Indemnitee is not entitled to
indemnification hereunder or if payment has not been timely made following a
determination of entitlement to indemnification pursuant to Sections 8 and
9, or if Expenses are not paid pursuant to Section 15, Indemnitee shall be
entitled to final adjudication in a court of competent jurisdiction of entitlement
to such indemnification or payment. Alternatively, Indemnitee at Indemnitee’s
option may seek an award in an arbitration to be conducted by a single
arbitrator pursuant to the rules of the American Arbitration Association,
such award to be made within 60 calendar days following the filing of the
demand for arbitration. The Company shall not oppose Indemnitee’s right to seek
any such adjudication or award in arbitration or any other claim. The
determination in any such judicial proceeding or arbitration shall be made de novo and Indemnitee shall not be
prejudiced by reason of a determination (if so made) pursuant to
Sections 8 or 9 that Indemnitee is not entitled to indemnification. If a
determination is made or deemed to have been made pursuant to the terms of Section 8
or 9 that Indemnitee is entitled to indemnification, the Company shall be bound
by such determination and is precluded from asserting that such determination
has not been made or that the procedure by which such determination was made is
not valid, binding and enforceable. The Company further agrees to stipulate in
any such court or before any such arbitrator that the Company is bound by all
the provisions of this Agreement and is precluded from making any assertions to
the contrary. If the court or arbitrator shall determine that Indemnitee is
entitled to any indemnification or payment of Expenses hereunder, the Company
shall pay all Expenses actually and reasonably incurred by Indemnitee in
connection with such adjudication or award in arbitration (including, but not
limited to, any appellate proceedings).

 

11.                                 Other Rights to Indemnification. Indemnification and payment of Expenses provided by this
Agreement shall not be deemed exclusive of any other rights to which Indemnitee
may now or in the future be entitled under any provision of the Certificate of
Incorporation or By-laws of the Company, vote of stockholders or Disinterested
Directors, provision of law, agreement or otherwise.

 

12.                                 Expenses to Enforce Agreement.
In the event that Indemnitee is subject to or intervenes in any action, suit or
proceeding in which the validity or enforceability of this Agreement is at
issue or seeks an adjudication or award in arbitration to enforce Indemnitee’s
rights under, or to recover damages for breach of, this Agreement, Indemnitee,
if Indemnitee prevails in whole or in part in such action, suit or proceeding,
shall be entitled to recover from the Company and shall be indemnified by the
Company against any Expenses actually and reasonably incurred by Indemnitee.

 

13                                    Continuation of Indemnity.
All agreements and obligations of the Company contained herein shall continue
during the period Indemnitee is a director, officer, employee, agent or
fiduciary of the Company or is serving at the request of the Company as a
director, officer, employee, agent or fiduciary of any other entity (including,
but not limited to, another corporation, partnership, joint venture or trust)
and shall continue thereafter with respect to any possible claims based on the fact
that Indemnitee was a director, officer, employee, agent or fiduciary of the
Company or was serving at the request of the Company as a director, officer,
employee, agent or fiduciary of any other entity (including, but not limited
to, another corporation, partnership, joint venture or trust). This Agreement
shall be binding upon all successors and assigns of the Company (including any
transferee of all or substantially all of its 

 

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assets and any successor by
merger or operation of law) and shall inure to the benefit of the heirs,
personal representatives and estate of Indemnitee.

 

14.                                 Notification and Defense of Claim. Promptly after receipt by Indemnitee of notice of any
Proceeding, Indemnitee shall, if a claim in respect thereof is to be made
against the Company under this Agreement, notify the Company in writing of the
commencement thereof; but the omission so to notify the Company shall not
relieve it from any liability that it may have to Indemnitee. Notwithstanding
any other provision of this Agreement, with respect to any such Proceeding of
which Indemnitee notifies the Company:

 

(a)                                  The Company shall be entitled to participate therein at its
own expense; and

 

(b)                                 Except as otherwise provided in this Section 14(b), to
the extent that it may wish, the Company, jointly with any other indemnifying
party similarly notified, shall be entitled to assume the defense thereof, with
counsel satisfactory to Indemnitee. After notice from the Company to Indemnitee
of its election so to assume the defense thereof, the Company shall not be
liable to Indemnitee under this Agreement for any expenses of counsel
subsequently incurred by Indemnitee in connection with the defense thereof
except as otherwise provided below. Indemnitee shall have the right to employ
Indemnitee’s own counsel in such Proceeding, but the fees and expenses of such
counsel incurred after notice from the Company of its assumption of the defense
thereof shall be at the expense of Indemnitee unless (i) the employment of
counsel by Indemnitee has been authorized by the Company, (ii) Indemnitee
shall have reasonably concluded that there may be a conflict of interest
between the Company and Indemnitee in the conduct of the defense of such
Proceeding, or (iii) the Company shall not within 60 calendar days of
receipt of notice from Indemnitee in fact have employed counsel to assume the
defense of the Proceeding, in each of which cases the fees and expenses of
Indemnitee’s counsel shall be at the expense of the Company. The Company shall
not be entitled to assume the defense of any Proceeding brought by or on behalf
of the Company or as to which Indemnitee shall have made the conclusion
provided for in (ii) above; and

 

(c)                                  If the Company has assumed the defense of a Proceeding, the
Company shall not be liable to indemnify Indemnitee under this Agreement for
any amounts paid in settlement of any Proceeding effected without the Company’s
written consent. The Company shall not settle any Proceeding in any manner that
would impose any penalty or limitation on or disclosure obligation with respect
to Indemnitee without Indemnitee’s written consent. Neither the Company nor
Indemnitee shall unreasonably withhold its consent to any proposed settlement.

