UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
December 30, 2014
Date of Report (Date of earliest event reported)
S&W SEED COMPANY
(Exact Name of Company as Specified in Its Charter)
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25552 South Butte Avenue
Five Points, CA 93624
(559) 884-2535
Not Applicable
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Definitive Material Agreement.
Securities Purchase Agreement (Debentures)
On December 30, 2014, S&W Seed Company, a Nevada corporation (the "Registrant"), entered into a Securities Purchase Agreement (the "Debenture Purchase Agreement") pursuant to which the Registrant will issue and sell in a private placement to certain accredited investors (i) senior secured convertible debentures in an aggregate principal amount of up to $27,000,000 (the "Debentures"), and (ii) common stock purchase warrants for the purchase of up to 2,700,000 shares of the Registrant's common stock (the "Warrant Shares").
At the Closing, the Registrant will receive gross proceeds of approximately $27,000,000 from the issuance and sale of the Debentures. Craig-Hallum Capital Group LLC and Roth Capital Partners served as co-placement agents for the transaction. Piper Jaffray & Co. acted as financial advisor to the Registrant. The net proceeds will be used to pay a portion of the purchase price for the acquisition of assets of Pioneer Hi-Bred International, Inc. (which is described in the Registrant's Current Report on Form 8-K that was filed on December 19, 2014 (the "Prior 8-K")).
The Debenture Agreement includes customary representations, warranties and covenants by the parties and customary termination provisions including that, subject to the terms of the Debenture Purchase Agreement, the Registrant or any purchaser, as to such purchaser's obligations only, may terminate the Debenture Purchase Agreement if the transaction has not been consummated by January 7, 2015.
The foregoing description of the Debenture Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Debenture Purchase Agreement, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Securities Purchase Agreement (Common Stock)
On December 30, 2014, the Registrant entered into a Securities Purchase Agreement (the "Share Purchase Agreement") pursuant to which the Registrant will issue and sell 1,294,000 shares of its common stock (the "Purchased Shares") to MFP Partners, L.P. in a private placement transaction. MFP Partners, LP. will pay to the Registrant a purchase price of $3.60 per share, for aggregate consideration of $4,658,400, which shall be paid in immediately available funds at closing. The net proceeds of the sale will be used by the Registrant (i) to pay a portion of the purchase price for the acquisition of assets of Pioneer Hi-Bred International, Inc., as described in the Prior 8-K, and (ii) for working capital purposes.
The Purchased Shares will be "registrable securities" for purposes of the Registration Rights Agreement described below in this Item 1.01.
The Share Purchase Agreement includes customary representations, warranties and covenants by the parties and customary termination provisions including that, subject to the terms of the Share Purchase Agreement, either party may terminate the Share Purchase Agreement if the transaction has not been consummated by January 7, 2015.
The foregoing description of the Share Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Share Purchase Agreement, a copy of which is attached hereto as Exhibit 4.1 and is incorporated herein by reference.
Senior Secured Convertible Debenture
At the closing under the Debenture Purchase Agreement, the Registrant will issue to each of the purchasers a senior secured convertible debenture in a principal amount equal to each such purchaser's subscription amount. The Debentures shall mature on the date that is thirty-five (35) months after the original issuance date. The Debentures shall bear interest at a rate of eight percent (8%) per annum, subject to adjustment as set forth in the Debentures. Interest shall be payable monthly in arrears and, so long as certain equity conditions have been satisfied, may be paid in shares of common stock at the option of the Registrant. The Registrant may elect to pay interest in whole or in part in cash. The Registrant intends to provide notice to the purchasers prior to the initial interest payment date of its intention to pay interest in cash.
Each of the Debentures is subject to voluntary conversion, in whole or in part, into shares of common stock of the Registrant at the option of the holder. The conversion price equals $5.00, subject to adjustment as set forth in the Debentures. If, on the date that is nine months from the original date of issuance of the Debentures (the "Adjustment Date"), the conversion price then in effect exceeds the "Adjusted Conversion Price," the conversion price under the Debentures will be reset to the Adjusted Conversion Price. As defined in the Debentures, the "Adjusted Conversion Price" means the greater of (i) the arithmetic average of the 10 lowest volume weighted average prices of the common stock during the 20 consecutive trading days ending on the trading day that is immediately prior to the Adjustment Date (subject to adjustment for any stock dividend, stock split, stock combination or other similar event affecting the common stock during such 20 trading day period) and (ii) $4.15 (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after December 30, 2014).
If the Registrant grants, issues or sells any common stock equivalents, options, convertible securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of common stock (the "Purchase Rights"), the holder of the Debenture will be entitled to acquire, the aggregate Purchase Rights which such holder could have acquired if the holder had held the number of shares of common stock acquirable upon complete conversion of the Debenture.
The Debentures shall be subject to monthly redemptions, commencing July 1, 2015. The monthly redemption amount is in shares of common stock of Registrant so long as certain equity conditions have been satisfied. However, upon prior written irrevocable notice, the Registrant may elect to pay all or part of a monthly redemption amount in cash. The Registrant intends to provide notice to the Holders prior to the initial monthly redemption payment date of its intention to pay the monthly redemption amount in cash. Following satisfaction of the equity conditions set forth in the Debentures (and so long as such satisfaction of the equity conditions continues), Registrant may cause the holder to convert all or part of the then outstanding principal amount of the applicable Debenture into shares of common stock of Registrant, as determined in accordance with the terms of the Debentures.
Only if the Registrant is electing to service the monthly redemption in common stock, the holders of the Debentures have the right to accelerate payment on each monthly redemption date of up to three monthly redemption amounts upon written notice to the Registrant. The holders also have the right to defer payment of up to four monthly redemption amounts. The Registrant also has the right to accelerate payment of up to two monthly redemptions amounts in the aggregate upon written notice to the Holder.
Prior to the date that is six months following the original issue date, Registrant also has the right to redeem up to $5,000,000, in the aggregate, of the Debentures upon the sale of certain real property or with cash from other sources. In addition, after the date that is six months after the original issue date, so long as the equity conditions have been satisfied (and such satisfaction of the equity conditions continues) the Registrant may redeem all or any portion of the principal amount of the applicable Debentures.
Following an event of default by the Registrant, the holders of the Debentures may require the Registrant to redeem all or any portion of the outstanding principal of the Debentures. Such redemption shall be payable in cash by wire transfer at a price equal to the mandatory default amount determined in accordance with terms of the Debentures.
Until such time as the Registrant has obtained shareholder approval required by The Nasdaq Stock Market for the issuance of shares greater than 19.99% of its outstanding and outstanding shares of common stock on the closing date, the Registrant may not issue, upon conversion of the Debentures, a number of shares of Common Stock which, when aggregated with any shares of common stock issued on or after the original issue date and prior to such conversion date (i) in connection with the conversion of any Debentures issued pursuant to the Debenture Purchase Agreement or as interest pursuant to the Debentures and (ii) in connection with the exercise of any Purchase Warrants, would exceed 1,036,594 shares of common stock (subject to adjustment for forward and reverse stock splits, recapitalizations and the like occurring after December 30, 2014) (or in the event the transactions contemplated by the Debenture Purchase Agreement are not integrated with the transactions contemplated by the Share Purchase Agreement for purposes of any shareholder approval requirement, 2,330,594 shares of common stock (subject to adjustment for forward and reverse stock splits, recapitalizations and the like occurring after December 30, 2014).
The foregoing description of the Debentures does not purport to be complete and is qualified in its entirety by reference to the full text of the Debentures, the form of which is attached hereto as Exhibit 10.2 and is incorporated herein by reference.
Common Stock Purchase Warrant
Concurrently with the issuance of the Debentures, Registrant shall issue to each of the purchasers a warrant (the "Purchase Warrant") to acquire shares of common stock of Registrant (the "Warrant Shares") equal to fifty percent (50%) of the shares issuable to each such purchaser upon conversion of the applicable Debenture. The Purchase Warrant shall be exercisable for the period commencing six (6) months following issuance and ending at the close of business on the date that is the five (5) year anniversary of such commencement date.
The initial exercise price for the purchase of the Warrant Shares equals $5.00, subject to adjustment as set forth in the Purchase Warrant. If prior to the third anniversary of the issuance date, the Registrant issues or sells (or is deemed to have issued or sold) any common stock of the Registrant for consideration per share less than the exercise price in effect immediately prior to such issuance or sale, then simultaneously with each such dilutive issuance the exercise price will be adjusted in accordance with the terms of the Purchase Warrant. Further, if, on the Adjustment Date, the exercise price then in effect exceeds the "Adjusted Exercise Price," the exercise price for the Purchase Warrant will be reset to the Adjusted Exercise Price. As defined in the Purchase Warrant, the "Adjusted Exercise Price" means the greater of (i) the arithmetic average of the 10 lowest volume weighted average prices of the common stock during the 20 consecutive trading days ending on the trading day that is immediately prior to the Adjustment Date (subject to adjustment for any stock dividend, stock split, stock combination or other similar event affecting the common stock during such 20 trading day period) and (ii) $4.15 (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after December 30, 2014).
If at any time after the initial exercise date, there is no registration statement registering, or no current prospectus available for, the resale of the Warrant Shares by the holder thereof, then the Purchase Warrant may also be exercised, in whole or in part, at such time by means of a "cashless exercise" as set forth in the Purchase Warrant.
At any time after the date that is six (6) months immediately following the issuance date, provided that (i) all equity conditions set forth in the Purchase Warrant have been satisfied, and (ii) the closing sales price of the common stock equals or exceeds $12.00, the Registrant may redeem all or any part of the Warrant Shares then remaining for cash in an amount equal to the optional redemption price, which shall be $0.25 per Warrant Share, as adjusted in accordance with the Purchase Warrant. The Purchase Warrant contains standard protections for dividends, purchase rights and merger, consolidation or asset sale transactions.
Until such time as the Registrant has obtained shareholder approval required by The Nasdaq Stock Market for the issuance of shares greater than 19.99% of its outstanding and outstanding shares of common stock on the closing date, the Registrant may not issue, upon exercise of the Purchase Warrants, a number of shares of Common Stock which, when aggregated with any shares of common stock issued on or after the original issue date and prior to such exercise date (i) in connection with the conversion of any Debentures issued pursuant to the Debenture Purchase Agreement or as interest pursuant to the Debentures and (ii) in connection with the exercise of any Purchase Warrants, would exceed 1,036,594 shares of common stock (subject to adjustment for forward and reverse stock splits, recapitalizations and the like occurring after December 30, 2014) (or in the event the transactions contemplated by the Debenture Purchase Agreement are not integrated with the transactions contemplated by the Share Purchase Agreement for purposes of any shareholder approval requirement, 2,330,594 shares of common stock (subject to adjustment for forward and reverse stock splits, recapitalizations and the like occurring after December 30, 2014).
The foregoing description of the Purchase Warrant does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Warrant, the form of which is attached hereto as Exhibit 10.3 and is incorporated herein by reference.
