Document:

sanw-ex43_453.htm

Exhibit 4.3

DESCRIPTION OF COMMON STOCK  

General

The following description summarizes the most important terms of our common stock. Because it is only a summary, it does not contain all the information that may be important to you. For a complete description of the matters set forth in this “Description of Common Stock,” you should refer to our articles of incorporation (the “articles of incorporation”), and second amended and restated bylaws, as amended (the “bylaws”), which are included as exhibits to our Annual Report on Form 10-K, and to the applicable provisions of Nevada law. Our authorized capital stock consists of 50,000,000 shares of common stock, par value $0.001 per share and 5,000,000 shares of preferred stock, par value $0.001 per share. Our board of directors is authorized, without stockholder approval, except as required by the listing standards of The Nasdaq Stock Market LLC, to issue additional shares of our capital stock.  

Common Stock

Voting Rights. Each holder of our common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors. Our stockholders do not have cumulative voting rights in the election of directors. Our bylaws provide that in contested director elections (meaning elections in which the number of nominees exceeds the number of directors to be elected), directors are elected by a plurality of the votes cast, and the nominees receiving the greatest numbers of votes are elected to serve as directors. Our bylaws further provide that our directors are elected in uncontested elections by a majority of the votes cast, meaning that a director nominee will be elected if the number of votes cast for that nominee’s election exceeds the number of votes cast against that nominee’s election.

Dividends. Subject to the preference in dividend rights of any series of preferred stock that we may issue in the future, the holders of common stock are entitled to receive such cash dividends, if any, as may be declared by our board of directors out of legally available funds. 

Liquidation. In the event of any liquidation, dissolution or winding up, after payment of all debts and liabilities and after payment of the liquidation preferences of any shares of preferred stock then outstanding, the holders of the common stock will be entitled to participate pro rata in all assets that are legally available for distribution. 

Rights and Preferences. Holders of common stock have no preemptive, subscription, redemption, sinking fund or conversion rights and are not subject to further calls or assessments. The rights and preferences of holders of common stock will be subject to the rights of any series of preferred stock that we may issue in the future. 

Preferred Stock

Our board of directors, without any vote or action by our stockholders, has the authority to designate and issue up to an aggregate of 5,000,000 shares of preferred stock from time to time, in one or more classes or series or shares, on terms that it may determine, including among other things:

	
 
	
•
	
its dividend rate;

	
 
	
•
	
its liquidation preference;

	
 
	
•
	
whether or not the shares will be convertible into, or exchangeable for, any other securities; 

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•
	
whether or not the shares will be subject to any restrictions on the repurchase or redemption of such shares while there is any arrearage in the payment of dividends or sinking fund installments; and

	
 
	
•
	
whether or not the shares will have voting rights, and, if so, determine the extent of the voting powers and the conditions under which the shares will vote as a separate class.

Our board of directors could issue all or part of the preferred stock with, among other things, substantial voting power or advantageous conversion rights. This stock could be issued to persons deemed by our board of directors likely to support our current management in a context for control of us, either as a precautionary measure or in response to a specific takeover threat.  The issuance of preferred stock could adversely affect the voting power of holders of common stock or reduce the likelihood that common stockholders would receive distributions or other payments upon liquidation. Any such issuance could have the effect of decreasing the market price of the common stock. The issuance of preferred stock also could have the effect of delaying, deterring or preventing a change in control.

Anti-Takeover Effects of Certain Provisions of Nevada Law and Our Articles of Incorporation and Bylaws

 

Anti-Takeover Effects of Certain Provisions of Nevada Law and Nevada Anti-takeover Statutes.

 

Certain provisions of the Nevada Revised Statutes, or NRS, as described below, may delay or discourage transactions involving an actual or potential change in our control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares or transactions that our stockholders might otherwise deem to be in their best interests.

 

Combinations with Interested Stockholders Statutes

 

Nevada’s “combinations with interested stockholders” statutes, NRS 78.411 through 78.444, inclusive, prohibit specified types of business “combinations” between certain Nevada corporations and any person deemed to be an “interested stockholder” for two years after such person first becomes an “interested stockholder” unless (1) the corporation’s board of directors approves, in advance, either the combination itself, or the transaction by which such person becomes an interested stockholder, or (2) the combination is approved by the board of directors and 60% of the then-outstanding voting power of the corporation’s stockholders not beneficially owned by the interested stockholder, its affiliates and associates. Further, in the absence of the prior approval described above, certain restrictions may apply even after such two-year period. However, these statutes do not apply to any combination of a corporation and an interested stockholder after the expiration of four years after the person first became an interested stockholder.