 

15.                                 Advancement of Expenses.
All Expenses incurred by Indemnitee in advance of the final disposition of any
Proceeding shall be paid by the Company at the request of Indemnitee. To
receive payment of Expenses under this Agreement, Indemnitee shall submit a
written request to the Secretary of the Company. Such request shall reasonably
evidence the Expenses incurred by Indemnitee and shall include or be
accompanied by an undertaking, by or on behalf of Indemnitee, to reimburse such
amounts if it is ultimately determined, after all appeals by a court of
competent jurisdiction, that Indemnitee is not entitled to be indemnified
against such Expenses by the Company as provided by this Agreement or
otherwise.  Indemnitee’s undertaking to
reimburse any such amounts is not required to be secured. Each such payment of
Expenses shall be made within 20 calendar days after the receipt by the

 

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Company of such written
request. Indemnitee’s entitlement to such Expenses shall include those incurred
in connection with any action, suit or proceeding by Indemnitee seeking a
judgment in court or an adjudication or award in arbitration pursuant to Section 10
of this Agreement (including the enforcement of this provision) to the extent
the court or arbitrator shall determine that Indemnitee is entitled to payment
of Expenses hereunder.

 

16.                                 Separability; Prior Indemnification Agreements. If any provision or provisions of this Agreement shall be
held to be invalid, illegal or unenforceable for any reason whatsoever (a) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including without limitation, all portions of any paragraphs of this
Agreement containing any such provision held to be invalid, illegal or unenforceable,
that are not by themselves invalid, illegal or unenforceable) shall not in any
way be affected or impaired thereby, and (b) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
of the parties that the Company provide protection to Indemnitee to the fullest
enforceable extent. This Agreement shall supersede and replace any prior
indemnification agreements entered into by and between the Company and
Indemnitee and any such prior agreements shall be terminated upon execution of
this Agreement.

 

17.                                 Headings; References; Pronouns. The headings of the sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof. References herein to
section numbers are to sections of this Agreement. All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural as appropriate.

 

18.                                 Definitions.
For purposes of this Agreement:

 

(a)          “Change in Control” means a change in control of the Company
occurring after the date of this Agreement of a nature that would be required
to be reported in response to Item 5.01 of Current Report on Form 8-K
(or in response to any similar item on any similar schedule or form)
promulgated under the Securities Exchange Act of 1934, whether or not the
Company is then subject to such reporting requirement; provided, however, that,
without limitation, a Change in Control shall be deemed to have occurred if
after the date of this Agreement (i) any “person” (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934)
becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of the Company’s
then outstanding securities without the prior approval of at least two-thirds
of the members of the Board of Directors in office immediately prior to such
person attaining such percentage, (ii) the Company is a party to a merger,
consolidation, sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board of Directors in office immediately
prior to such transaction or event constitute less than a majority of the Board
of Directors thereafter, or (iii) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors (including for this purpose any new director whose election or
nomination for election by the Company’s stockholders was approved by a vote of
at least two-thirds of the directors then still in office who were directors at
the beginning of such period) cease for any reason to constitute at least a majority
of the Board of Directors.

 

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(b)         “Disinterested Director” means a director of the Company who
is not or was not a party to the Proceeding in respect of which indemnification
is being sought by Indemnitee.

 

(c)          “Expenses” includes, without limitation, expenses incurred
in connection with the defense or settlement of any investigation, action, suit
or other proceeding, including any judicial, administrative, investigative,
legislative or other proceedings, and appeals, attorneys’ fees, witness fees
and expenses, fees and expenses of accountants and other advisors, retainers
and disbursements and advances thereon, the premium, security for, and other
costs relating to any bond (including cost bonds, appraisal bonds or their
equivalents), and any expenses of establishing a right to indemnification or
advancement under Sections 8, 10, 12 and 15 above but shall not include
the amount of judgments, penalties, fines or amounts paid in settlement.

 

(d)         “Independent Counsel” means a law firm or a member of a law
firm that neither is presently nor in the past five years has been retained to
represent: (i) the Company or Indemnitee in any matter material to either
such party, or (ii) any other party to the Proceeding giving rise to a
claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent
Counsel” shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine
Indemnitee’s right to indemnification under this Agreement.

 

(e)          “Proceeding” includes any threatened, pending or completed
investigation, action, suit or other proceeding, whether brought in the name of
the Company or otherwise, against Indemnitee, whether of a civil, criminal,
administrative, investigative, legislative or other nature, including, but not
limited to, actions, suits or proceedings in which Indemnitee may be or may have
been involved as a party or otherwise, by reason of the fact that Indemnitee is
or was a director, officer, employee, agent or fiduciary of the Company, or is
or was serving, at the request of the Company, as a director, officer,
employee, agent or fiduciary of any other entity, including, but not limited
to, another corporation, partnership, joint venture or trust, or by reason of
anything done or not done by Indemnitee in any such capacity, whether or not
Indemnitee is serving in such capacity at the time any liability or expense is
incurred for which indemnification or reimbursement can be provided under this
Agreement.

 

19.                                 Other Provisions.

 

(a)          This Agreement shall be interpreted and enforced in
accordance with the laws of California.

 

(b)         This Agreement may be executed in one or more counterparts,
each of which shall for all purposes be deemed to be an original but all of
which together shall constitute one and the same Agreement. Only one such
counterpart signed by the party against whom enforceability is sought needs to
be produced as evidence of the existence of this Agreement.

 

(c)          This Agreement shall not be deemed an employment contract
between the Company and any Indemnitee who is an officer of the Company, and,
if Indemnitee is an officer of the Company, Indemnitee specifically
acknowledges that Indemnitee may be discharged at

 

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any
time for any reason, with or without cause, and with or without severance
compensation, except as may be otherwise provided in a separate written
contract between Indemnitee and the Company.

 

(d)         Upon a payment to Indemnitee under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of Indemnitee to recover against any person for such liability, and Indemnitee
shall execute all documents and instruments required and shall take such other
actions as may be necessary to secure such rights, including the execution of
such documents as may be necessary for the Company to bring suit to enforce
such rights.