Registration Rights Agreement
A Registration Rights Agreement (the "Registration Rights Agreement") will be entered into by the Registrant and the purchasers of the Debentures and Purchased Shares on the date of the closing of the transactions contemplated by the purchase agreements. Under the terms of the Registration Rights Agreement, the Registrant will agree to file registration statements with respect to, among other things, the common stock issuable under the Debentures and the Purchase Warrants, as well as the Purchased Shares. The initial registration statement is to be filed with the SEC within thirty (30) calendar days following the closing of the transactions contemplated by the Debenture Purchase Agreement. Additional registration statements are to be filed on the later of (i) sixty (60) days after substantially all of the registrable securities registered under the preceding registration statement have been sold, or (ii) six (6) months from the date the most recent registration statement is declared effective by the SEC.
If, among other things, the Registrant fails to file the registration agreement as set forth in the Registration Rights Agreement or if the registration statements are not continuously effective, the Registrant shall pay registration delay payments equal to the product of 1.0% and the aggregate subscription amount paid by each such holder under the Debenture Purchase Agreement on the date of the Registrant's failure and on each monthly anniversary thereof (prorated for periods less than 30 days) until such time as the failure is cured.
The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Registration Rights Agreement, the form of which is attached hereto as Exhibit 10.4 and is incorporated herein by reference.
Security Agreement
The Registrant and each of its U.S. subsidiaries will enter into a Security Agreement on the date of the closing of the transactions contemplated by the Debenture Purchase Agreement (the "Security Agreement"), in favor of the collateral agent for the purchasers under the Debenture Purchase Agreement. Pursuant to the terms of the Security Agreement, the Debentures shall be secured by the assets of the Registrant and each of its U.S. subsidiaries, including, without limitation, mortgages on certain real property owned by the Registrant. The Debentures shall also be guaranteed by each of the U.S. subsidiaries of the Registrant.
The foregoing description of the Security Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Security agreement, the form of which is attached hereto as Exhibit 10.5 and is incorporated herein by reference.
Guaranty
Each of the Registrant's U.S. subsidiaries will enter into a Guaranty, on the date of the closing of the transactions contemplated by the Debenture Purchase Agreement, to guarantee the Registrant's obligations with respect to the Debentures. The foregoing description of the Guaranty does not purport to be complete and is qualified in its entirety by reference to the full text of the Guaranty, the form of which is attached hereto as Exhibit 10.6 and is incorporated herein by reference.
Intercreditor and Subordination Agreement
Wells Fargo Bank, National Association, the collateral agent, and Pioneer H-Bred International, Inc. will enter into an Intercreditor and Subordination Agreement on the date of the closing of the transactions contemplated by the Debenture Purchase Agreement, pursuant to which the parties define their rights and obligations with respect to the assets of the Registrant. The foregoing description of the Intercreditor and Subordination Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Intercreditor and Subordination Agreement, a copy of which is attached hereto as Exhibit 10.7 and is incorporated herein by reference.
Voting Agreement
The Registrant and certain of its shareholders, including the purchaser under the Share Purchase Agreement, will enter into a Voting Agreement pursuant to which the shareholders will agree to vote their respective shares of common stock in favor of certain shareholder approvals required under the Debenture Purchase Agreement. The foregoing description of the Voting Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Voting Agreement, the form of which is attached hereto as Exhibit 4.2 and is incorporated herein by reference.
Lock-Up Agreement
Under the terms of a lock-up agreement to be entered into on the date of the closing of the transactions contemplated by the purchase agreements, the officers and directors of the Registrant will agree not to transfer shares of common stock of the Registrant without the prior consent of the lead investor, for a period ninety (90) days after the earlier of (i) the date the registration statement required pursuant to the terms of the Registration Rights Agreement is effective, and (ii) the date that the shares issuable upon conversion of the Debentures and the Warrant Shares are available for resale under Rule 144. The Registrant shall impose irrevocable stop transfer instructions preventing its transfer agent and the registrar from transferring any shares of common stock of the Registrant held by the officers and directors except in compliance with the terms of the lock-up agreement.
The foregoing description of the lock-up agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the lock-up agreement, the form of which is attached hereto as Exhibit 4.3 and is incorporated herein by reference.
Transfer Agent Instruction Letter
On the closing date of the transactions contemplated by the Debenture Purchase Agreement, the Registrant will issue irrevocable authorization and direction to Transfer Online, Inc., as transfer agent, regarding the future issuance of the shares issuable upon conversion of the Debentures and the Warrant Shares. The foregoing description of the transfer agent instruction letter does not purport to be complete and is qualified in its entirety by reference to the full text of the transfer agent instruction letter, the form of which is attached hereto as Exhibit 4.4 and is incorporated herein by reference.
Escrow Agreement
The Registrant, Craig-Hallum Capital Group LLC and Alerus Financial, as escrow agent, are party to an Escrow Agreement, dated December 30, 2014, pursuant to which the proceeds of the purchase price under the Debenture Purchase Agreement will be placed into escrow until the closing under the Debenture Purchase Agreement, to be released to the Registrant upon such closing.
The foregoing description of the escrow agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the escrow agreement, a copy of which is attached hereto as Exhibit 10.8 and is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
Additionally, the Registrant and Wells Fargo Bank, National Association (the "Bank") will enter into an Amendment and Waiver Agreement on the date of the closing of the transactions contemplated by the Debenture Purchase Agreement, pursuant to which the Bank will agree to waive or amend certain provisions of the credit and security agreements related to the Registrant's working capital loans. In particular, the Bank has agreed to waive provisions that would prohibit or restrict the Registrant's (i) acquisition of assets as described in the Prior 8-K, (ii) ability to incur additional indebtedness, or (iii) ability to grant liens over certain assets of the Registrant or its subsidiaries. The Bank has also agreed to amend the credit agreements to add additional affirmative covenants, negative covenants and events of default.
The foregoing description of the Amendment and Waiver Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment and Waiver Agreement, a copy of which is attached hereto as Exhibit 10.9 and is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth under Item 1.01 of this Current Report on Form 8-K regarding the issuance of the Debentures and Purchase Warrants is incorporated by reference into this item 3.02. As described in Item 1.01 of this Current Report on Form 8-K, the Debentures were sold to the initial accredited investors pursuant to a private placement under Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder.
The Debentures, the underlying shares of the Registrant's common stock issuable upon conversion of the Debentures, and the Warrant Shares have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an appropriate exemption from the registration requirements of the Securities Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit |
Description |
4.1 4.2 4.3 4.4 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9
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Securities Purchase Agreement between S&W Seed Company and MFP Partners L.P. Voting Agreement among S&W Seed Company and the shareholders named therein Form of Lock-Agreement Form of Transfer Agent Instructions Securities Purchase Agreement between S&W Seed Company and the purchasers named therein Form of 8% Senior Secured Convertible Debenture Form of Common Stock Purchase Warrant Form of Registration Rights Agreement Form of Security Agreement Form of Guaranty Form of Intercreditor and Subordination Agreement Form of Escrow Agreement Form of Amendment and Waiver Agreement |
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
S&W SEED COMPANY |
By: /s/ Matthew K. Szot |
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Matthew K. Szot | |
Executive Vice President of Finance and Administration and Chief Financial Officer |
Date: December 31, 2014
EXHIBIT INDEX
Exhibit
Description
4.1
4.2
4.3
4.4
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
Securities Purchase Agreement between S&W Seed Company and MFP Partners L.P.
Voting Agreement among S&W Seed Company and the shareholders named therein
Form of Lock-Agreement
Form of Transfer Agent Instructions
Securities Purchase Agreement between S&W Seed Company and the purchasers named therein
Form of 8% Senior Secured Convertible Debenture
Form of Common Stock Purchase Warrant
Form of Registration Rights Agreement
Form of Security Agreement
Form of Guaranty
Form of Intercreditor and Subordination Agreement
Form of Escrow Agreement
Form of Amendment and Waiver Agreement
EXHIBIT 4.1
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this " Agreement "), is made and entered into as of this ____ day of December, 2014, between S&W Seed Company, a Nevada corporation, with offices at 25552 South Butte Avenue, Five Points, California 93624 (the " Company ") and MFP Partners, L.P., with offices at 667 Madison Avenue, 25 th Floor, New York, NY 10065 (the " Purchaser ").
WITNESSETH :
WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the " Securities Act ") and Rule 506 promulgated thereunder, the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company, securities of the Company as more fully described in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants and the terms set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1 - DEFINITIONS
Section 1.1 Certain Defined Terms
As used in this Agreement, the following terms shall have the following meanings:
" 1934 Act " means the Securities Exchange Act of 1934, as amended.
" Affiliate " of a person or entity shall mean any other person or entity directly, or indirectly through one or more intermediaries, controlling, controlled by, or under common control with such person or entity. As used in this definition, the term " control " means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract, or otherwise.
" Business Day " means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
" Commission " means the United States Securities and Exchange Commission.
" Common Stock " means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.
" Common Stock Equivalents " means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
" Contingent Obligation " means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.
" Conversion Price " shall have the meaning ascribed to such term in the Debentures.
" Debt Transaction Documents " has the meaning set forth in Section 3.1(g).
" Disclosure Schedules " means the Disclosure Schedules delivered by the Company concurrently with the execution and delivery of this Agreement.
" Effective Date " means the earliest of the date that (a) the initial Registration Statement has been declared effective by the Commission, (b) all of the Shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale restrictions or (c) following the one-year anniversary of the Closing Date provided that a holder of Shares is not an Affiliate of the Company, all of the Shares may be sold pursuant to an exemption from registration under Section 4(1) of the Securities Act without volume or manner-of-sale restrictions and Company Counsel has delivered to such holders a standing written unqualified opinion that resales may then be made by such holders of the Shares pursuant to such exemption which opinion shall be in form and substance reasonably acceptable to such holders.
" Exchange Act " means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
" Exempt Issuance " means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose for services rendered to the Company, (b) securities upon the exercise or exchange of or conversion of any securities issued pursuant to the Debt Transaction Documents and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, including without limitation, securities issued upon exercise of outstanding Class B Warrants, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in
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connection with stock splits or combinations) or to extend the term of such securities, (c) securities issued pursuant to acquisitions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, and (d) up to 300,000 shares of Common Stock (as adjusted for any stock dividends, stock split, stock combination, reclassification or similar transactions occurring after the date hereof) issued in a transaction with Bioceres, S.A., a joint-venture partner of the Company.
" FCPA " means the Foreign Corrupt Practices Act of 1977, as amended.
" Governmental Authority " means any United States federal, state or local or any foreign government, governmental regulatory or administrative authority, agency or commission or any court, tribunal or judicial body of competent jurisdiction.
" Indebtedness " of any Person means, without duplication (a) all indebtedness for borrowed money, (b) all obligations issued, undertaken or assumed as the deferred purchase price of property or services, including, without limitation, "capital leases" in accordance with GAAP (other than trade payables entered into in the ordinary course of business consistent with past practice), (c) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (d) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (e) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (f) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a "capital lease", (g) all indebtedness referred to in clauses (a) through (f) above secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (h) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (a) through (g) above.