 

For purposes of these statutes, an “interested stockholder” is any person who is (1) the beneficial owner, directly or indirectly, of 10% or more of the voting power of the outstanding voting shares of the corporation, or (2) an affiliate or associate of the corporation and at any time within the two previous years was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the then outstanding shares of the corporation. The definition of the term “combination” is sufficiently broad to cover most significant transactions between a corporation and an interested stockholder. These statutes generally apply to “resident domestic corporations,” namely Nevada corporations with 200 or more stockholders of record. However, a Nevada corporation may elect in its articles of incorporation not to be governed by these particular laws, but if such election is not made in the corporation’s original articles of incorporation, the amendment (1) must be approved by the affirmative vote of the holders of stock representing a majority of the outstanding voting power of the corporation not beneficially owned by interested stockholders or their affiliates and associates, and (2) is not effective until 18 months after the 

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vote approving the amendment and does not apply to any combination with a person who first became an interested stockholder on or before the effective date of the amendment. 

 

Our original articles of incorporation include a provision providing that at such time, if any, that we become a “resident domestic corporation” as defined in the NRS, we will not be subject to, or governed by, any of the provisions of NRS 78.411 to 78.444, inclusive, as amended from time to time, or any successor statute.  As a result, pursuant to NRS 78.434, the “combinations with interested stockholders” statutes will not apply to us, unless our articles of incorporation are subsequently amended to provide that we are subject to those provisions.

 

Acquisition of Controlling Interest Statutes

 

Nevada’s “acquisition of controlling interest” statutes, NRS 78.378 through 78.3793, inclusive, contain provisions governing the acquisition of stockholder voting power above specified thresholds in certain Nevada corporations. These “control share” laws provide generally that any person that acquires a “controlling interest” in certain Nevada corporations may be denied voting rights, unless a majority of the disinterested stockholders of the corporation elects to restore such voting rights. These laws provide that a person acquires a “controlling interest” whenever a person acquires shares of a subject corporation that, but for the application of these provisions of the NRS, would enable that person to exercise (1) one-fifth or more, but less than one-third, (2) one-third or more, but less than a majority or (3) a majority or more, of all of the voting power of the corporation in the election of directors. Once an acquirer crosses one of these thresholds, shares which it acquired in the transaction taking it over the threshold and within the 90 days immediately preceding the date when the acquiring person acquired or offered to acquire a controlling interest become “control shares” to which the voting restrictions described above apply.

 

In our bylaws, we have elected not to be governed by, and to otherwise opt out of, the provisions of NRS 78.378 to 78.3793, inclusive. Absent such provision in our bylaws, these statutes would apply to us as of a particular date if we were to have 200 or more stockholders of record (at least 100 of whom have addresses in Nevada appearing on our stock ledger at all times during the 90 days immediately preceding that date) and do business in the State of Nevada directly or through an affiliated corporation, unless our articles of incorporation or bylaws in effect on the tenth day after the acquisition of a controlling interest provide otherwise.

 

NRS 78.139(4) also provides that directors of a Nevada corporation may resist a change or potential change in control of the corporation if the board of directors determines that the change or potential change is opposed to, or not in, the best interest of the corporation upon consideration of any relevant facts, circumstances, contingencies or constituencies that the directors are entitled, but not required, to consider when exercising their directorial powers pursuant to NRS 78.138(4).

 

The existence of the foregoing provisions and other potential anti-takeover measures could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our company, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition.

 

Articles of Incorporation and Bylaw Provisions.

 

Our articles of incorporation and bylaws contain provisions that might have an anti-takeover effect. These provisions, which are summarized below, may have the effect of delaying, deterring or preventing a change in control of our company. They could also impede a transaction in which our stockholders might receive a premium over the then-current market price of our common stock and our stockholders’ ability to approve transactions that they consider to be in their best interests.

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Articles of Incorporation. Our authorized but unissued shares of common stock and preferred stock are available for our board of directors to issue without stockholder approval. We may use these additional shares for a variety of corporate purposes, including future public or private offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of our authorized but unissued shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of our company by means of a proxy contest, tender offer, merger or other transaction. Our authorized but unissued shares may be used to delay, defer or prevent a tender offer or takeover attempt that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders. 

 

Bylaws. Certain provisions of our bylaws may be considered to have anti-takeover effects, including advance notice requirements for director nominations and other stockholder proposals. Our bylaws establish advance notice procedures for stockholder proposals to be brought before an annual meeting of stockholders, and for proposed nominations of candidates for election to our board of directors at an annual or special meeting of stockholders. Generally, such notices must be received by our corporate secretary at our principal executive offices, in the case of an annual meeting, between 90 days and 120 days prior to the first anniversary of the preceding year’s annual meeting and, in the case of a special meeting called for the purpose of electing directors, between 90 and 120 days prior to the date of the special meeting or within 10 days after the day on which public announcement of the date of the special meeting is first made by us. In addition, our board of directors has the authority to amend or repeal our bylaws, or to adopt new bylaws, which could have the effect of delaying, deterring or preventing a change of control.

 

Certain other provisions of Nevada Law and our Articles of Incorporation, and Bylaws

 

Certain provisions of Nevada Law, our articles of incorporation and bylaws, which are summarized below, could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they might also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile takeover attempts. These provisions might also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders might otherwise deem to be in their best interests. 