 

(e)          No supplement, modification or amendment of this Agreement
shall be binding unless executed in writing by both parties hereto. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute
a waiver of any other provisions hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.

 

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

 

	
   

  	
  The Company:

  
	
   

  	
  S&W SEED COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Indemnitee:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  

 

9EXHIBIT 10.3

 

CREDIT AGREEMENT

 

THIS
CREDIT AGREEMENT (this “Agreement”) is entered into as of December 26,
2008, by and between S&W SEED COMPANY, a California general partnership.(“Borrower”),
and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”).

 

RECITALS

 

Borrower has requested that Bank extend or continue
credit to Borrower as described below, and Bank has agreed to provide such
credit to Borrower on the terms and conditions contained herein.

 

NOW,
THEREFORE, for valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Bank and Borrower hereby agree as follows:

 

ARTICLE I

CREDIT TERMS

 

SECTION 1.1.                                     LINE OF CREDIT.

 

(a)                             Line
of Credit.  Subject
to the terms and conditions of this Agreement, Bank hereby agrees to make
advances to Borrower from time to time up to and including December 1,
2009, not to exceed at any time the aggregate principal amount of Two Million
Five Hundred Thousand Dollars ($2,500,000.00) (“Line of Credit”), the proceeds
of which shall be used to finance Borrower’s working capital requirements.
Borrower’s obligation to repay advances under the Line of Credit shall be
evidenced by a promissory note dated as of December 26, 2008 (“Line of
Credit Note”), all terms of which are incorporated herein by this reference.

 

(b)                            Borrowing
and Repayment. 
Borrower may from time to time during the term of the Line of Credit
borrow, partially or wholly repay its outstanding borrowings, and reborrow,
subject to all of the limitations, terms and conditions contained herein or in
the Line of Credit Note; provided however, that the total outstanding
borrowings under the Line of Credit shall not at any time exceed the maximum
principal amount available thereunder, as set forth above.

 

SECTION 1.2.                                     INTEREST/FEES.

 

(a)                             Interest.  The outstanding principal
balance of each credit subject hereto shall bear interest at the rate of
interest set forth in each promissory note or other instrument or document
executed in connection therewith.

 

(b)                            Computation
and Payment. 
Interest shall be computed on the basis of a 360-day year, actual days
elapsed. Interest shall be payable at the times and place set forth in each
promissory note or other instrument or document required hereby.

 

SECTION 1.3.                                     COLLECTION
OF PAYMENTS. Borrower authorizes Bank to collect all interest and fees due
under each credit subject hereto by charging Borrower’s deposit account number                with
Bank, or any other deposit account maintained by Borrower with Bank, for the
full amount thereof. Should there be insufficient funds in any such deposit
account to pay all such sums when due, the full amount of such deficiency shall
be immediately due and payable by Borrower.

 

 

SECTION 1.4.                                     COLLATERAL.

 

As
security for all indebtedness and other obligations of Borrower to Bank subject
hereto, Borrower hereby grants to Bank security interests of first priority in
all Borrower’s accounts receivable and other rights to payment, general
intangibles and inventory.

 

All
of the foregoing shall be evidenced by and subject to the terms of such
security agreements, financing statements, deeds or mortgages, and other
documents as Bank shall reasonably require, all in form and substance
satisfactory to Bank. Borrower shall pay to Bank immediately upon demand the
full amount of all charges, costs and expenses (to include fees paid to third
parties and all allocated costs of Bank personnel), expended or incurred by
Bank in connection with any of the foregoing security, including without
limitation, filing and recording fees and costs of appraisals, audits and title
insurance.

 

SECTION 1.5.                                     GUARANTIES.  The payment and performance of all
indebtedness and other obligations of Borrower to Bank shall be guaranteed
jointly and severally by Grover T. Wickersham, Seed Holding, Ltd.,
Yellowjacket, LP and Paul F. Shoen, Trustee of The Paul F. Shoen Revocable
Trust in the principal amount of Two Million Five Hundred Thousand Dollars
($2,500,000.00) each, as evidenced by and subject to the terms of guaranties in
form and substance satisfactory to Bank.

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES

 

Borrower
makes the following representations and warranties to Bank, which
representations and warranties shall survive the execution of this Agreement
and shall continue in full force and effect until the full and final payment,
and satisfaction and discharge, of all obligations of Borrower to Bank subject
to this Agreement.

 

SECTION 2.1.                                     LEGAL
STATUS. Borrower is a general partnership, duly organized and existing and in
good standing under the laws of California, and is qualified or licensed to do
business (and is in good standing as a foreign corporation, if applicable) in
all jurisdictions in which such qualification or licensing is required or in
which the failure to so qualify or to be so licensed could have a material
adverse effect on Borrower.

 

SECTION 2.2.                                     AUTHORIZATION
AND VALIDITY. This Agreement and each promissory note, contract, instrument and
other document required hereby or at any time hereafter delivered to Bank in
connection herewith (collectively, the “Loan Documents”) have been duly
authorized, and upon their execution and delivery in accordance with the
provisions hereof will constitute legal, valid and binding agreements and
obligations of Borrower or the party which executes the same, enforceable in
accordance with their respective terms.

 

SECTION 2.3.                                     NO
VIOLATION. The execution, delivery and performance by Borrower of each of the
Loan Documents do not violate any provision of any law or regulation, or
contravene any provision of the Partnership Agreement of Borrower, or result in
any breach of or default under any contract, obligation, indenture or other
instrument to which Borrower is a party or by which Borrower may be bound.

 

 

SECTION 2.4.                                     LITIGATION.
There are no pending, or to the best of Borrower’s knowledge threatened,
actions, claims, investigations, suits or proceedings by or before any
governmental authority, arbitrator, court or administrative agency which could
have a material adverse effect on the financial condition or operation of
Borrower other than those disclosed by Borrower to Bank in writing prior to the
date hereof.