" Issuer Covered Person " shall have the meaning ascribed to such term in Section 3.1(qq).
" Law " means any foreign, local, state or federal law, ordinance, regulation, order, injunction or decree, or common law or any other binding requirement of a Governmental Authority.
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" Liens " means encumbrances, mortgages, claims (pending or threatened), security interests, options, charges, pledges, title defects or objections, easements, encroachments or restrictions of any kind of any nature whatsoever, lock-up arrangements, options or rights of first offer or refusal, or stop transfer order.
" Person " means any entity, organization or individual.
" Pioneer Documents " shall have the meaning ascribed to the term "Transaction Documents" in the Asset Purchase and Sale Agreement, dated as of December 19, 2014, by and between the Company and Pioneer Hi-Bred International, Inc.
" Placement Agent " means Craig-Hallum Capital Group LLC.
" Proceeding " means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.
" Registration Statement " means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale of the Shares by the Purchaser as provided for in the Registration Rights Agreement.
" Required Approvals " shall have the meaning ascribed to such term in Section 3.1(e).
" SEC Documents " shall mean each form, report, schedule, statement and other document filed or required to be filed by the Company with the Commission pursuant to the 1934 Act through the date hereof, including any filed amendment to such document, whether or not such amendment is required to be so filed.
" Shareholder Approval " means such approval required by the applicable rules and regulations of the Nasdaq Stock Market (or any successor entity) from the shareholders of the Company with respect to the transactions contemplated by the Transaction Documents.
" Short Sales " means all "short sales" as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).
" Subsidiary " means any entity in which the Company, directly or indirectly, owns any of the capital stock or holds an equity or similar interest.
" Trading Market " means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).
" Transaction Documents " means this Agreement, the Registration Rights Agreement and the Voting Agreement, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated thereunder and hereunder.
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" Transfer Agent " means Transfer Online, Inc.
" Warrants " means, collectively, the Common Stock purchase warrants delivered to the purchasers pursuant to the Debt Transaction Documents, which Warrants shall be exercisable six months from the Closing Date and have a term of exercise equal to five (5) years from the date of exercisability.
ARTICLE 2 - PURCHASE AND SALE
Section 2.1 Purchase and Sale of Securities.
At the Closing (as defined in Section 8.1), the Company will sell and issue to the Purchaser, and the Purchaser will purchase (the " Closing "), One Million Two Hundred Ninety Four (1,294,000) shares of the Company's authorized and unissued Common Stock (the " Shares "), free and clear of all Liens other than transfer restrictions under applicable securities laws and any Liens resulting from actions of the Purchaser and his Affiliates.
At the Closing the Purchaser will pay to the Company Four Million Six Hundred Fifty Eight Thousand Four Hundred Dollars ($4,658,400) (the " Purchase Price ") ($3.60 per share) as payment in full for the Shares purchased by the Purchaser hereunder. The amount required to be paid pursuant to this Section 2.2 shall be paid by wire transfer of immediately available funds at Closing to an account designated by the Company no later than one business day prior to Closing.
Section 2.3 Deliveries by the Company.
At the Closing, the Company shall deliver or cause to be delivered to the Transfer Agent such documents as may be required by the Transfer Agent to issue certificate(s) for the Shares in Purchaser's name.
Section 2.4 Deliveries by Purchaser.
At the Closing, the Purchaser will deliver or cause to be delivered to the Company (i) the Purchase Price by wire transfer of immediately available funds to an account designated by the Company, and (ii) the Voting Agreement in form attached as Exhibit A hereto executed by the Purchaser.
ARTICLE 3 - COMPANY REPRESENTATIONS AND WARRANTIES
3.1 Except as set forth in the correspondingly numbered Disclosure Schedules, the Company hereby makes the following representations and warranties to the Purchaser:
(a) Subsidiaries . All of the direct and indirect Subsidiaries (both domestic and foreign) of the Company are set forth on Schedule 3.1(a) . The Company owns, directly or
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indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. Except as otherwise stated in Schedule 3.1(a) , the Company has the unrestricted right to vote, and (subject to limitations imposed by applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries owned by the Company or such Subsidiary.
(b) Organization and Qualification . Except as may otherwise be stated in Schedule 3.1(b) , the Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in a material adverse effect on (i) the transactions contemplated by the Transaction Documents, (ii) the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, individually or taken as a whole, or (iii) the Company's ability to perform on a timely basis its obligations under any Transaction Document (any of clauses (i), (ii) or (iii), a " Material Adverse Effect "). No Proceeding has been instituted in any applicable jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power, authority or qualification of the Company or its Subsidiaries.
(c) Authorization; Enforcement . The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out the Company's obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company, and no further action is required by the Company, the Board of Directors or the Company's shareholders in connection herewith or therewith, other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which the Company is a party have been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (A) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, (B) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (C) insofar as indemnification and contribution provisions may be limited by applicable law.
(d) No Conflicts . The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which the Company is a party, the issuance
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and sale of the Shares and the consummation by the Company of the transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company's or any Subsidiary's certificate or articles of incorporation, bylaws or other organizational or charter documents; (ii) conflict with, or constitute a default (or an event that with notice, lapse of time, or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to other Persons any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time, or both) of, any agreement, credit facility, debt or other instrument (evidencing Company or Subsidiary Indebtedness or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, such as could reasonably be expected to result in a Material Adverse Effect; or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected.
(e) Filings, Consents and Approvals . Neither the Company nor any Subsidiary is required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filing of a Current Report on Form 8-K disclosing the material terms of the transactions contemplated hereby, (ii) the filing with the Commission pursuant to the Registration Rights Agreement, (iii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Shares for trading thereon in the time and manner required thereby, and (iv) the filing of a Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the " Required Approvals ").
(f) Issuance of the Shares . The Shares are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents.
(g) Capitalization . The capitalization of the Company is as set forth on Schedule 3.1(g) , which Schedule 3.1(g) shall also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof. The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of stock options under the Company's equity incentive plans, the issuance of shares of Common Stock to employees and the Company's former chairman pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Shares and the Company's 8% Senior Secured Convertible Debentures (the " Debentures ") and related transactions being conducted concurrently herewith (the " Debt Transaction Documents "), pursuant to the Company's equity incentive plan and the
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outstanding Class B Warrants originally issued in connection with the Company's initial public offering, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock or the capital stock of any Subsidiary, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock, Common Stock Equivalents or capital stock of any Subsidiary. The issuance and sale of the Shares will not obligate the Company or any Subsidiary to issue shares of Common Stock or other securities to any Person (other than the Purchaser) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. There are no outstanding securities or instruments of the Company or any Subsidiary that contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to redeem a security of the Company or such Subsidiary. The Company does not have any stock appreciation rights or "phantom stock" plans or agreements or any similar plan or agreement. All of the outstanding shares of capital stock of the Company and each Subsidiary are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any shareholder, the Board of Directors or others is required for the issuance and sale of the Shares. Other than as contemplated by the Transaction Documents and the Debt Transaction Documents, there are no shareholders agreements, voting agreements or other similar agreements with respect to the Company's capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company's shareholders.
(h) SEC Reports; Financial Statements . The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two (2) years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the " SEC Reports ") on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company is not and has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved ("GAAP"), except as may be otherwise specified in such financial statements or the notes thereto, and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the
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Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.
(i) Material Changes; Undisclosed Events, Liabilities or Developments . Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) neither the Company nor any Subsidiary has incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company's or any Subsidiary's financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) except as set forth on Schedule 3.1(i)(iii), neither the Company nor any Subsidiary has sold any assets outside the ordinary course of business or had capital expenditures, individually or in the aggregate, in excess of $200,000, (iv) neither the Company nor any Subsidiary has altered its method of accounting, (v) neither the Company nor any Subsidiary has declared or made any dividend or distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (vi) neither the Company nor any Subsidiary has issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company or Subsidiary equity incentive plans. The Company does not have pending before the Commission any request for confidential treatment of information. No event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company, its Subsidiaries or their respective businesses, properties, operations, assets or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date that this representation is made.
(j) Litigation . There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (each, an " Action ") which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Shares or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company, nor any Subsidiary nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.
(k) Labor Relations . No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company or any Subsidiary that could reasonably be expected to result in a Material Adverse Effect. None of the Company's or its
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Subsidiaries' employees is a member of a union that relates to such employee's relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(l) Compliance . Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case of clauses (i), (ii) and (iii) as could not have or reasonably be expected to result in a Material Adverse Effect.
(m) Environmental Laws . The Company and its Subsidiaries (i) are in compliance with all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land surface or subsurface strata), including laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, "Hazardous Materials") into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder (" Environmental Laws "); (ii) have received all permits licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses; and (iii) are in compliance with all terms and conditions of any such permit, license or approval where in each of clauses (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
(n) Regulatory Permits . The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory
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authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (" Material Permits "), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.
(o) Title to Assets . All of the Company's and each Subsidiary's owned real property is set forth on Schedule 3.1(o) (the " Real Property Collateral "). The Company and each Subsidiary have good and marketable title in fee simple to all such Real Property Collateral owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company or such Subsidiary, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company or such Subsidiary and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP, and the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company or any Subsidiary are held by them under valid, subsisting and enforceable leases with which the Company or such Subsidiary is in compliance. Except as set forth on Schedule 3.1(o) , none of the Company's Subsidiaries owns or leases any real property.
(p) Intellectual Property . The Company and each Subsidiary have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights as necessary or required for use in connection with their respective businesses and which the failure to so have could have a Material Adverse Effect (collectively, the " Intellectual Property Rights "). Each of the patents owned by the Company or its Subsidiaries is set forth on Schedule 3.1(p) . None of the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as could not have or reasonably be expected to not have a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(q) Insurance . The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage at least equal to $20 million. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.
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(r) Transactions With Affiliates and Employees . Except as set forth in Schedule 3.1(r) , none of the officers or directors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from providing for the borrowing of money from or lending of money to, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, shareholder, member or partner, in each case in excess of $120,000, other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option and restricted stock unit agreements under any equity incentive plan of the Company.
(s) Sarbanes-Oxley; Internal Accounting Controls . The Company and the Subsidiaries are in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002, as amended, that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. The Company's certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the " Evaluation Date "). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) that have materially affected, or is reasonably likely to materially affect, the internal control over financial reporting of the Company or its Subsidiaries.
(t) Certain Fees . No brokerage or finder's fees or commissions are or will be payable by the Company or any Subsidiaries to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents, other than the Placement Agent. With respect to any fees or commissions payable to the Placement Agent as a result of the transactions
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contemplated hereby, (i) the Company shall not issue to the Placement Agent any Common Stock or Common Stock Equivalents as payment therefor, and (ii) the Company shall pay, and hold each Purchaser harmless against any liability, loss or expense (including, without limitation, attorney's fees and out-of-pocket expenses) arising in connection with such claim. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section 3.1(t) that may be due in connection with the transactions contemplated by the Transaction Documents.