 

Removal of Directors. Directors may be removed with or without cause by the holders of not less than two-thirds of the voting power of all of our then-outstanding stock entitled to vote generally in the election of directors (voting as a single class), excluding stock entitled to vote only upon the happening of a fact or event unless such fact or event shall have occurred.

 

Resolutions to Change Authorized Number of Directors. The authorized number of directors shall be fixed from time to time by resolution of the Board of Directors but shall not be less than three or more than 10. 

 

Vacancies may be Filled by Directors. All vacancies, including newly created directorships, shall be filled solely by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors and the director(s) so chosen shall hold office until their successors are elected and qualified, at which the term of the class to which he or she has been elected expires, or until his or her earlier resignation or removal.

 

Advance Notice Procedures. Stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide advance and timely notice in writing, and also specify requirements as to the form and content of a stockholder’s 

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notice.

 

No Cumulative Voting Rights. Our articles of incorporation and bylaws do not provide for cumulative voting rights. As a result, the holders of a majority of the shares of common stock entitled to vote in any election of directors would have the ability to elect all of the directors standing for election.

 

Action by Written Consent; Special Meetings of Stockholders. Stockholder action can only be taken at an annual or special meeting of stockholders called and noticed in the manner required by the bylaws. The stockholders may not in any circumstance take action by written consent.

 

Authorized but Unissued Shares. Our authorized but unissued shares of common stock will be available for future issuance without stockholder approval. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of common stock could render more difficult or discourage an attempt to obtain control of a majority of our common stock by means of a proxy contest, tender offer, merger or otherwise. 

Transfer Agent and Registrar 

The transfer agent and registrar for our common stock is Transfer Online, Inc. 

Listing 

Our common stock is listed on the Nasdaq Capital Market under the symbol “SANW”.

 

5sanw-ex1027_783.htm

Exhibit 10.27

FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

This First Amendment to Loan and Security Agreement (this “First Amendment”) made and entered into as of the day of September 22, 2020, is by and among S&W Seed Company, a Nevada corporation (“S&W Seed”), Seed Holding, LLC, a Nevada limited liability company (“Seed Holding”), and Stevia California, LLC, a California limited liability company (“Stevia CA”; S&W Seed, Seed Holding and Stevia CA are each individually a “Borrower” and collectively referred to as “Borrowers”), the other Loan Parties hereto, the financial institutions that are or may from time to time become parties hereto (together with their respective successors and assigns, the “Lenders”), and CIBC BANK USA (in its individual capacity, “CIBC”), as administrative agent for the Lenders (“Administrative Agent”).

W I T N E S S E T H:

WHEREAS, prior hereto, Lenders provided loans, extensions of credit and other financial accommodations to Borrowers pursuant to (a) that certain Loan and Security Agreement dated as of December 26, 2019, by and among Lenders, Borrowers, the other Loan Parties thereto and Administrative Agent (the “Loan Agreement”), and (b) the other documents, agreements and instruments referenced in the Loan Agreement or executed and delivered pursuant thereto;

WHEREAS, Borrowers desire Administrative Agent and Lenders to, among other things, (a) modify certain financial covenants, (b) modify the definitions of Applicable Margin and Revolving Loan Availability, (c) decrease the Total Revolving Loan Commitment, (d) modify certain financial reporting requirements, (e) institute a LIBO floor, and (f) waive the “Existing Defaults” (as hereinafter defined) (collectively, the “Additional Financial Accommodations”); and

WHEREAS, Administrative Agent and Lenders are willing to provide the Additional Financial Accommodations, but solely on the terms and subject to the provisions set forth in this First Amendment and the other agreements, documents and instruments referenced herein or executed and delivered pursuant hereto.

NOW, THEREFORE, in consideration of the foregoing, the mutual promises and understandings of the parties hereto set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Administrative Agent, Lenders, Borrowers and the other Loan Parties hereto hereby agree as set forth in this First Amendment.

	
 
	
I.
	
Definitions.

A.Use of Defined Terms.  Except as expressly set forth in this First Amendment, all terms which have an initial capital letter where not required by the rules of grammar are used herein as defined in the Loan Agreement.

B.Amended Definitions. Effective as of the “First Amendment Effective Date” (as hereinafter defined), Section 1.1 of the Loan Agreement is hereby amended by substituting the definitions set forth below for the corresponding definitions set forth in the Loan Agreement:

Adjusted EBITDA shall mean, with respect to any Person and its Subsidiaries for any test period and without duplication, the sum of EBITDA, plus (a) to the extent deducted in determining EBITDA with respect to such Person and its Subsidiaries for such test period, (i) the Corteva/Pioneer Quarterly Addback, (ii) the Corteva/Pioneer One-Time Addback, (iii) one-time expenses incurred in connection with the initial documentation and closing of this Agreement in an amount not to exceed $500,000.00, provided such expenses are incurred not later than 30 days after the Closing Date, (iv) one-time expenses incurred in connection with Permitted Acquisitions in an amount not to exceed $500,000.00 for any Fiscal Year, provided such expenses are incurred not later than 90 days after the closing of the applicable Permitted