 

SECTION 2.5.                                     CORRECTNESS
OF FINANCIAL STATEMENT. The annual financial statement of Borrower dated December 31,
2007, and all interim financial statements delivered to Bank since said date,
true copies of which have been delivered by Borrower to Bank prior to the date
hereof, (a) are complete and correct and present fairly the financial
condition of Borrower, (b) disclose all liabilities of Borrower that are required
to be reflected or reserved against under generally accepted accounting
principles, whether liquidated or unliquidated, fixed or contingent, and (c) have
been prepared in accordance with generally accepted accounting principles
consistently applied. Since the dates of such financial statements there has
been no material adverse change in the financial condition of Borrower, nor has
Borrower mortgaged, pledged, granted a security interest in or otherwise
encumbered any of its assets or properties except in favor of Bank or as
otherwise permitted by Bank in writing.

 

SECTION 2.6.                                     INCOME
TAX RETURNS. Borrower has no knowledge of any pending assessments or
adjustments of its income tax payable with respect to any year.

 

SECTION 2.7.                                     NO
SUBORDINATION. There is no agreement, indenture, contract or instrument to
which Borrower is a party or by which Borrower may be bound that requires the
subordination in right of payment of any of Borrower’s obligations subject to
this Agreement to any other obligation of Borrower.

 

SECTION 2.8.                                     PERMITS,
FRANCHISES. Borrower possesses, and will hereafter possess, all permits,
consents, approvals, franchises and licenses required and rights to all
trademarks, trade names, patents, and fictitious names, if any, necessary to enable
it to conduct the business in which it is now engaged in compliance with
applicable law.

 

SECTION 2.9.                                     ERISA.
Borrower is in compliance in all material respects with all applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended
or recodified from time to time (“ERISA”); Borrower has not violated any
provision of any defined employee pension benefit plan (as defined in ERISA)
maintained or contributed to by Borrower (each, a “Plan”); no Reportable Event
as defined in ERISA has occurred and is continuing with respect to any Plan
initiated by Borrower; Borrower has met its minimum funding requirements under
ERISA with respect to each Plan; and each Plan will be able to fulfill its
benefit obligations as they come due in accordance with the Plan documents and
under generally accepted accounting principles.

 

SECTION 2.10.                               OTHER
OBLIGATIONS. Borrower is not in default on any obligation for borrowed money,
any purchase money obligation or any other material lease, commitment, contract,
instrument or obligation.

 

SECTION 2.11.                               ENVIRONMENTAL
MATTERS. Except as disclosed by Borrower to Bank in writing prior to the date
hereof, Borrower is in compliance in all material respects with all applicable
federal or state environmental, hazardous waste, health and safety statutes,
and any rules or regulations adopted pursuant thereto, which govern or
affect any of Borrower’s operations and/or properties, including without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the
Federal Resource Conservation and Recovery Act of 1976, and the Federal Toxic

 

 

Substances
Control Act, as any of the same may be amended, modified or supplemented from
time to time. None of the operations of Borrower is the subject of any federal
or state investigation evaluating whether any remedial action involving a
material expenditure is needed to respond to a release of any toxic or
hazardous waste or substance into the environment. Borrower has no material
contingent liability in connection with any release of any toxic or hazardous
waste or substance into the environment.

 

ARTICLE III

CONDITIONS

 

SECTION 3.1.                                     CONDITIONS OF INITIAL EXTENSION OF
CREDIT.  The obligation of Bank to extend
any credit contemplated by this Agreement is subject to the fulfillment to Bank’s
satisfaction of all of the following conditions:

 

(a)                                            Approval of  Bank Counsel.  All
legal matters incidental to the extension of credit by Bank shall be satisfactory
to Bank’s counsel.

 

(b)                                           Documentation.  Bank
shall have received, in form and substance satisfactory to Bank, each of the
following, duly executed:

 

(i)                                     This Agreement and each promissory note or
other instrument or document required hereby.

(ii)                                  Certificate of Incumbency.

(iii)                               Corporate
Resolution: Partnership Activity.

(iv)                              Limited
Liability Company Certificate: Continuing Guaranty.

(v)                                 Limited
Liability Company Certificate: Partnership Activity.

(vi)                              Partnership,
Joint Venture or Association Certificate: Borrowing.

(vii)                           Partnership,
Joint Venture or Association Certificate: Continuing Guaranty.

(viii)                        Partnership,
Joint Venture or Association Certificate: Partnership Activity.

(ix)                                Certificate
of Trust.

(x)                                   Continuing
Guaranties (4).

(xi)                                Continuing
Security Agreement: Rights to Payment and Inventory.

(xii)                           Disbursement
Order.

(xiii)                        Such other documents as Bank may require
under any other Section of this Agreement.

 

(c)                                                Financial
Condition. There shall have been no material adverse
change, as determined by Bank, in the financial condition or business of
Borrower or any guarantor hereunder, nor any material decline, as determined by
Bank, in the market value of any collateral required hereunder or a substantial
or material portion of the assets of Borrower or any such guarantor.

 

(d)                                               Insurance.
Borrower shall have delivered to Bank evidence of insurance coverage on all
Borrower’s property, in form, substance, amounts, covering risks and issued by
companies satisfactory to Bank, and where required by Bank, with loss payable
endorsements in favor of Bank.

 

SECTION 3.2.                                     CONDITIONS
OF EACH EXTENSION OF CREDIT. The obligation of Bank to make each extension of
credit requested by Borrower hereunder shall be subject to the fulfillment to
Bank’s satisfaction of each of the following conditions:

 

 

(a)                                                Compliance.  The representations and warranties contained
herein and in each of the other Loan Documents shall be true on and as of the
date of the signing of this Agreement and on the date of each extension of
credit by Bank pursuant hereto, with the same effect as though such
representations and warranties had been made on and as of each such date, and
on each such date, no Event of Default as defined herein, and no condition,
event or act which with the giving of notice or the passage of time or both
would constitute such an Event of Default, shall have occurred and be
continuing or shall exist.