(u) Private Placement . Assuming the accuracy of the Purchaser's representations and warranties set forth in Section 4, no registration under the Securities Act is required for the offer and sale of the Shares by the Company to the Purchaser as contemplated hereby. The issuance and sale of the Shares hereunder does not contravene the rules and regulations of the principal Trading Market.
(v) Investment Company . Neither the Company nor any Subsidiary is, nor is an Affiliate of, and immediately after receipt of payment for the Shares, will not be or be an Affiliate of, an "investment company" within the meaning of the Investment Company Act of 1940, as amended. The Company and its Subsidiaries shall conduct their respective businesses in a manner so that none will become an "investment company" subject to registration under the Investment Company Act of 1940, as amended.
(w) Registration Rights . Other than the Purchaser and as contemplated by the Debt Transaction Documents, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company or any Subsidiaries.
(x) Listing and Maintenance Requirements . The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements. The Common Stock is currently eligible for electronic transfer through the Depository Trust Company or another established clearing corporation, and the Company is current in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in connection with such electronic transfer.
(y) Application of Takeover Protections . The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company's articles of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchaser as a result of the Purchaser and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without
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limitation, as a result of the Company's issuance of the Shares and the Purchaser's ownership of the Shares.
(z) Disclosure . Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that it believes constitutes or might constitute material, non-public information. The Company understands and confirms that the Purchaser will rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchaser regarding the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve (12) months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that the Purchaser does not make or has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 4 hereof.
(aa) No Integrated Offering . Assuming the accuracy of the Purchaser's representations and warranties set forth in Section 4, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Shares to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.
(bb) Solvency . Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Shares hereunder: (i) the fair saleable value of the Company's assets exceeds the amount that will be required to be paid on or in respect of the Company's existing debts (including known contingent liabilities) as they mature, (ii) the Company's assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts or believes it will incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction
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within one year from the Closing Date. Schedule 3.1(bb) sets forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments.
(cc) Tax Status . Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or any Subsidiary know of no basis for any such claim.
(dd) No General Solicitation . Neither the Company nor any Person acting on behalf of the Company has offered or sold any of the Shares by any form of general solicitation or general advertising.
(ee) Foreign Corrupt Practices . Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any Person acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision of FCPA.
(ff) Accountants . The Company's accounting firm is set forth on Schedule 3.1(ff). To the knowledge and belief of the Company, such accounting firm: (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company's Annual Report for the fiscal year ending June 30, 2015.
(gg) No Disagreements with Accountants and Lawyers . There are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company, and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company's ability to perform any of its obligations under any of the Transaction Documents.
(hh) Acknowledgment Regarding Purchasers' Purchase of Shares . The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm's length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or
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fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby, and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers' purchase of the Shares. The Company further represents to each Purchaser that the Company's decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.
(ii) Acknowledgment Regarding Purchaser's Trading Activity . Anything in this Agreement or elsewhere herein to the contrary notwithstanding (other than as may be set forth in the Debt Transaction Documents), it is understood and acknowledged by the Company that: (i) the Purchaser has not been asked by the Company to agree, nor has the Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or "derivative" securities based on securities issued by the Company or to hold the Shares for any specified term, (ii) past or future open market or other transactions by the Purchaser, specifically including, without limitation, Short Sales or "derivative" transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of the Company's publicly-traded securities, (iii) the Purchaser, and counter-parties in "derivative" transactions to which any such Purchaser is a party, directly or indirectly, may presently have a "short" position in the Common Stock and (iv) the Purchaser shall not be deemed to have any affiliation with or control over any arm's length counter-party in any "derivative" transaction. The Company further understands and acknowledges that (y) the Purchaser may engage in hedging activities at various times, and (z) such hedging activities (if any) could reduce the value of the existing shareholders' equity interests in the Company at and after the time that the hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.
(jj) Regulation M Compliance . The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Shares, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Shares, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Placement Agent in connection with the placement of the Shares.
(kk) Form S-3 Eligibility . The Company is eligible to register the resale of the Shares for resale by the Purchaser on Form S-3 promulgated under the Securities Act.
(ll) Stock Option Plans . Each stock option granted by the Company under the Company's equity incentive plan was granted (i) in accordance with the terms of the Company's equity incentive plan and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company's equity incentive plan has been backdated. The Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material information
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regarding the Company or its Subsidiaries or their financial results or prospects. The number of shares of Common Stock issuable upon the exercise of outstanding stock options scheduled to expire (i) on March 9, 2015 does not exceed 295,000 and (ii) on June 14, 2014 does not exceed 105,000, in each case as adjusted for reverse and forward stock splits, stock dividends, stock combinations and similar transactions occurring after the date hereof.
(mm) Office of Foreign Assets Control . Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director, officer, agent, employee or Affiliate of the Company or any Subsidiary, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (" OFAC ").
(nn) U.S. Real Property Holding Corporation . The Company is not and has never been a U.S. real property holding corporation within the meaning of Section 897 of the Code, and the Company shall so certify upon Purchaser's request.
(oo) Bank Holding Company Act . Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956, as amended (the " BHCA ") and to regulation by the Board of Governors of the Federal Reserve System (the " Federal Reserve "). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(pp) Money Laundering . The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the " Money Laundering Laws "), and no Action or Proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, or any Subsidiary, threatened.
(qq) No Disqualification Events . With respect to the Shares to be offered and sold hereunder in reliance on Rule 506(b) under the Securities Act, none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of twenty percent (20%) or more of the Company's outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an " Issuer Covered Person " and, together, " Issuer Covered Persons ") is subject to any of the "Bad Actor" disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a " Disqualification Event "), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations
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under Rule 506(e), and has furnished to the Purchasers a copy of any disclosures provided thereunder upon request.
(rr) Other Covered Persons . The Company is not aware of any person that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sale of any Shares.
(ss) Notice of Disqualification Events . The Company will notify the Purchasers and the Placement Agent in writing, prior to the Closing Date of (i) any Disqualification Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating to any Issuer Covered Person.
(tt) Off Balance Sheet Arrangements . There is no transaction, arrangement, or other relationship between the Company (or any Subsidiary) and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its Exchange Act filings and is not so disclosed or that otherwise would be reasonably likely to have a Material Adverse Effect.
(uu) Transfer Taxes . On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the sale and transfer of the Shares to be sold to each Purchaser hereunder will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.
(vv) Franchise Taxes . There are no unpaid franchise taxes claimed by the taxing authority of any jurisdiction to be due by the Company or any Subsidiary, and the officers of the Company or any Subsidiary know of no basis for any such claim.
ARTICLE 4 - PURCHASER REPRESENTATIONS AND WARRANTIES
The Purchaser hereby represents and warrants to the Company the following:
Section 4.1 Power and Authority .
The Purchaser has the right, power and authority to execute, deliver and perform this Agreement and all the documents and instruments referred to herein and contemplated hereby and to consummate the transactions contemplated by this Agreement. This Agreement has been duly and validly executed and delivered by the Purchaser and will constitute a legal, valid and binding obligation of Purchaser, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws in effect which affect the enforcement of creditors' rights generally, or equitable principles.
The execution and delivery by the Purchaser of this Agreement and the consummation of the transactions contemplated herein by the Purchaser will not: (i) violate, conflict with, result
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in a breach or default under, cause termination of, create any right of termination under or any adverse change of rights under, (including the acceleration of payments under) any term or condition of, or result in the creation of any Lien pursuant to, any mortgage, indenture, contract, license, permit, instrument, or other agreement, document or instrument to which such Purchaser is a party or by which such Purchaser or any of its properties may be bound or (ii) violate any provision of Law or any valid and enforceable court order or ruling of any Governmental Authority to which Purchaser is a party or by which Purchaser or its properties may be bound as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Purchaser to consummate the transactions contemplated by this Agreement.
Section 4.3 Required Consents, Approvals and Filings .
No consent or approval is required by virtue of the execution of this Agreement by the Purchaser or the consummation of the transaction contemplated herein by the Purchaser.
Section 4.4 Accredited Investor.
The Purchaser is an accredited investor as that term is defined in Section 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the " Securities Act ").
Section 4.5 Purchase for Investment.
The Purchaser is acquiring the Shares for its own account in the ordinary course of its business, for investment only and not with a view to the distribution thereof in violation of the Securities Act, and the rules and regulations of the Commission promulgated thereunder.
Section 4.6 Restricted Securities.
The Purchaser acknowledges that the Shares are "restricted securities" as that term is defined in Rule 144 promulgated under the Securities Act and, accordingly, the Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available and the certificates evidencing the Shares will be legended accordingly. Without limiting the generality of the foregoing, the Purchaser acknowledges that, unless the resale of the Shares is covered under an effective registration statement, the Shares may not be sold pursuant to Rule 144 for a period of six (6) months from the date of Closing.
Section 4.7 Sophistication.
The Purchaser has, independently and without reliance upon the Company and its Affiliates, and based on such documents and information as the Purchaser has deemed appropriate, made its own appraisal of, and investigation into, the business, operations, property, financial and other condition of the Company, investment merits and consequences of its purchase of the Shares and made its own decision with respect to its purchase of the Shares. The Purchaser has consulted to the extent deemed appropriate by it with its own advisers as to the financial, tax, legal and related matters concerning a purchase of the Shares and on that basis understands the financial, legal, tax and related consequences of a purchase of the Shares, and
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believes that a purchase of the Shares is suitable and appropriate for him. The Purchaser is knowledgeable, sophisticated and experienced in making, and is qualified to make, decisions with respect to investments in securities representing an investment decision like that involved in the purchase of the Shares, and has requested, received, reviewed and considered all information it deems relevant in making an informed decision to purchase the Shares. The Purchaser understands that its investment in the Shares involves a significant degree of risk including a risk of total loss of its investment, and it is fully aware of and understands all the risk factors related to its purchase of the Shares. The Purchaser acknowledges that the Company and its Affiliates have or may have material non-public information relating to the business or financial condition of the Company, or relating to the Shares, that has not been disclosed to the Purchaser and which information may impact the value of the Shares, and that notwithstanding such non-disclosure, the Purchaser has received information deemed by it to be sufficient to allow it to make an independent and informed decision with respect to its acquisition of the Shares contemplated hereunder.
Section 4.8 Broker.
The Purchaser has not employed any broker or finder in connection with the transactions contemplated by its Agreement.
ARTICLE 5 - OTHER AGREEMENTS OF THE PARTIES
Section 5.1 Consents and Approvals .
The Company and the Purchaser shall take, or cause to be taken, all actions and shall do, or cause to be done, all things necessary under applicable Laws and regulations to consummate and make effective the transactions contemplated by this Agreement, including, without limitation, to comply promptly with all legal requirements which may be imposed on it with respect to this Agreement and the transactions contemplated hereby by any Governmental Authority with regulatory jurisdiction over enforcement of any applicable antitrust or other similar regulatory Laws (" Governmental Regulatory Authority ") (which actions shall include, without limitation, furnishing all information required by applicable Law in connection with approvals of or filings with any Governmental Regulatory Authority).
All liability for sales, transfer, use, gross receipt or other similar taxes arising out of the transactions contemplated by this Agreement shall be borne by the Company. Responsibility for collecting and paying such taxes shall be as required under applicable Law.