 

 

Acquisition, and (v) one-time expenses incurred in connection with the Related Transactions in an amount not to exceed $750,000.00, provided such expenses are incurred not later than 90 days after the closing of the Related Transactions, and (b) the New Equity Addback for such test period up to the amount of research and develop expenses incurred in such test period (and without duplication of the New Equity Addback utilized by Borrowers to decrease unfinanced Capital Expenditures in Sections 14.1 and 14.2). For purposes of calculating the Consolidated Fixed Charge Coverage Ratio and the Loan Party Fixed Charge Coverage Ratio only, the Loan Parties may include, without duplication, the following in Adjusted EBITDA: (i) half of the Five Points Sale Gain for the Fiscal Quarter ending March 31, 2021, (ii) one fourth (1/4) of the Five Points Sale Gain for the Fiscal Quarter ending June 30, 2021, and (iii) one fourth (1/4) of the Five Points Sale Gain for the Fiscal Quarter ending September 30, 2021.

Applicable Margin shall mean, for any day, the margin set forth below, it being understood that the Applicable Margin for (i) LIBOR Loans shall be the percentage set forth under the column “LIBO Rate Applicable Margin”, (ii) Base Rate Loans shall be the percentage set forth under the column “Base Rate Applicable Margin”, (iii) the Unused Line Fee shall be the percentage set forth under the column “Unused Line Fee Applicable Margin”, and (iv) the Letter of Credit Fee shall be the percentage set forth under the column “Letter of Credit Fee Applicable Margin”:

 

				
	
LIBO Rate 
Applicable Margin
	
Base Rate Applicable Margin
	
Unused Line Fee Applicable Margin
	
Letter of Credit Fee Applicable Margin

	
3.00%
	
1.00%
	
0.375%
	
2.50%

 

Benchmark Replacement means the sum of: (a) the alternate benchmark rate (which may include Term SOFR) that has been selected by Administrative Agent giving due consideration to (i) any selection or recommendation of a replacement rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then- prevailing market convention for determining a rate of interest as a replacement to the Libo Rate for U.S. dollar-denominated syndicated credit facilities and (b) the Benchmark Replacement Adjustment provided that, if the Benchmark Replacement as so determined would be less than 1.0%, the Benchmark Replacement will be deemed to be 1.0% for the purposes of this Agreement.

Eligible Inventory Sublimit shall mean $12,500,000.00 for Eligible Inventory with respect to alfalfa or sorghum seed stock, other than Pioneer alfalfa and sorghum.

LIBO Rate shall mean a rate of interest equal to (a) the per annum rate of interest at which United States dollar deposits for a period equal to the relevant Interest Period are offered in the London Interbank Eurodollar market at 11:00 A.M. (London time) two (2) Business Days prior to the commencement of such Interest Period (or three (3) Business Days prior to the commencement of such Interest Period if banks in London, England were not open and dealing in offshore United States dollars on such second preceding Business Day), as displayed in the Bloomberg Financial Markets system (or other authoritative source selected by Administrative Agent in its sole discretion), divided by (b) a number determined by subtracting from 1.00 the then stated maximum reserve percentage for determining reserves to be maintained by member banks of the Federal Reserve System for Eurocurrency funding or liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D), or as the LIBO Rate is otherwise determined by Administrative Agent in its sole and absolute discretion; provided, that if at any time the LIBO Rate is below one percent (1.0%), the LIBO Rate shall be deemed to be one percent (1.0%). Administrative Agent’s determination of the LIBO Rate shall be conclusive, absent manifest error and shall remain fixed during such Interest Period.

Maximum Loan Amount shall mean Twenty-Five Million and No/100 Dollars

 

 

 

 

($25,000,000.00).

Revolving Loan Availability shall mean with respect to Borrowers an amount up to the sum of the following sublimits: (i) up to eighty-five percent (85.0%) of the face amount (less maximum discounts, credits and allowances which may be taken by or granted to Account Debtors in connection therewith in the ordinary course of Borrowers’ business) of Borrowers’ Eligible Accounts; provided that such advance rate shall be reduced by one (1) percentage point for each whole or partial percentage point by which Dilution (as determined by Administrative Agent in good faith based on the results of the most recent twelve (12) month period for which Administrative Agent has conducted a field audit of Borrowers) exceeds five percent (5%); plus (ii) up to ninety percent (90.0%) of the face amount (less maximum discounts, credits and allowances which may be taken by or granted to Account Debtors in connection therewith in the ordinary course of Borrowers’ business) of Borrowers’ Eligible Foreign Accounts; provided that Eligible Foreign Accounts backed by cash against documents shall not exceed $3,000,000; plus (iii) up to the lesser of (a) sixty-five percent (65.0%) (or such other percent determined by Lender in its Permitted discretion from time to time) of the lower of cost or market value of Borrowers’ Eligible Inventory, and (b) eighty-five percent (85.0%) of the appraised net orderly liquidation value (as determined by an appraiser acceptable to Administrative Agent) of Borrowers’ Eligible Inventory; provided that, the aggregate amount of Eligible Inventory consisting of sorghum and alfalfa (other than Pioneer sorghum and alfalfa) under clause (iii)(a) and (iii)(b) above which may be included in the calculation of Revolving Loan Availability shall not exceed the Eligible Inventory Sublimit; minus (iv) the Revolving Loan Reserve, (v) minus such other reserves as Administrative Agent elects, in its sole discretion, determined in good faith, to establish from time to time, including, without limitation, reserves with respect to Bank Products Obligations, Hedging Obligations and growers liens. Notwithstanding the foregoing, all Pioneer Inventory shall be considered ineligible from and after March 1, 2021.