 

(b)                                               Documentation.  Bank shall have received all additional
documents which may be required in connection with such extension of credit.

 

ARTICLE IV

AFFIRMATIVE COVENANTS

 

Borrower
covenants that so long as Bank remains committed to extend credit to Borrower
pursuant hereto, or any liabilities (whether direct or contingent, liquidated
or unliquidated) of Borrower to Bank under any of the Loan Documents remain
outstanding, and until payment in full of all obligations of Borrower subject
hereto, Borrower shall, unless Bank otherwise consents in writing:

 

SECTION 4.1.                                     PUNCTUAL PAYMENTS.  Punctually pay all principal, interest, fees
or other liabilities due under any of the Loan Documents at the times and place
and in the manner specified therein.

 

SECTION 4.2.                                     ACCOUNTING
RECORDS.  Maintain adequate books and
records in accordance with generally accepted accounting principles
consistently applied, and permit any representative of Bank, at any reasonable
time, to inspect, audit and examine such books and records, to make copies of
the same, and to inspect the properties of Borrower.

 

SECTION 4.3.                                     FINANCIAL
STATEMENTS.  Provide to Bank all of the
following, in form and detail satisfactory to Bank:

 

(a)                             not
later than 90 days after and as of the end of each fiscal year, a reviewed
financial statement of Borrower, prepared by a certified public accountant
acceptable to Bank, to include balance sheet, income statement and statement of
cash flow;

 

(b)                            not
later than 30 days after and as of the end of each month, an inventory
collateral report, an aged listing of accounts receivable and accounts payable,
prepared by Borrower;

 

(c)                        from
time to time such other information as Bank may reasonably request.

 

SECTION 4.4.                                     COMPLIANCE.  Preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; and comply .with
the provisions of all documents pursuant to which Borrower is organized and/or
which govern Borrower’s continued existence and with the requirements of all
laws, rules, regulations and orders of any governmental authority applicable to
Borrower and/or its business.

 

SECTION 4.5.                                     INSURANCE. 
Maintain and keep in force, for each business in which Borrower is
engaged, insurance of the types and in amounts customarily carried in similar
lines of business, including but not limited to fire, extended coverage, public
liability, flood, property damage and workers’ compensation, with all such
insurance carried with companies and in amounts satisfactory to Bank, and
deliver to Bank from time to time at Bank’s request schedules setting forth all
insurance then in effect.

 

 

SECTION 4.6.                                     FACILITIES.  Keep all properties useful or necessary to
Borrower’s business in good repair and condition, and from time to time make
necessary repairs, renewals and replacements thereto so that such properties
shall be fully and efficiently preserved and maintained.

 

SECTION 4.7.                                     TAXES
AND OTHER LIABILITIES.  Pay and discharge
when due any and all indebtedness, obligations, assessments and taxes, both
real or personal, including without limitation federal and state income taxes
and state and local property taxes and assessments, except (a) such as
Borrower may in good faith contest or as to which a bona fide dispute may
arise, and (b) for which Borrower has made provision, to Bank’s
satisfaction, for eventual payment thereof in the event Borrower is obligated
to make such payment.

 

SECTION 4.8.                                     LITIGATION.  Promptly give notice in writing to Bank of
any litigation pending or threatened against Borrower.

 

SECTION 4.9.                                     FINANCIAL
CONDITION.  Maintain Borrower’s financial
condition as follows using generally accepted accounting principles
consistently applied and used consistently with prior practices (except to the
extent modified by the definitions herein):

 

(a)                        Working
Capital not less than $1,250,000.00 at each fiscal year end, with “Working
Capital” defined as total current assets minus total current liabilities.

 

(b)                       Total
Liabilities divided by Tangible Net Worth not greater than 1.1 to 1.0 at each
fiscal year end, with “Total Liabilities” defined as the aggregate of current
liabilities and noncurrent liabilities less subordinated debt, and with “Tangible
Net Worth” defined as the aggregate of total partners’ equity plus subordinated
debt less any intangible assets.

 

(c)                        Net
income after taxes not less than $1.00 on an annual basis, calculated on a
trailing 12-month basis.

 

SECTION 4.10.                               NOTICE
TO BANK.  Promptly (but in no event more
than five (5) days after the occurrence of each such event or matter) give
written notice to Bank in reasonable detail of: (a) the occurrence of any
Event of Default, or any condition, event or act which with the giving of
notice or the passage of time or both would constitute an Event of Default; (b) any
change in the name or the organizational structure of Borrower; (c) the
occurrence and nature of any Reportable Event or Prohibited Transaction, each
as defined in ERISA, or any funding deficiency with respect to any Plan; or (d) any
termination or cancellation of any insurance policy which Borrower is required
to maintain, or any uninsured or partially uninsured loss through liability or
property damage, or through fire, theft or any other cause affecting Borrower’s
property.

 

ARTICLE V

NEGATIVE COVENANTS

 

Borrower
further covenants that so long as Bank remains committed to extend credit to
Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until
payment in full of all obligations of Borrower subject hereto, Borrower will not
without Bank’s prior written consent:

 

SECTION 5.1.                                 USE
OF FUNDS.  Use any of the proceeds of any
credit extended hereunder except for the purposes stated in Article I
hereof.

 

 

SECTION 5.2.                                 LEASE
EXPENDITURES.  Incur operating lease
expense in any fiscal year.

 

SECTION 5.3.                                 OTHER
INDEBTEDNESS.  Create, incur, assume or
permit to exist any indebtedness or liabilities resulting from borrowings,
loans or advances, whether secured or unsecured, matured or unmatured,
liquidated or unliquidated, joint or several, except (a) the liabilities
of Borrower to Bank, and (b) any other liabilities of Borrower existing as
of, and disclosed to Bank prior to, the date hereof.