The Company will include the Shares as "Registrable Securities" pursuant to the terms of the Registration Rights Agreement in the form attached hereto as Exhibit B. This Section 5.3 shall survive the Closing.
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Section 5.4 Rule 144 Legal Opinions.
From time-to-time following the satisfaction of the applicable conditions to the public sale of the Shares by Purchaser as set forth in Rule 144 promulgated under the Securities Act, the Company agrees promptly following the request therefor from Purchaser to cause its counsel to provide to the Company and its transfer agent an opinion to the effect that such transfer does not require registration of the Shares under the Securities Act.
Section 5.5 Indemnification of Purchaser.
(a) Subject to the provisions of this Section 5.5, the Company will indemnify and hold the Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who "controls" such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a " Purchaser Party ") harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys' fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of, arising out of, or relating to (i) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (ii) any Action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any Person who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents, any transaction financed in whole or in part, directly or indirectly, with the proceeds from the issuance of the Shares, or the status of such Purchaser Party as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents (other than (x) an Action by the Company based solely upon such Purchaser Party's breach of the Transaction Documents, (y) an Action by governmental authorities based solely upon violations by such Purchaser Party of state or federal securities laws or (z) an Action arising solely as a result of any conduct by such Purchaser Party which has been determined by a final, non-appealable judicial decision to constitute fraud, gross negligence or willful misconduct).
(b) If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such Action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such Action there is, in the reasonable opinion of counsel to the Purchaser Party, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement
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(y) for any settlement by a Purchaser Party effected without the Company's prior written consent, which shall not be unreasonably withheld, conditioned or delayed or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party's breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents.
(c) The indemnification required by this Section 5.5 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law.
(d) Given that a Purchaser Party may be entitled to indemnification (a " Jointly Indemnifiable Purchaser Claim ") from both the Company, pursuant to this Agreement, and from any other person, whether pursuant to applicable law, any indemnification agreement, the organizational documents of such person or otherwise (the " Indemnitee-Related Purchaser Entities "), the Company acknowledges and agrees that the Company shall be fully and primarily responsible for the payment to the Purchaser Party in respect of indemnification and advancement of expenses in connection with any such Jointly Indemnifiable Purchaser Claim, pursuant to and in accordance with the terms of this Agreement, irrespective of any right of recovery the Purchaser Party may have from the Indemnitee-Related Purchaser Entities. Under no circumstance shall the Company be entitled to any right of subrogation or contribution by the Indemnitee-Related Purchaser Entities and no right of recovery the Purchaser Party may have from the Indemnitee-Related Purchaser Entities shall reduce or otherwise alter the rights of the Purchaser Party or the obligations of the Company hereunder. In the event that any of the Indemnitee-Related Purchaser Entities shall make any payment to the Purchaser Party in respect of indemnification or advancement of expenses with respect to any Jointly Indemnifiable Purchaser Claim, the Indemnitee-Related Investor Entity making such payment shall be subrogated to the extent of such payment to all of the rights of recovery of the Purchaser Party against the Company, and the Purchaser Party shall execute all papers reasonably required and shall do all things that may be reasonably necessary to secure such rights, including the execution of such documents as may be necessary to enable the Indemnitee-Related Purchaser Entities effectively to bring suit to enforce such rights. Each of the Indemnitee-Related Purchaser Entities shall be third-party beneficiaries with respect to this Section 5.5, entitled to enforce this Section 5.5 against the Company as though each such Indemnitee-Related Investor Entity were a party to this Agreement.
Section 5.6 Transfer Restrictions.
(a) The Shares may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Shares other than pursuant to an effective registration statement or Rule 144 or in connection with a pledge as contemplated in Section 5.6(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company (it being agreed that the opinion of Purchaser's in-house counsel shall be acceptable to the Company), the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Shares under the Securities
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Act. As a condition of granting any transferee of Shares any rights pursuant to any of the Transaction Documents, any such transferee shall agree in writing to be bound by the terms of this Agreement and the Registration Rights Agreement and shall have the rights and obligations of a Purchaser under this Agreement and the Registration Rights Agreement.
(b) The Purchasers agree to the imprinting, so long as is required by this Section 5.6, of a legend on any of the Shares in the following form:
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD (I) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (II) PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AS EVIDENCED BY A LEGAL OPINION OF COUNSEL SELECTED BY THE HOLDER TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY OR (III) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
(c) The Company acknowledges and agrees that the Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Shares to a financial institution that is an "accredited investor" as defined in Rule 501(a) under the Securities Act. Such pledge would not be deemed a transfer, sale or assignment, would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor would be required in connection therewith. Further, no notice shall be required of such pledge. At the Purchaser's expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of the Shares may reasonably request in connection with a pledge of the Shares, including, if the Shares are subject to registration pursuant to the Registration Rights Agreement, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders (as defined in the Registration Rights Agreement) thereunder.
(d) Certificates evidencing the Shares shall not contain any legend (including the legend set forth in Section 5.6(b) hereof): (i) while a registration statement covering the resale of such security is effective under the Securities Act, (ii) following any sale of such Shares pursuant to Rule 144, (iii) if such Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Shares and without volume or manner-of-sale restrictions or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the Transfer Agent promptly after the Effective Date if required by the Transfer Agent to effect the removal of the legend hereunder.
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The Company agrees that following the Effective Date or at such time as such legend is no longer required under this Section 5.6, it will, no later than three (3) Trading Days following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing Underlying Shares, as applicable, issued with a restrictive legend (such third Trading Day, the " Legend Removal Date "), deliver or cause to be delivered to such Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 5.6. Certificates for Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting the account of the Purchaser's prime broker with the Depository Trust Company System as directed by such Purchaser.
(e) If the Company fails to issue to the Purchaser a certificate without such legend or to deliver such Shares to the Purchaser by the Legend Removal Date, and if on or after the Legend Removal Date such Purchaser purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the holder of such Shares that the holder anticipated receiving without legend from the Company (a " Buy-In "), then the Company shall, within three (3) Trading Days after the Purchaser's request and in the Purchaser's discretion, either (i) pay cash to the Purchaser in an amount equal to the Purchaser's total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the " Buy-In Price "), at which point the Company's obligation to deliver such unlegended Shares shall terminate, or (ii) promptly honor its obligation to deliver to the Purchaser such unlegended Shares as provided above and pay cash to the Purchaser in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Sale Price (as defined in the Debt Transaction Documents) of the Common Stock on the Legend Removal Date. Nothing herein shall limit such Purchaser's right to pursue actual damages for the Company's failure to deliver certificates representing any Shares as required by the Transaction Documents, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.
(f) The Purchaser agrees with the Company that such Purchaser will sell any Shares pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Shares are sold pursuant to a Registration Statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing Shares as set forth in this Section 5.6 is predicated upon the Company's reliance upon this understanding.
Section 5.7 Furnishing of Information; Public Information.
(a) Until the earliest of the time that (i) the Purchaser owns no Shares or (ii) the warrants issued pursuant to the Debt Transaction Documents have expired, the Company covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof
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pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act.
(b) At any time during the period commencing from the six (6) month anniversary of the date hereof and ending at such time that all of the Shares may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, (i) if the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) or (ii) if the Company has ever been an issuer described in Rule 144(i)(1)(i) or becomes such an issuer in the future, and the Company shall fail for any reason to satisfy any condition set forth in Rule 144(i)(2) (each of clauses (i) and (ii), a " Public Information Failure "), then, in addition to the Purchaser's other available remedies, the Company shall pay to the Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Shares, an amount in cash equal to one percent (1.0%) of the aggregate Purchase Price on the day of a Public Information Failure and on every thirtieth (30th) day (pro rated for periods totaling less than thirty (30) days) thereafter until the earlier of (i) the date such Public Information Failure is cured and (ii) such time that such public information is no longer required for the Purchaser to transfer the Shares pursuant to Rule 144. The payments to which the Purchaser shall be entitled pursuant to this Section 5.7 are referred to herein as " Public Information Failure Payments ." Public Information Failure Payments shall be paid on the earlier of (y) the last day of the calendar month during which such Public Information Failure Payments are incurred and (z) the third (3rd) Business Day after the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full. Nothing herein shall limit the Purchaser's right to pursue actual damages for the Public Information Failure, and the Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.
Section 5.8 Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any "security" (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Shares in a manner that would require the registration under the Securities Act of the sale of the Shares or that would be integrated with the offer or sale of the Shares for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.
Section 5.9 Shareholder Rights Plan.
No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that the Purchaser is an "Acquiring Person" under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that the Purchaser could be deemed to trigger the provisions of any such plan or
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arrangement, by virtue of receiving Shares under the Transaction Documents or under any other agreement between the Company and the Purchaser.
Section 5.10 Non-Public Information.
The Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide the Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto the Purchaser shall have entered into a written agreement with the Company regarding the confidentiality and use of such information. To the extent that the Company delivers any material, non-public information to the Purchaser without the Purchaser's consent, the Company hereby covenants and agrees that the Purchaser shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates, or a duty to the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates not to trade on the basis of, such material, non-public information. The Company understands and confirms that the Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.
Section 5.11 Use of Proceeds.
The Company shall use the net proceeds from the sale of the Shares hereunder for the payment of a portion of the purchase price for the acquisition of assets of Pioneer Hi-Bred International, Inc. as contemplated by the Pioneer Documents and for working capital purposes and shall not use such proceeds: (a) for the satisfaction of any portion of the Company's Indebtedness, (b) for the redemption of any Common Stock or Common Stock Equivalents, (c) for the settlement of any outstanding litigation or (d) in violation of FCPA or OFAC regulations.
Section 5.12 Participation in Future Financing.
(a) From the date hereof until the date that is the two (2) year anniversary of the Closing Date, upon any issuance by the Company or any of its Subsidiaries of Common Stock, Common Stock Equivalents for cash consideration, Indebtedness or a combination of units thereof (other than for any transactions which generate, in the aggregate from the date hereof, gross proceeds of up to $5 million) (a " Subsequent Financing "), the Purchaser shall have the right to participate in up to its Pro Rata Portion of the Subsequent Financing, on the same terms, conditions and price provided for in the Subsequent Financing.
(b) Approximately four (4) Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to the Purchaser a written notice of its intention to effect a Subsequent Financing (a " Subsequent Financing Notice "). The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and shall include a term sheet or similar document relating thereto as an attachment.
(c) If the Purchaser desires to participate in such Subsequent Financing, it must provide written notice to the Company by not later than 5:30 p.m. (New York City time) on the third (3rd) Trading Day (or in the case of a confidentially marketed public offering or registered
26
direct offering, the next Trading Day), after the Purchaser has received the Subsequent Financing Notice that the Purchaser is willing to participate in the Subsequent Financing, the amount of such Purchaser's participation, and representing and warranting that the Purchaser has such funds ready, willing, and available for investment on the terms set forth in the Subsequent Financing Notice. If the Company receives no such notice from the Purchaser as of such third (3rd) Trading Day (or the next Trading Day in the case of a confidentially marketed public offering or registered direct offering), the Purchaser shall be deemed to have notified the Company that it does not elect to participate.