Revolving Loan Reserve shall mean an amount equal to Seven Million Five Hundred Thousand and No/100 Dollars ($7,500,000.00) as of the First Amendment Effective Date, and such amount shall increase by Five Hundred Thousand and No/100 Dollars ($500,000.00) on the last day of each month beginning November 1, 2020 until the Revolving Loan Reserve reaches Ten Million and No/100 Dollars ($10,000,000.00); provided, however, (a) upon Administrative Agent’s receipt of the audited financial statements for the Fiscal Year ending June 30, 2021 in accordance with Section 9.3, and (b) so long as (i) no Event of Default then exists, (ii) the Consolidated Fixed Charge Coverage Ratio and Loan Party Fixed Charge Coverage Ratio, each calculated using Reserve Adjustment EBITDA, rather than Adjusted EBITDA, on a trailing twelve (12) month basis for such Fiscal Year is not less than 1.15 to 1.00, as reflected on such audited financial statements, and (iii) Borrowers have delivered to Administrative Agent a certification that all of the foregoing conditions precedent have been satisfied, including calculations of Consolidated Fixed Charge Coverage Ratio and Loan Party Fixed Charge Coverage Ratio calculated as set forth above, then this Revolving Loan Reserve shall be reduced to $0.00.

Total Revolving Loan Commitment shall mean an amount equal to Twenty-Five Million and No/100 Dollars ($25,000,000.00) except as such amount may be increased or, following the occurrence of an Event of Default, decreased by Required Lenders in their sole discretion.

C.New Definitions. Effective as of the date of this First Amendment, Section 1.1 of the Loan Agreement is hereby amended by adding the following new definitions thereto in the appropriate alphabetical order, respectively:

First Amendment Effective Date shall mean September , 2020.

Five Points Sale Gain shall mean the Borrowers net gain realized from the sale of the processing facility located at 25552 South Butte Avenue, Five Points, CA 93264 in an aggregate amount not to exceed $1,500,000.

 

 

PPP Loan means the unsecured loans received by S&W Seed through the Paycheck Protection Program pursuant to 15 U.S.C. 636(a)(36) guaranteed by the SBA totaling approximately $1,900,000 in the aggregate.

II.Amendments to Loan Agreement. Effective as of the First Amendment Effective Date, the Loan Agreement is hereby amended as follows:

A.PPP Loan. Section 12 of the Loan Agreement is hereby amended by adding Section 12.13 to the Loan Agreement in proper numerical order as follows:

“12.13 PPP Loan. Borrowers have advised Administrative Agent and Lenders that S&W Seed obtained an unsecured PPP Loan from CIBC Bank guaranteed by the U.S. Small Business Administration (“SBA”). S&W Seed hereby represents, warrants, covenants and agrees that it has and will continue to use the proceeds thereof solely for the allowable uses set forth in Section 7(a)(36)(F) of the Small Business Act (15 U.S.C. 636(a)), as amended by the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) (the foregoing is referred to as the “PPP Loan Transaction”). Borrowers hereby represent, warrant covenant and agree to the following:

	
 
	
(a)
	
S&W Seed shall use the proceeds of the PPP Loan solely for the allowable uses set forth in Section 7(a)(36)(F) of the Small Business Act (15 U.S.C. 636(a)), as amended by the CARES Act and shall comply in all other respects with the applicable requirements of the Small Business Act, the CARES Act and any and all promulgations thereunder;
	
 

	
 
	
(b)
	
at no time shall any liens on assets of any Borrower or any other Loan Party be granted to secure the PPP Loan without further written consent by Administrative Agent in its sole discretion;
	
 

	
 
	
(c)
	
at no time shall any Loan Party guaranty the PPP Loan without further written consent by Administrative Agent in its sole discretion;
	
 

	
 
	
(d)
	
prior to its receipt of PPP Loan proceeds, S&W Seed obtained consents from all holders of Subordinated Debt and/or any other lenders to S&W Seed in which the agreements with such holders and lenders thereunder prohibit or could be construed to prohibit the PPP Loan Transaction. Borrowers shall provide Lender with copies of all such consents, each in form and substance satisfactory to Administrative Agent;
	