 

SECTION 5.4.                                 MERGER,
CONSOLIDATION, TRANSFER OF ASSETS.  Merge
into or consolidate with any other entity; make any substantial change in the
nature of Borrower’s business as conducted as of the date hereof; acquire all
or substantially all of the assets’ f any other entity; nor sell, lease,
transfer or otherwise dispose of all or a substantial or material portion of
Borrower’s assets except in the ordinary course of its business.

 

SECTION 5.5.                                 GUARANTIES.  Guarantee or become liable in any way as
surety, endorser (other than as endorser of negotiable instruments for deposit
or collection in the ordinary course of business), accommodation endorser or
otherwise for, nor pledge or hypothecate any assets of Borrower as security
for, any liabilities or obligations of any other person or entity, except any
of the foregoing in favor of Bank.

 

SECTION 5.6.                                 LOANS, ADVANCES, INVESTMENTS.  Make any loans or advances to or investments
in any person or entity, except any of the foregoing existing as of, and
disclosed to Bank prior to, the date hereof.

 

SECTION 5.7.                                 PLEDGE
OF ASSETS.  Mortgage, pledge, grant or
permit to exist a security interest in, or lien upon, all or any portion of
Borrower’s assets now owned or hereafter acquired, except any of the foregoing
in favor of Bank or which is existing as of, and disclosed to Bank in writing
prior to, the date hereof.

 

ARTICLE VI

EVENTS OF DEFAULT

 

SECTION 6.1.                                 The
occurrence of any of the following shall constitute an “Event of Default” under
this Agreement:

 

(a)                         Borrower
shall fail to pay when due any principal, interest, fees or other amounts
payable under any of the Loan Documents.

 

(b)                        Any financial statement or certificate
furnished to Bank in connection with, or any representation or warranty made by
Borrower or any other party under this Agreement or any other Loan Document
shall prove to be incorrect, false or misleading in any material respect when
furnished or made.

 

(c)                         Any default
in the performance of or compliance with any obligation, agreement or other
provision contained herein or in any other Loan Document (other than those
referred to in subsections (a) and (b) above), and with respect to
any such default which by its nature can be cured, such default shall continue
for a period of twenty (20) days from its occurrence.

 

(d)                        Any
default in the payment or performance of any obligation, or any defined event
of default, under the terms of any contract or instrument (other than any of
the Loan Documents) pursuant to which Borrower, any guarantor hereunder or any
general partner or joint venturer in

 

 

Borrower if a partnership or joint venture (with
each such guarantor, general partner and/or joint venturer referred to herein
as a “Third Party Obligor”) has incurred any debt or other liability to any
person or entity, including Bank.

 

(e)                         The
filing of a notice of judgment lien against Borrower or any Third Party
Obligor; or the recording of any abstract of judgment against Borrower or any
Third Party Obligor in any county in which Borrower or such Third Party Obligor
has an interest in real property; or the service of a notice of levy and/or of
a writ of attachment or execution, or other like process, against the assets of
Borrower or any Third Party Obligor; or the entry of a judgment against
Borrower or any Third Party Obligor.

 

(f)                           Borrower
or any Third Party Obligor shall become insolvent, or shall suffer or consent
to or apply for the appointment of a receiver, trustee, custodian or liquidator
of itself or any of its property, or shall generally fail to pay its debts as
they become due, or shall make a general assignment for the benefit of
creditors; Borrower or any Third Party Obligor shall file a voluntary petition
in bankruptcy, or seeking reorganization, in order to effect a plan or other
arrangement with creditors or any other relief under the Bankruptcy Reform Act,
Title 11 of the United States Code, as amended or recodified from time to time
(“Bankruptcy Code”), or under any state or federal law granting relief to
debtors, whether now or hereafter in effect; or any involuntary petition or
proceeding pursuant to the Bankruptcy Code or any other applicable state or
federal law relating to bankruptcy, reorganization or other relief for debtors
is filed or commenced against Borrower or any Third Party Obligor, or Borrower
or any Third Party Obligor shall file an answer admitting the jurisdiction of
the court and the material allegations of any involuntary petition; or Borrower
or any Third Party Obligor shall be adjudicated a bankrupt, or an order for
relief shall be entered against Borrower or any Third Party Obligor by any
court of competent jurisdiction under the Bankruptcy Code or any other
applicable state or federal law relating to bankruptcy, reorganization or other
relief for debtors.

 

(g)                        There
shall exist or occur any event or condition which Bank in good faith believes
impairs, or is substantially likely to impair, the prospect of payment or
performance by Borrower of its obligations under any of the Loan Documents.

 

(h)                        The
death or incapacity of Borrower or any Third Party Obligor if an individual.
The dissolution or liquidation of Borrower or any Third Party Obligor if a
corporation, partnership, joint venture or other type of entity; or Borrower or
any such Third Party Obligor, or any of its directors, stockholders or members,
shall take action seeking to effect the dissolution or liquidation of Borrower
or such Third Party Obligor.

 

(i)                            The
withdrawal, resignation or expulsion of any one or more of the general partners
in Borrower with an aggregate ownership interest in Borrower of twenty-five
percent (25%) or more.

 

SECTION 6.2.                                     REMEDIES.
Upon the occurrence of any Event of Default: (a) all indebtedness of
Borrower under each of the Loan Documents, any term thereof to the contrary
notwithstanding, shall at Bank’s option and without notice become immediately
due and payable without presentment, demand, protest or notice of dishonor, all
of which are hereby expressly waived by Borrower; (b) the obligation, if
any, of Bank to extend any further credit under any of the Loan Documents shall
immediately cease and terminate; and (c) Bank shall have all rights,
powers and remedies available under each of the Loan Documents, or accorded by
law, including without limitation the right to resort to any or all security
for any credit subject hereto and to exercise any or

 

 

all
of the rights of a beneficiary or secured party pursuant to applicable law. All
rights, powers and remedies of Bank may be exercised at any time by Bank and
from time to time after the occurrence of an Event of Default, are cumulative
and not exclusive, and shall be in addition to any other rights, powers or
remedies provided by law or equity.