(d) " Pro Rata Portion " means 9.9% of the Subsequent Financing.
(e) The Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right of participation set forth above in this Section 5.12, if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated for any reason on the terms set forth in such Subsequent Financing Notice within thirty (30) Trading Days after the date of the initial Subsequent Financing Notice.
(f) The Company and the Purchaser agree that if any Purchaser elects to participate in the Subsequent Financing, the transaction documents related to the Subsequent Financing shall not include any term or provision whereby such Purchaser shall be required to agree to any restrictions on trading as to any of the Shares purchased hereunder or be required to consent to any amendment to or termination of, or grant any waiver, release or the like under or in connection with, the Transaction Documents, without the prior written consent of the Purchaser.
(g) Notwithstanding anything to the contrary in this Section 5.12 and unless otherwise agreed to by the Purchaser, the Company shall either confirm in writing to the Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that the Purchaser will not be in possession of any material, non-public information, by the fourth (4th) Trading Day following delivery of the Subsequent Financing Notice. If by such fourth (4th) Trading Day, no public disclosure regarding a transaction with respect to the Subsequent Financing has been made, and no notice regarding the abandonment of such transaction has been received by the Purchaser, such transaction shall be deemed to have been abandoned and the Purchaser shall not be deemed to be in possession of any material, non-public information with respect to the Company or any of its Subsidiaries.
(h) Notwithstanding the foregoing, this Section 5.12 shall not apply in respect of an Exempt Issuance.
Section 5.13 [Intentionally Omitted]
Section 5.14 Form D; Blue Sky Filings
The Company agrees to timely file a Form D with respect to the Shares as required under Regulation D and to provide a copy thereof promptly after such filing to the Purchaser upon request. The Company shall take such action, as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Shares for, sale to the Purchaser on or before the Closing under applicable securities or "Blue Sky" laws of the states of the
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United States, and shall provide evidence of such actions promptly to the Purchaser. The Company shall make all filings and reports relating to the offer and sale of the Shares required under such laws following the Closing Date.
Section 5.15 Rescission and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever the Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then the Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.
Section 5.16 Replacement of Shares.
If any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Shares.
Section 5.17 Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Purchaser and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any Action for specific performance of any such obligation the defense that a remedy at law would be adequate.
Section 5.18 Payment Set Aside.
To the extent that the Company makes a payment or payments to the Purchaser pursuant to any Transaction Document or the Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
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Section 5.19 Liquidated Damages.
The Company's obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled.
Section 5.20 WAIVER OF JURY TRIAL.
IN ANY ACTION OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
ARTICLE 6 - CONDITIONS TO THE COMPANY'S OBLIGATIONS
The obligation of the Company to consummate the transactions contemplated hereby will be subject to the satisfaction (or written waiver by the Company), at or prior to the Closing, of the condition that there shall be in effect no injunction, decree or order of, any Governmental Authority that prohibits or renders unlawful the consummation of the transactions contemplated hereby.
ARTICLE 7 - CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of the Purchaser to consummate the transactions contemplated hereby is subject to the satisfaction (or written waiver by such Purchaser), at or prior to the Closing, of the conditions that (a) there shall be in effect no injunction, decree or order of, any Governmental Authority that prohibits or renders unlawful the consummation of the transactions contemplated hereby, (b) the transactions contemplated by the Debt Transaction Documents shall have closed concurrently with the transactions contemplated hereby, and (c) Shares shall have been approved for listing on the Trading Market.
ARTICLE 8 - CLOSING
Assuming the satisfaction or, if permitted, wavier of the conditions set forth in Articles 6 and 7, the closing of the transactions contemplated hereby (the " Closing ") shall take place on December 31, 2014, at the Company's offices, or such earlier time and/or date as the parties may agree upon in writing (the " Closing Date ") If the conditions set forth in Articles 6 and 7 are not satisfied by December 31, 2014, the Closing shall take place within three (3) business days of the satisfaction or, if permitted, wavier of the conditions set forth in Articles 6 and 7. At the Closing, the Company will make the deliveries set forth in Section 2.3 and the Purchaser will deliver the Purchase Price in accordance with Section 2.4.
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Section 8.2 Termination Prior to Closing .
Notwithstanding the foregoing, this Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing:
(A) Upon the written agreement of the parties hereto;
(B) By the Company or Purchaser, by giving written notice to the other party in the event that any permanent injunction or action by any Governmental Authority preventing the consummation of the transactions contemplated by this Agreement shall be have become final and nonappealable; or
(C) By the Company or Purchaser, by written notice to the other party, if the Closing has not been consummated on or before five (5) Business Days from the date hereof.
Section 8.3 Effect of Termination .
Termination of this Agreement pursuant to Section 8.2 will terminate all obligations of the parties hereunder, except for Sections 9.7 and 9.10; provided , however , that termination pursuant to such Section 8.2 will not relieve a defaulting or breaching party from any liability to the other party hereto.
ARTICLE 9 - MISCELLANEOUS
Section 9.1 Entire Agreement .
This Agreement and all other agreements to be signed or delivered at Closing constitute the full understanding of the parties, a complete allocation of risks between them and a complete and exclusive statement of the terms and conditions of their agreement relating to the subject matter hereof and supersede any and all prior agreements, whether written or oral, that may exist between the parties with respect thereto.
No waiver by a party with respect to any breach or default or of any right or remedy and no course of dealing or performance, will be deemed to constitute a continuing waiver of any other breach or default or of any other right or remedy, unless such waiver is expressed in writing signed by the party to be bound. Failure of a party to exercise any right will not be deemed a waiver of such right or rights in the future.
Section 9.3 Parties Bound by Agreement; Successors and Assigns ; Nature of the Company's Obligations .
The terms, conditions and obligations of this Agreement will inure to the benefit of and be binding upon the parties hereto and the respective successors and assigns thereof. Neither of
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the parties hereto may transfer or assign its rights, duties or obligations hereunder or any part thereof to any other person or entity without the prior written consent of the other parties hereto.
This Agreement may be executed in multiple counterparts, each of which will for all purposes be deemed to be an original and all of which will constitute the same instrument.
All notices, requests and other communications to any party hereunder shall be in writing and shall be given (and shall be deemed to have been duly given when received or first refused) (i) by hand delivery, (ii) by overnight courier, express mail service or registered or certified mail, in each case with postage or fees prepaid, or (iii) by facsimile or email transmission (with a copy of any such notice sent by hand delivery, overnight courier, express mail service or registered or certified mail, in each case with postage or fees prepaid) to the respective parties at the following addresses (or at such other address for a party as shall be specified by like notice):
If to the Company:
S&W Seed Company
25552 South Butte Avenue (if in person or overnight mail)
P.O. Box 235 (if by U.S. mail)
Five Points, California 93624
Attention: Chief Financial Officer
Facsimile: (559) 884-2750
Email: mszot@swseedco.com
If to Purchaser:
MFP Partners, L.P.
667 Madison Avenue, 25
th
Floor
New York, NY 10065
Attention: Chief Executive Officer
Facsimile: ______________________________
Email: __________________________________
Section 9.6 Governing Law; Submission to Jurisdiction .
All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits
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to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action or Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Action or Proceeding is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such Action or Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If any party hereto shall commence an Action or Proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section 5.5, the prevailing party in such Action or Proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys' fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action or Proceeding.
Section 9.7 Public Announcements .
Except as required by Law, any announcements or similar publicity or any disclosure to any person other than the respective advisors of the parties hereto regarding the contents of this Agreement or any other agreement between the parties entered into pursuant hereto shall be agreed upon by the parties prior to such disclosure and, except as provided herein, any information relating to the matters described above shall be kept confidential by the parties hereto (and their respective representatives and agents); provided that nothing herein shall prohibit the Company from making such disclosure to the Company's Affiliates and any shareholders of the Company and its Affiliates; and provided further , that this prohibition shall not be deemed breached in the event the Company is required to disclose this transaction under the rules and regulations of the Commission applicable to the Company.
Section 9.8 No Third-Party Beneficiaries .
Other than as set forth in Section 5.5(d) of this Agreement, there exists no right of any person to claim a beneficial interest in this Agreement or any rights occurring by virtue of this Agreement.
Section 9.9 Fees and Expenses .
Each party hereto shall bear its own expenses in connection with the preparation and negotiation of this Agreement and the consummation of the transactions contemplated by this Agreement.
Section 9.9 Survival.
Unless this Agreement is terminated under Section 8.2, the representations and warranties of the Company and the Purchaser contained in Article 3, and the agreements and covenants set forth in Article 5, shall survive the Closing and the delivery of the Securities.
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Section 9.10 Amendments; Waivers.
No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchaser, and in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
Words of the masculine gender will be deemed and construed to include correlative words of the feminine and neuter genders. Words importing the singular number will include the plural number and vice versa unless the context will otherwise indicate. The headings of this Agreement are for convenience and do not define or limit the provisions hereof. Words importing persons include firms, associations and corporations. The term "herein," "hereunder," "hereby," "hereto," "hereof" and any similar terms refer to this Agreement, the term "heretofore" means before the date of execution of this Agreement and the term "hereafter" means after the date of execution of this Agreement. References herein to "include," "includes" or "including" shall mean without limitation.
* * * * *
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives as of the date first above written.
S&W SEED COMPANY
By: /s/ Matthew K. Szot
Matthew K. Szot
Executive Vice President of Finance and
Administration and Chief Financial Officer
PURCHASER:
MFP PARTNERS, L.P.
By: /s/ Timothy E. Ladin
Timothy E. Ladin
General Counsel and Vice President
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EXHIBIT 4.2
VOTING AGREEMENT
VOTING AGREEMENT, DATED AS OF DECEMBER __, 2014 (THIS " AGREEMENT "), BY AND AMONG S&W SEED COMPANY, A NEVADA CORPORATION (THE " COMPANY "), AND THE SHAREHOLDERS LISTED ON THE SIGNATURE PAGES HERETO UNDER THE HEADING " SHAREHOLDERS " (EACH, A " SHAREHOLDER " AND COLLECTIVELY, THE " SHAREHOLDERS ").
WHERE AS, the Company and certain purchasers (each, a " Purchaser ", and collectively, the " Purchasers ") have entered into a Securities Purchase Agreement (the " Purchase Agreement "), dated as December __, 2014 (the " Subscription Date "), pursuant to which, among other things, the Company has agreed to issue and sell to the Purchasers, and the Purchasers have agreed to purchase, (i) senior secured convertible debentures of the Company (the " Debentures ") pursuant to which the shares of the Company's common stock, par value $0.001 per share (the " Common Stock ") may be issued and (ii) warrants which will be exercisable to purchase shares of Common Stock ;
WHEREAS, as of the date hereof, and taking into account the issuance of 1,294,000 shares of Common Stock to MFP Partners, L.P. on or prior to the date hereof, the Shareholders own collectively 2,309,652 shares of Common Stock, which represent in the aggregate approximately 17.831% of the total issued and outstanding capital stock of the Company; and
WHEREAS, as a condition to the willingness of the Purchasers to enter into the Purchase Agreement and to consummate the transactions contemplated thereby (collectively, the " Transactions "), the Purchasers have required that each Shareholder agree, and in order to induce the Purchasers to enter into the Purchase Agreement, each Shareholder has agreed, to enter into this Agreement with respect to all the Common Stock now owned and which may hereafter be acquired by the Shareholders and any other securities, if any, which such Shareholder is currently entitled to vote, or after the date hereof, becomes entitled to vote, at any meeting of shareholders of the Company (the " Other Securities ").