 

	
 
	
(e)
	
upon request by Administrative Agent, each Borrower shall promptly deliver to Administrative Agent true, correct and complete copies of any documentation executed in connection with the PPP Loan Transaction;
	
 

	
 
	
(f)
	
all financial covenants, pricing provisions and any other agreements that exist between Borrowers, Administrative Agent and Lenders that would be affected by the PPP Loan Transaction (including, without limitation, any such covenant, provision or agreement that would vary based on the amount of debt outstanding or the effect of forgiveness of all or a portion of the PPP Loan) shall be calculated and interpreted as if the PPP Loan had not been incurred until Administrative Agent agrees otherwise or such covenants, provisions and other agreements have been amended in accordance herewith. Notwithstanding the foregoing, Administrative Agent, Lender and Borrowers hereby acknowledge and agree that (i) the PPP Loan shall be considered Debt for all purposes of the Loan Agreement upon the first to occur of (a) the SBA has made a final determination of the amount of the PPP Loan that is forgiven in accordance with the CARES Act, in which case the unforgiven portion of the PPP Loan shall be deemed Debt as of the date of such determination, or (b) March 31, 2021, in which case the unforgiven portion of the PPP Loan shall be deemed Debt as of such date, (ii) under no circumstances will the PPP Loan or the forgiveness of all or any portion of the PPP Loan
	
 

 

 

be deemed to increase Borrowers’ EBITDA under the Loan Agreement for any purposes, and (iii) S&W Seed has recorded the PPP Loan on its books as a government grant; and

	
 
	
(g)
	
except as expressly amended by any other supplemental documents or instruments executed by Borrowers or Lender in order to effectuate the PPP Loan Transaction, the terms and conditions of the Loan Agreement and other Loan Documents shall remain unmodified and shall continue in full force and effect.’
	
 

B.Debt. Section 13.2 of the Loan Agreement is hereby amended by deleting Section 13.2 in its entirety and substituting therefor the following:

“13.2 Debt. No Loan Party nor any Subsidiary shall create, incur, assume or become obligated (directly or indirectly), for any Debt other than the Obligations, except that the Loan Parties and Subsidiaries may (i) incur Subordinated Debt; (ii) maintain their present Debt listed on Schedule 11.14 hereto; (iii) incur Contingent Liabilities arising with respect to customary indemnification obligations and earn out payments and with respect to Non-Loan Party Subsidiaries deferred consideration from the proceeds of Inventory and accounts receivable (subordinated to the Obligations in a manner satisfactory to Administrative Agent unless waived by Administrative Agent) in favor seller in connection with the Related Transactions or in connection with Permitted Acquisitions and purchases in connection with dispositions permitted under this Agreement; (iv) incur purchase money Debt or capitalized lease obligations in connection with Capital Expenditures permitted pursuant to Section 14.5 hereof incurred in connection with the purchase of Equipment; (v) incur Hedging Obligation approved by Administrative Agent and in favor of a Lender or an Affiliate thereof for bona fide hedging purposes and not for speculation;(vi) solely with respect to the Loan Parties, incur operating lease obligations requiring payments not to exceed $2,000,000.00 in the aggregate during any Fiscal Year of the Loan Parties; (vii) make loans to, and guaranties of Debt of, one another so long as (X) each is a Loan Party, or (Y) with respect to Non-Loan Party Subsidiaries, the amount thereof does not exceed $250,000.00 in the aggregate; (viii) incur other unsecured Debt, in addition to the Debt listed above, in an aggregate principal amount not to exceed $250,000.00,

(ix) incur the Rooster Debt, so long as such Debt is subject to the Rooster Intercreditor Agreement, (x) upon consummation of the Related Transactions, incur the Debt as set forth on Annex 2, provided any such Debt is subject to the Related Transactions Subordination Agreement, (xi) maintain Debt pursuant to extensions, renewals and refinancing of the Debt set forth in clauses (i), (ii) and (iv) above so long as the principal amount of such Debt is not increased (and any terms with respect to clause (i) above are permitted by the applicable subordination agreement) and (xii) the PPP Loan.”

C.Financial Covenants. Section 14 of the Loan Agreement is hereby amended by deleting Section 14 in its entirety and substituting therefor the following:

“SECTION 14FINANCIAL COVENANTS.

Borrowers shall maintain and keep in full force and effect each of the financial covenants set forth below:

	
 
	
14.1
	
Consolidated Fixed Charge Coverage.

Loan Parties shall not permit the Consolidated Fixed Charge Coverage Ratio, tested as of the last day of each Fiscal Quarter, to be less than 1.15 to 1.00 for any Fiscal Quarter from and after the Fiscal Quarter ending March 31, 2021. For purposes of clarification, the Consolidated Fixed Charge Coverage Ratio shall not be tested for the Fiscal Quarters ending September 30, 2020 and December 31, 2020.

	
 
	
14.2
	
Loan Party Fixed Charge Coverage.