 

ARTICLE VII

MISCELLANEOUS

 

SECTION 7.1.                                     NO
WAIVER.  No delay, failure or
discontinuance of Bank in exercising any right, power or remedy under any of
the Loan Documents shall affect or operate as a waiver of such right, power or
remedy; nor shall any single or partial exercise of any such right, power or
remedy preclude, waive or otherwise affect any other or further exercise
thereof or the exercise of any other right, power or remedy. Any waiver, permit,
consent or approval of any kind by Bank of any breach of or default under any
of the Loan Documents must be in writing and shall be effective only to the
extent set forth in such writing.

 

SECTION 7.2.                                     NOTICES.  All notices, requests and demands which any
party is required or may desire to give to any other party under any provision
of this Agreement must be in writing delivered to each party at the following
address:

 

	
  BORROWER: 

  	
  S&W Seed Company 

  
	
   

  	
  25552 S. Butte Avenue 

  
	
   

  	
  Five Points, CA 93624

  
	
   

  	
   

  
	
  BANK:

  	
  WELLS FARGO BANK, NATIONAL ASSOCIATION 

  
	
   

  	
  Fresno Regional Commercial Banking Office

  
	
   

  	
  8405 N. Fresno Street, Suite 200

  
	
   

  	
  Fresno, CA 93720

  

 

or
to such other address as any party may designate by written notice to all other
parties. Each such notice, request and demand shall be deemed given or made as
follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after
deposit in the U.S. mail, first class and postage prepaid; and (c) if sent
by telecopy, upon receipt.

 

SECTION 7.3.                                     COSTS,
EXPENSES AND ATTORNEYS’ FEES.  Borrower
shall pay to Bank immediately upon demand the full amount of all payments,
advances, charges, costs and expenses, including reasonable attorneys’ fees (to
include outside counsel fees and all allocated costs of Bank’s in-house
counsel), expended or incurred by Bank in connection with (a) the
negotiation and preparation of this Agreement and the other Loan Documents,
Bank’s continued administration hereof and thereof, and the preparation of any
amendments and waivers hereto and thereto, (b) the enforcement of Bank’s
rights and/or the collection of any amounts which become due to Bank under any
of the Loan Documents, and (c) the prosecution or defense of any action in any way
related to any of the Loan Documents, including without limitation, any action
for declaratory relief, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the foregoing
incurred in connection with any bankruptcy proceeding (including without
limitation, any adversary proceeding, contested matter or motion brought by
Bank or any other person) relating to Borrower or any other person or entity.

 

SECTION 7.4.                                     SUCCESSORS,
ASSIGNMENT.  This Agreement shall be
binding upon and inure to the benefit of the heirs, executors, administrators,
legal representatives, successors and assigns of the parties; provided however,
that Borrower may not assign or transfer its interests or

 

 

rights
hereunder without Bank’s prior written consent. Bank reserves the right to
sell, assign, transfer, negotiate or grant participations in all or any part
of, or any interest in, Bank’s rights and benefits under each of the Loan
Documents. In connection therewith, Bank may disclose all documents and
information which Bank now has or may hereafter acquire relating to any credit
subject hereto, Borrower or its business, any guarantor hereunder or the
business of such guarantor, or any collateral required hereunder.

 

SECTION 7.5.            ENTIRE
AGREEMENT; AMENDMENT.  This Agreement and
the other Loan Documents constitute the entire agreement between Borrower and
Bank with respect to each credit subject hereto and supersede all prior
negotiations, communications, discussions and correspondence concerning the
subject matter hereof. This Agreement may be amended or modified only in
writing signed by each party hereto.

 

SECTION 7.6.            NO THIRD PARTY BENEFICIARIES.  This Agreement is made and entered into for
the sole protection and benefit of the parties hereto and their respective
permitted successors and assigns, and no other person or entity shall be a
third party beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any other of the Loan Documents to
which it is not a party.

 

SECTION 7.7.            TIME.  Time is of the essence of each and every
provision of this Agreement and each other of the Loan Documents.

 

SECTION 7.8.            SEVERABILITY
OF PROVISIONS.  If any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or any
remaining provisions of this Agreement.

 

SECTION 7.9.            COUNTERPARTS.  This Agreement may be executed in any number
of counterparts, each of which when executed and delivered shall be deemed to
be an original, and all of which when taken together shall constitute one and the
same Agreement.

 

SECTION 7.10.          GOVERNING LAW.  This Agreement shall be governed by and
construed in accordance with the laws of the State of California.

 

SECTION 7.11. ARBITRATION.

 

(a)          Arbitration.  The parties hereto agree, upon demand by any
party, to submit to binding arbitration all claims, disputes and controversies
between or among them (and their respective employees, officers, directors,
attorneys, and other agents), whether in tort, contract or otherwise in any way
arising out of or relating to (i) any credit subject hereto, or any of the
Loan Documents, and their negotiation, execution, collateralization,
administration, repayment, modification, extension, substitution,
formation, inducement, enforcement, default or termination; or (ii) requests
for additional credit.

 

(b)        Governing
Rules.  Any arbitration proceeding
will (i) proceed in a location in California selected by the American
Arbitration Association (“AAA”); (ii) be governed by the Federal
Arbitration Act (Title 9 of the United States Code), notwithstanding any
conflicting choice of law provision in any of the documents between the
parties; and (iii) be conducted by the AAA, or such other administrator as
the parties shall mutually agree upon, in accordance with the AAA’s commercial
dispute resolution procedures, unless the claim or counterclaim is at least
$1,000,000.00 exclusive of claimed interest, arbitration fees and costs in
which case the

 

 

arbitration shall be conducted in accordance
with the AAA’s optional procedures for large, complex commercial disputes (the
commercial dispute resolution procedures or the optional procedures for large,
complex commercial disputes to be referred to herein, as applicable, as the “Rules”).
If there is any inconsistency between the terms hereof and the Rules, the terms
and procedures set forth herein shall control. Any party who fails or refuses
to submit to arbitration following a demand by any other party shall bear all
costs and expenses incurred by such other party in compelling arbitration of
any dispute. Nothing contained herein shall be deemed to be a waiver by any
party that is a bank of the protections afforded to it under 12 U.S.C. §91 or
any similar applicable state law.