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
VOTING AGREEMENT OF THE SHAREHOLDERS
SECTION 1.01. Voting Agreement . Each Shareholder hereby agrees that at any meeting of the shareholders of the Company, however called, and in any action by written consent of the Company's shareholders, each of the Shareholders shall vote the Common Stock and the Other Securities: (a) in favor of the Shareholder Approval (as defined in the Purchase Agreement) as described in Section 4.11(c) of the Purchase Agreement; and (b) against any proposal or any other corporate action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Purchase Agreement or which could result in any of the conditions to the Company's obligations under the Purchase Agreement not being fulfilled. Each Shareholder acknowledges
receipt and review of a copy of the Purchase Agreement and the other Transaction Documents (as defined in the Purchase Agreement).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder hereby represents and warrants, severally but not jointly, to each of the Purchasers as follows:
SECTION 2.01. Authority Relative to This Agreement . Each Shareholder has all necessary legal capacity, power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by such Shareholder and constitutes a legal, valid and binding obligation of such Shareholder, enforceable against such Shareholder in accordance with its terms, except (a) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws now or hereafter in effect relating to, or affecting generally the enforcement of creditors' and other obligees' rights, (b) where the remedy of specific performance or other forms of equitable relief may be subject to certain equitable defenses and principles and to the discretion of the court before which the proceeding may be brought, and (c) where rights to indemnity and contribution thereunder may be limited by applicable law and public policy.
SECTION 2.02. No Conflict . (a) The execution and delivery of this Agreement by such Shareholder does not, and the performance of this Agreement by such Shareholder shall not, (i) conflict with or violate any federal, state or local law, statute, ordinance, rule, regulation, order, judgment or decree applicable to such Shareholder or by which the Common Stock or the Other Securities owned by such Shareholder are bound or affected or (ii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien, charge, pledge, option, security interest, encumbrance, tax, right of first refusal, preemptive right or other restriction (each, a " Lien ") on any of the Common Stock or the Other Securities owned by such Shareholder pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which such Shareholder is a party or by which such Shareholder or the Common Stock or Other Securities owned by such Shareholder are bound.
(b) The execution and delivery of this Agreement by such Shareholder does not, and the performance of this Agreement by such Shareholder shall not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental entity by such Shareholder.
SECTION 2.03. Title to the Stock . As of the date hereof, each Shareholder is the owner of the number of shares of Common Stock set forth opposite its name on Appendix A attached hereto, entitled to vote, without restriction, on all matters brought before holders of capital stock of the Company, which Common Stock represents on the date hereof the percentage of the outstanding stock and voting power of the Company set forth on such Appendix. Such Common Stock represents all the securities of the Company owned, either of record or beneficially, by such Shareholder. Such Common Stock is owned free and clear of all Liens or
2
limitations on such Shareholder's voting rights of any nature whatsoever. No Shareholder has appointed or granted any proxy, which appointment or grant is still effective, with respect to the Common Stock or Other Securities owned by such Shareholder.
ARTICLE III
COVENANTS
SECTION 3.01. No Disposition or Lien of Stock . Each Shareholder hereby covenants and agrees that, until the Shareholder Approval has been obtained, except as contemplated by this Agreement, such Shareholder shall not offer or agree to sell, transfer, tender, assign, hypothecate or otherwise dispose of, grant a proxy or power of attorney with respect to, or create or permit to exist any Lien or limitation on such Shareholder's voting rights of any nature whatsoever with respect to the Common Stock or Other Securities, directly or indirectly, initiate, solicit or encourage any person to take actions which could reasonably be expected to lead to the occurrence of any of the foregoing; provided , however , that any such Shareholder may assign, sell or transfer any Common Stock or Other Securities provided that any such recipient of the Common Stock or Other Securities has delivered to the Company and each Purchaser or other holder of Securities a written agreement in a form reasonably satisfactory to the Purchasers or other holders of Securities that the recipient shall be bound by, and the Common Stock and/or Other Securities so transferred, assigned or sold shall remain subject to this Agreement. The provisions of this Section 3.01 notwithstanding, the following dispositions shall be permitted without restriction throughout the term of this Agreement: (a) dispositions under any Rule 10b5-1 stock trading plans that are in effect as of September 1, 2014, provided that such Rule 10b5-1 stock trading plans are not amended, modified or changed on or after such date, except that Fred Fabre, a Shareholder, may make a one-time amendment to his Rule 10b5-1 stock trading plan as in effect on September 1, 2014 to lengthen the term thereof so long as there is no other amendment, change or modification thereto; (b) any sales of shares of Common Stock issuable upon exercise of stock options outstanding as of the Subscription Date that expire on March 9, 2015 and June 15, 2014, provided that such stock options are not amended, modified or changed on or after the Subscription Date; and (c) any dispositions pursuant to a final decree of a divorce or upon death of the Shareholder.
SECTION 3.02. Company Cooperation . The Company hereby covenants and agrees that it will not, and such Shareholder irrevocably and unconditionally acknowledges and agrees that the Company will not (and waives any rights against the Company in relation thereto), recognize any Lien or agreement on any of the Common Stock or Other Securities subject to this Agreement unless the provisions of Section 3.01 have been complied with. The Company agrees to use its reasonable best efforts to ensure that at any time in which any Shareholder Approval is required pursuant to Section 4.11(c) of the Purchase Agreement, it will cause holders of Common Stock or Other Securities representing the percentage of outstanding capital stock required to vote in favor of the Transactions in order for the Company to comply with its obligations under Section 4.11(c) of the Purchase Agreement to become party to and bound by the terms and conditions of this Agreement and the Common Stock and Other Securities held by such holders to be subject to the terms and conditions of this Agreement.
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ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Further Assurances . Each Shareholder will execute and deliver such further documents and instruments and take all further action as may be reasonably necessary in order to consummate the transactions contemplated hereby.
SECTION 4.02. Specific Performance . In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers or any other holder of Securities (without being joined by any other Purchaser or holder of Securities) and the Company will be entitled to specific performance under this Agreement. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained herein and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.
SECTION 4.03. Entire Agreement . This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and thereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents.
SECTION 4.04. Amendment . The provisions of this Agreement may not be amended or waived, nor may this Agreement be terminated by the Company other than pursuant to the provisions of Section 4.07.
SECTION 4.05. Severability . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
SECTION 4.06. Governing Law . All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any action or proceeding, any claim that it is not personally subject to
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the jurisdiction of any such court, that such action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address set forth on the signature pages to this Agreement (and service so made shall be deemed complete three days after the same has been posted) and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. Any Purchaser or other holder of Securities shall be entitled to its reasonable attorneys' fees in any action brought to enforce this Agreement in which it is the prevailing party. IN ANY ACTION OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
SECTION 4.07. Termination . This Agreement and the obligations of the parties hereunder shall terminate immediately following the occurrence of the Shareholder Approval.
[Signature Page Follows]
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IN WITNESS WHEREOF, each Shareholder and the Company has duly executed this Agreement.
THE COMPANY: S&W SEED COMPANY |
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By: |
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Name: |
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Title: |
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Dated: December ___, 2014 |
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Address: |
S&W Seed Company 25552 South Butte Avenue Five Points, CA 93624
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SHAREHOLDERS: |
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Name: |
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(Signature) |
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Dated: December ___, 2014 |
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Address: |
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SHAREHOLDERS: |
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Name: |
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(Signature) |
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Dated: December ___, 2014 |
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Address: |
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Shareholder |
Common Stock
|
Percentage of Stock Outstanding(1) |
Voting Percentage
|
Glen D. Bornt |
180,000 |
1.390% |
1.390% |
Fred Fabre |
205,000 |
1.583% |
1.583% |
Michael M. Fleming |
1,000 |
0.008% |
0.008% |
Danielson B. Gardner |
-- |
-- |
-- |
Mark S. Grewal |
89,762 |
0.693% |
0.693% |
Mark J. Harvey |
188,000 |
1.451% |
1.451% |
Dennis C. Jury |
128,217 |
0.990% |
0.990% |
Daniel Z. Karsten |
-- |
-- |
-- |
Charles B. Seidler |
48,680 |
0.376% |
0.376% |
William S. Smith |
40,000 |
0.309% |
0.309% |
Matthew K. Szot |
34,553 |
0.267% |
0.267% |
Grover T. Wickersham |
100,440 |
0.775% |
0.775% |
Mark Wong |
-- |
-- |
-- |
MFP Partners, L.P. |
1,294,000 |
9.990% |
9.990% |
Total |
2,309,652 |
17.831% |
17.831% |
(1) Based on 12,952,801 shares of Common Stock outstanding, which includes the issuance of 1,294,000 shares of Common Stock to MFP Partners, L.P. on or prior to the date hereof.
EXHIBIT 4.3
S&W Seed Company
December __, 2014
Transfer Online, Inc.
512 SW Salmon St.
Portland, OR 97214
Telephone: (503) 227-2950
Facsimile: (503) 227-6874
E-mail: carolyn@transferonline.com
Attention: Carolyn Hall
Re: S&W Seed Company - Lock-Up Agreement
Dear Sir or Madam:
This Lock-Up Agreement is being delivered to you in connection with the Securities Purchase Agreement (the " Purchase Agreement "), dated as of December 30, 2014 (the " Subscription Date ") by and among S&W Seed Company (the " Company ") and the purchasers party thereto (the " Purchasers "), with respect to the issuance of (i) senior secured convertible debentures of the Company (the " Debentures ") pursuant to which shares of the Company's common stock, par value $0.001 per share (the " Common Stock ") may be issued and (ii) warrants (the " Warrants ") which Warrants will be exercisable to purchase Common Stock. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement.
In order to induce the Purchasers to enter into the Purchase Agreement, the undersigned agrees that, commencing on the date hereof and ending on the date that is 90 days after the earlier of (i) the Effective Date of the Registration Statement and (ii) provided that the Company is in compliance with its current public information requirement under Rule 144(c)(1), the date on which sales of the shares of Common Stock issuable pursuant to the Debentures and the Warrants are available for resale under Rule 144 (the " Lock-Up Period "), without the prior written consent of the Lead Investor, which consent may be withheld in its sole discretion for any reason or no reason, the undersigned will not, and will cause all affiliates (as defined in Rule 144) of the undersigned or any person in privity with the undersigned or any affiliate of the undersigned not to, (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase, make any short sale or otherwise dispose of or agree to dispose of, directly or indirectly, any shares of Common Stock or Common Stock Equivalents, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to any shares of Common Stock or Common Stock Equivalents owned directly by the undersigned (including holding as a custodian) or with respect to which the undersigned has beneficial ownership within the rules and regulations of the Commission (which, for purposes of certainty, are the same shares of Common Stock that are subject to the Voting Agreement entered into by the Undersigned on or about the date hereof) (collectively, the " Undersigned's Shares "), or (ii) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of ownership of any of the Undersigned's Shares, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of shares of Common Stock or other securities, in cash or otherwise, (iii) make any demand or exercise any right to cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any shares of Common Stock or Common Stock Equivalents or (iv) publicly disclose the intention to do any of the foregoing.