Loan Parties shall not permit the Loan Party Fixed Charge Coverage Ratio, tested as of the last day of each Fiscal Quarter, to be less than 1.15 to 1.00 for any Fiscal Quarter

 

 

from and after the Fiscal Quarter ending March 31, 2021. For purposes of clarification, the Loan Party Fixed Charge Coverage Ratio shall not be tested for the Fiscal Quarters ending September 30, 2020 and December 31, 2020.

	
 
	
14.3
	
Capital Expenditure Limitations.

Loan Parties and their Subsidiaries shall not make any Capital Expenditures if, after giving effect to such Capital Expenditure, the aggregate cost of all Capital Expenditures would exceed $2,500,000.00 during any Fiscal Year.

	
 
	
14.4
	
Minimum EBITDA.

Loan Parties shall not permit year-to-date EBITDA to be less than negative Six Million and No/100 Dollars (-$6,000,000.00), tested as of the last day of each Fiscal Quarter, beginning with the Fiscal Quarter ending September 30, 2020, through and including December 31, 2020. For purposes of clarification, the minimum EBITDA covenant shall not be tested after December 31, 2020. Notwithstanding anything contained herein to the contrary, the Five Points Sale Gain shall not be included in the calculation of the minimum EBITDA covenant.”

D.Annex 1. Annex 1 to the Loan Agreement is hereby deleted and replaced with Annex 1 attached to this First Amendment.

III.Conditions Precedent. Administrative Agent’s and Lenders’ obligations to provide the Additional Financial Accommodations to Borrowers are subject to the full and timely performance of the following covenants prior to or contemporaneously with the execution and delivery of this First Amendment:

A.Borrowers executing and delivering, or causing to be executed and delivered to the Administrative Agent and the Lenders, the following documents, each of which shall be in form and substance acceptable to the Administrative Agent and the Lenders:

(i)a Note of even date herewith, payable by Borrowers to the order of CIBC in the original principal amount of $25,000,000.00; and

(ii)such other agreements, documents and instruments as Administrative Agent or Lenders may reasonably request.

B.No Default or Event of Default exists under the Loan Agreement, as amended by this First Amendment, or any of the other Loan Documents, other than the Existing Defaults;

C.No claims, litigation, arbitration proceedings or governmental proceedings not disclosed in writing to Administrative Agent and the Lenders prior to the date of hereof shall be pending or known to be threatened against Borrowers or any other Loan Party and no known material development not so disclosed shall have occurred in any claims, litigation, arbitration proceedings or governmental proceedings so disclosed which in the opinion of Administrative Agent is likely to materially or adversely affect the financial position or business of Borrowers or any other Loan Party or the capability of Borrowers to pay their obligations and liabilities to Lenders; and

D.There shall have been no Material Adverse Effect since the date of each Borrower’s most recent financial statements delivered to Administrative Agent.

IV.Organizational Information. Each Loan Party hereby represents and warrants to Administrative Agent and Lenders that as of the First Amendment Effective Date, (a) the formation and organizational documents of each such Loan Party attached to the Company General Certificates dated as of December 26, 2019, executed and delivered by each such Loan Party to Administrative Agent and Lenders (the “Certificates”), have not been modified or altered in any way, (b) the officers, members or managers, as applicable, for each Loan Party set forth in each such Certificate, that are authorized

 

 

to execute documents on behalf of such Loan Party remain duly authorized officers, members or managers of such Loan Party, (c) the resolutions attached to each of such Certificate have not been modified, rescinded or altered in any way and are sufficient to authorize the execution and delivery of this First Amendment and the other agreements, documents and instruments executed and delivered in connection herewith, and (d) each Loan Party is and continues to be in good standing in the state of its formation and in all other states where it is qualified or licensed to do business in which the laws thereof require such Loan Party to be so qualified or licensed except where the failure to qualify would not have a material adverse effect.

V.Waiver of Existing Defaults. The Loan Parties each hereby acknowledge and agree as follows: (a) the following Events of Default currently exist under the Loan Agreement (collectively, the “Existing Defaults”): (i) the Loan Parties failed to satisfy the Consolidated Fixed Charge Coverage Ratio for the Fiscal Quarter ending June 30, 2020, in violation of Section 14.1 of the Loan Agreement, and (ii) the Loan Parties failed to satisfy the Loan Party Fixed Charge Coverage Ratio for the Fiscal Quarter ending June 30, 2020, in violation of Section 14.2 of the Loan Agreement, and (b) as a result of such Events of Default, Administrative Agent and the Lenders have the right to immediately exercise such of their rights and remedies pursuant to the Loan Agreement and the other Loan Documents as they deem appropriate. Each Loan Party hereby represents and warrants to Administrative Agent and the Lenders that no Event of Default currently exists other than the Existing Defaults set forth above. Subject to the Loan Parties’ full and timely satisfaction of the conditions precedent set forth in this First Amendment, Administrative Agent and the Lenders hereby waive the Existing Defaults; provided that such waiver shall not be or be deemed to be a waiver of any other Event of Default, whether now existing or hereafter arising or occurring, including, without limitation, any future Event of Default arising under Section 14.1 and Section 14.2 of the Loan Agreement, other than the Existing Defaults for the time period set forth above.