 

(c)        No
Waiver of Provisional Remedies, Self-Help and Foreclosure.  The arbitration requirement does not limit
the right of any party to (i) foreclose against real or personal property
collateral; (ii) exercise self-help remedies relating to collateral or
proceeds of collateral such as setoff or repossession; or (iii) obtain
provisional or ancillary remedies such as replevin, injunctive relief,
attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise
of the actions detailed in sections (i), (ii) and (iii) of this
paragraph.

 

(d)        Arbitrator
Qualifications and Powers.  Any
arbitration proceeding in which the amount in controversy is $5,000,000.00 or
less will be decided by a single arbitrator selected according to the Rules,
and who shall not render an award of greater than $5,000,000.00. Any dispute in
which the amount in controversy exceeds $5,000,000.00 shall be decided by
majority vote of a panel of three arbitrators; provided however, that all three
arbitrators must actively participate in all hearings and deliberations. The
arbitrator will be a neutral attorney licensed in the State of California or a
neutral retired judge of the state or federal judiciary of California, in
either case with a minimum of ten years experience in the substantive law
applicable to the subject matter of the dispute to be arbitrated. The
arbitrator will determine whether or not an issue is arbitratable and will give
effect to the statutes of limitation in determining any claim. In any
arbitration proceeding the arbitrator will decide (by documents only or with a
hearing at the arbitrator’s discretion) any pre-hearing motions which are
similar to motions to dismiss for failure to state a claim or motions for
summary adjudication. The arbitrator shall resolve all disputes in accordance
with the substantive law of California and may grant any remedy or relief that
a court of such state could order or grant within the scope hereof and such
ancillary relief as is necessary to make effective any award. The arbitrator
shall also have the power to award recovery of all costs and fees, to impose
sanctions and to take such other action as the arbitrator deems necessary to
the same extent a judge could pursuant to the Federal Rules of Civil
Procedure, the California Rules of Civil Procedure or other applicable
law. Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction. The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.

 

(e)          Discovery.  In any arbitration proceeding, discovery will
be permitted in accordance with the Rules. All discovery shall be expressly
limited to matters directly relevant to the dispute being arbitrated and must
be completed no later than 20 days before the hearing date. Any requests for an
extension of the discovery periods, or any discovery disputes, will be subject
to final determination by the arbitrator upon a showing that the request for
discovery is essential for the party’s presentation and that no alternative
means for obtaining information is available.

 

 

(f)          Class Proceedings and Consolidations.  No party hereto shall be entitled to join or
consolidate disputes by or against others in any arbitration, except parties
who have executed any Loan Document, or to include in any arbitration any
dispute as a representative or member of a class, or to act in any arbitration
in the interest of the general public or, in a private attorney general
capacity.

 

(g)         Payment Of Arbitration Costs And Fees.  The arbitrator shall award all costs and
expenses of the arbitration proceeding.

 

(h)         Real Property Collateral; Judicial
Reference.  Notwithstanding anything
herein to the contrary, no dispute shall be submitted to arbitration if the
dispute concerns indebtedness secured directly or indirectly, in whole or in
part, by any real property unless (i) the holder of the mortgage, lien or
security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or
benefits that might accrue to them by virtue of the single action rule statute
of California, thereby agreeing that all indebtedness and obligations of the
parties, and all mortgages, liens and security interests securing such
indebtedness and obligations, shall remain fully valid and enforceable. If any
such dispute is not submitted to arbitration, the dispute shall be referred to
a referee in accordance with California Code of Civil Procedure Section 638
et seq., and this general reference agreement is intended to be specifically
enforceable in accordance with said Section 638. A referee with the
qualifications required herein for arbitrators shall be selected pursuant to the
AAA’s selection procedures. Judgment upon the decision rendered by a referee
shall be entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and 645.

 

(i)           Miscellaneous.  To the maximum extent practicable, the AAA,
the arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the
filing of the dispute with the AAA. No arbitrator or other party to an
arbitration proceeding may disclose the existence, content or results thereof,
except for disclosures of information by a party required in the ordinary
course of its business or by applicable law or regulation. If more than one
agreement for arbitration by or between the parties potentially applies to a
dispute, the arbitration provision most directly related to the Loan Documents
or the subject matter of the dispute shall control. This arbitration provision
shall survive termination, amendment or expiration of any of the Loan Documents
or any relationship between the parties.

 

(j)           Small Claims Court. 
Notwithstanding anything herein to the contrary, each party retains the
right to pursue in Small Claims Court any dispute within that court’s
jurisdiction. Further, this arbitration provision shall apply only to disputes
in which either party seeks to recover an amount of money (excluding attorneys’
fees and costs) that exceeds the jurisdictional limit of the Small Claims
Court.

 

 

IN WITNESS WHEREOF, the parties hereto have, caused
this Agree er t to be executed as of the day and year first written above,

 

 

	
  S&W SEED COMPANY

  	
  WELLS
  FARGO-BANK, NATIONAL. ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Harry B.
  Hansen

  	
   

  	
  By:

  	
  /s/ Robert A.
  Griffin

  
	
   

  	
  Harry B. Hansen

  	
   

  	
   

  	
  Robert A.
  Griffin

  
	
   

  	
  Managing Partner

  	
   

  	
   

  	
  Vice President

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