VI.Conflict. If, and to the extent, the terms and provisions of this First Amendment contradict or conflict with the terms and provisions of the Loan Agreement, the terms and provisions of this First Amendment shall govern and control; provided, however, to the extent the terms and provisions of this First Amendment do not contradict or conflict with the terms and provisions of the Loan Agreement, the Loan Agreement, as amended by this First Amendment, shall remain in and have its intended full force and effect, and Lenders, Administrative Agent and Borrowers hereby affirm, confirm and ratify the same.

VII.Severability. Wherever possible, each provision of this First Amendment shall be interpreted in such manner as to be valid and enforceable under applicable law, but if any provision of this First Amendment is held to be invalid or unenforceable by a court of competent jurisdiction, such provision shall be severed herefrom and such invalidity or unenforceability shall not affect any other provision of this First Amendment, the balance of which shall remain in and have its intended full force and effect. Provided, however, if such provision may be modified so as to be valid and enforceable as a matter of law, such provision shall be deemed to be modified so as to be valid and enforceable to the maximum extent permitted by law.

VIII.Reaffirmation. Each Loan Party hereby reaffirms and remakes all of its respective representations, warranties, covenants, duties, obligations and liabilities contained in the Loan Agreement, as amended hereby, and the other Loan Documents.

	
 
	
IX.
	
Fees, Costs and Expenses.

A.Contemporaneously herewith, Borrowers shall pay Lender a fully earned, non- refundable amendment fee in the amount of Twenty-Five Thousand and No/100 Dollars ($25,000.00).

B.Borrowers agree to pay, upon demand, all fees, costs and expenses of Administrative Agent and Lenders, including, but not limited to, reasonable attorneys’ fees, in connection with the preparation, execution, delivery and administration of this First Amendment and the other agreements, documents and instruments executed and delivered in connection herewith or pursuant hereto.

	
 
	
X.
	
Reservation of Rights. Except with respect to the Existing Defaults, Administrative Agent and

 

 

Lenders reserve all of their rights and remedies, including all security interests, assignments and liens pursuant to the Loan Agreement and the other Loan Documents, as well as any rights and remedies at law, in equity or otherwise. Except with respect to the Existing Defaults, nothing contained in this First Amendment shall be or be deemed a waiver of any presently existing or any hereafter arising or occurring breach, default or event of default, nor shall preclude the subsequent exercise of any of Administrative Agent’s or Lenders’ rights or remedies.

XI.Choice of Law. This First Amendment has been delivered and accepted in Chicago, Illinois, and shall be governed by and construed in accordance with the laws of the State of Illinois, regardless of the laws that might otherwise govern under applicable principles of conflicts of law as to all matters, including matters of validity, construction, effect, performance and remedies.

XII.Counterpart. This First Amendment may be executed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. A facsimile or email transmitted executed counterpart to this First Amendment and the other agreements, documents and instruments executed in connection herewith will be deemed an acceptable original for purposes of consummating this First Amendment and such other agreements, documents and instruments; provided, however, each Borrower and each other Loan Party shall be required to deliver to the Administrative Agent original executed signature pages in substitution for said facsimile or email transmitted signature pages upon the Administrative Agent’s request therefor.

XIII.Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THE LOAN AGREEMENT, AS AMENDED FROM TIME TO TIME, ANY NOTE, ANY OTHER LOAN DOCUMENT AND ANY OTHER AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

[signature page follows]

 

 

 

IN WITNESS WHEREOF, Administrative Agent, Lenders, Borrowers and each other Loan Party have caused this First Amendment to be executed and delivered by their duly authorized officers as of the date first set forth above.

 

BORROWERS:

 

		
	
S&W SEED COMPANY,

a Nevada corporation

 

By/s/ Matthew K. Szot
Matthew K. Szot, Executive Vice President and Chief Financial Officer
	
SEED HOLDING, LLC,

a Nevada limited liability company

 

By /s/ Matthew K. Szot
Matthew K. Szot, Manager

	
 

STEVIA CALIFORNIA, LLC,

a California limited liability company

 

By/s Matthew K. Szot
Matthew K. Szot, Manager
	
 

 

 

 

 

 

 

 

 

 

 

[Signature page to First Amendment to Loan and Security Agreement]

 

CIBC BANK USA,

as Administrative Agent and as a Lender

 

By: /s/ Jennifer Kempton
Name: Jennifer Kempton

Title: Managing Director

 

 

 

 

 

 

[Signature page to First Amendment to Loan and Security Agreement]

 

ANNEX 1 – COMMITMENTS

 

			
	
Lender
	
Revolving Loan Commitment
	
Percentage

	
CIBC BANK USA
	
$25,000,000.00
	
100.000000000

	
Total
	
$25,000,000.00
	
100.000000000

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