The foregoing restriction is expressly agreed to preclude the undersigned, and any affiliate of the undersigned and any person in privity with the undersigned or any affiliate of the undersigned, from engaging in any hedging or other transaction which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of the Undersigned's Shares even if the Undersigned's Shares would be disposed of by someone other than the undersigned. Such prohibited hedging or other transactions would include, without limitation, any short sale or any purchase, sale or grant of any right (including, without limitation, any put or call option) with respect to any of the Undersigned's Shares or with respect to any security that includes, relates to, or derives any significant part of its value from the Undersigned's Shares.
Notwithstanding the foregoing, the undersigned may transfer the Undersigned's Shares (i) as a bona fide gift or gifts, provided that the donee or donees thereof agree to be bound in writing by the restrictions set forth herein; (ii) to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value; (iii) pursuant to any Rule 10b5-1 stock trading plans that are in effect as of September 1, 2014, provided that such Rule 10b5-1 stock trading plans are not amended, modified or changed on or after such date; (iv) pursuant to a final decree of a divorce or upon death of the undersigned; or (v) that are issuable upon exercise of stock options outstanding as of the Subscription Date that expire on March 9, 2015 and June 15, 2015, provided that such stock options are not amended, modified or changed on or after the Subscription Date. For purposes of this Lock-Up Agreement, "immediate family" shall mean any relationship by blood, marriage or adoption, not more remote than first cousin. The undersigned now has, and, except as contemplated by the immediately preceding sentence, for the duration of this Lock-Up Agreement will have, good and marketable title to the Undersigned's Shares, free and clear of all liens, encumbrances, and claims whatsoever. The undersigned also agrees and consents to the entry of stop transfer instructions with the Company's transfer agent (the " Transfer Agent ") and registrar against the transfer of the Undersigned's Shares except in compliance with the foregoing restrictions.
In order to enforce this covenant, the Company shall impose irrevocable stop-transfer instructions preventing the Transfer Agent from effecting any actions in violation of this Lock-Up Agreement.
The undersigned acknowledges that the execution, delivery and performance of this Lock-Up Agreement is a material inducement to each Purchaser to complete the transactions contemplated by the Purchase Agreement and that the Company shall be entitled to specific performance of the undersigned's obligations hereunder. The undersigned hereby represents that the undersigned has the power and authority to execute, deliver and perform this Lock-Up Agreement, that the undersigned has received adequate consideration therefor and that the
2
undersigned will indirectly benefit from the closing of the transactions contemplated by the Purchase Agreement.
The undersigned understands and agrees that this Lock-Up Agreement is irrevocable and shall be binding upon the undersigned's heirs, legal representatives, successors, and assigns.
This Lock-Up Agreement may be executed in two counterparts, each of which shall be deemed an original but both of which shall be considered one and the same instrument.
All questions concerning the construction, validity, enforcement and interpretation of this Lock-Up Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to principles of conflicts of law thereof.
[Remainder of page intentionally left blank]
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Very truly yours,
______________________________
Exact Name of Shareholder
______________________________
Authorized Signature
______________________________
Title
Agreed to and Acknowledged:
S&W SEED COMPANY
By: _______________________
Name:
Title:
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EXHIBIT 4.4
TRANSFER AGENT INSTRUCTIONS
S&W SEED COMPANY
December 30, 2014
Transfer Online, Inc.
512 SW Salmon St.
Portland, OR 97214
Telephone: (503)227-2950
Facsimile: (503) 227-6874
E-mail: carolyn@transferonline.com
Attention: Carolyn Hall
Ladies and Gentlemen:
Reference is made to that certain Securities Purchase Agreement, dated as of December 30, 2014 (the " Purchase Agreement "), by and among S&W Seed Company, a Nevada corporation (the " Company "), and each purchaser identified on the signature pages thereto (collectively, the " Holders "), pursuant to which the Company is issuing to the Holders (i) senior secured convertible debentures (the " Debentures "), which are convertible into shares of the common stock of the Company, par value $0.001 per share (the " Common Stock "), and (ii) warrants (the " Warrants "), which are exercisable to purchase shares of Common Stock.
This letter shall serve as our irrevocable authorization and direction to you (provided that you are the transfer agent of the Company at such time):
(i) to issue shares of Common Stock upon conversion of the Debentures (the " Conversion Shares ") to or upon the order of a Holder from time to time upon delivery to you of a properly completed and duly executed Notice of Conversion, in the form attached hereto as Exhibit I ; and
(ii) to issue shares of Common Stock upon exercise of the Warrants (the " Warrant Shares ") to or upon the order of a Holder from time to time upon delivery to you of a properly completed and duly executed Notice of Exercise, in the form attached hereto as Exhibit II .
You acknowledge and agree that so long as you have previously received (a) written confirmation from the Company's legal counsel that either (i) a registration statement covering resales of the Conversion Shares and the Warrant Shares has been declared effective by the Securities and Exchange Commission (the " Commission ") under the Securities Act of 1933, as amended (the " Securities Act "), or (ii) sales of the Conversion Shares and/or the Warrant Shares may be made in conformity with Rule 144 under the Securities Act (" Rule 144 ") and (b) if applicable, a copy of such registration statement , then within three (3) business days of your receipt of a notice of transfer, Notice of Conversion or Notice of Exercise, you shall issue the
certificates representing the Conversion Shares and/or the Warrant Shares , as applicable, registered in the names of such transferees , and such certificates shall not bear any legend restricting transfer of the Conversion Shares and/or the Warrant Shares thereby and should not be subject to any stop-transfer restriction; provided , however , that if such Conversion Shares and Warrant Shares are not registered for resale under the Securities Act or able to be sold under Rule 144, then the certificates for such Conversion Shares and/or Warrant Shares shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD (I) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (II) PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AS EVIDENCED BY A LEGAL OPINION OF COUNSEL SELECTED BY THE HOLDER TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY OR (III) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The Holders and Company expressly understand and agree that nothing in this irrevocable Transfer Instruction Agreement shall require or be construed in any way to require the transfer agent to do, take or not do take any action that would be contrary to any federal or state law, rule, or regulation including but expressly not limited to both the Securities Act of 1933, as amended, and the Securities and Exchange Act of 1934 as amended, and the rule and regulations promulgated there under.
Notwithstanding anything herein contained to the contrary, Transfer Online, Inc. is not a party to the Agreement and is acting only in the capacity of an administrator. In addition, the Company must be current in all amounts owed to Transfer Online, Inc. and in good financial standing with Transfer Online Inc., before the issuance of any shares of the Common Stock herein.
In the event of any dispute or ligation between the Company and the Holders as a result of the failure to be current in all amounts owed to Transfer Online, Inc. and in good standing with Transfer Online, Inc., which might cause a delay in the issuance of shares of the Common Stock hereunder, Transfer Online, Inc. shall not be included in any litigation between the Company and the Holders nor have any liability to the Company or the Holders.
Please execute this letter in the space indicated to acknowledge your agreement to act in accordance with these instructions. Should you have any questions concerning this matter, please contact me at (858) 337-0766.
Very truly yours,
S&W SEED COMPANY
By: ___________________________
Name:
Title:
THE FOREGOING INSTRUCTIONS ARE
ACKNOWLEDGED AND AGREED TO
this 30th day of December, 2014
TRANSFER ONLINE, INC.
By: _________________________
Name: __________________________
Title: ____________________________
Enclosures
cc: Hudson Bay Master Fund Ltd.
Eleazer Klein, Esq.
EXHIBIT I
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal under the 8% Senior Secured Convertible Debenture due ________ of S&W Seed Company, a Nevada corporation (the " Company "), into shares of common stock (the " Common Stock "), of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.
By the delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not exceed the amounts specified under Section 4 of this Debenture, as determined in accordance with Section 13(d) of the Exchange Act.
The undersigned agrees to comply with any applicable prospectus delivery requirements under the applicable securities laws (or an exemption therefrom) in connection with any transfer of the aforesaid shares of Common Stock.
Conversion calculations:
Date to Effect Conversion:
Principal Amount of Debenture to be Converted:
Number of shares of Common Stock to be issued:
Signature:
Name:
Address for Delivery of Common Stock Certificates:
Or
DWAC Instructions:
Broker No: _________________
Account No: ____________________
EXHIBIT II
NOTICE OF EXERCISE
To: S&W Seed Company
(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] if permitted, the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
(4) Accredited Investor . The undersigned is an "accredited investor" as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
[SIGNATURE OF HOLDER]
Name of Investing Entity: _______________________________
Signature of Authorized Signatory of Investing Entity
:
____________________________________________________
Name of Authorized Signatory: __________________________
Title of Authorized Signatory: __________________________
Date: _____________________
EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this " Agreement ") is dated as of December 30, 2014, between S&W Seed Company, a Nevada corporation (the " Company "), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a " Purchaser " and collectively, the " Purchasers ").
WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the " Securities Act "), and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions . In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Debentures (as defined herein), and (b) the following terms have the meanings set forth in this Section 1.1:
" 8-K Filings " shall have the meaning ascribed to such term in Section 4.6.
" Acquiring Person " shall have the meaning ascribed to such term in Section 4.7.
" Action " shall have the meaning ascribed to such term in Section 3.1(j).
" Affiliate " means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
" BHCA " shall have the meaning ascribed to such term in Section 3.1(pp).
" Board of Directors " means the board of directors of the Company.
" Business Day " means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
" Buy-In " shall have the meaning ascribed to such term in 4.1(e).
" Buy-In Price " shall have the meaning ascribed to such term in 4.1(e).
" California Properties " means any real estate property owned by the Company or any of the Subsidiaries in (a) Imperial Valley, California and (b) Five Points, California.
" Closing " means the closing of the purchase and sale of the Securities pursuant to Section 2.1.
" Closing Date " means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (a) the Purchasers' obligations to pay the Subscription Amount and (b) the Company's obligations to deliver the Securities, in each case, have been satisfied or waived.
" Code " shall have the meaning ascribed to such term in Section 2.1.
" Collateral " shall have the meaning ascribed to such term in the Security Agreement.
" Collateral Agent " shall have the meaning ascribed to such term in Section 4.22(a).
" Collateral Agent Indemnitees " shall have the meaning ascribed to such term in Section 4.22(b).
" Commission " means the United States Securities and Exchange Commission.
" Common Stock " means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.
" Common Stock Equivalents " means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
" Company Counsel " means Holland & Knight LLP, with offices located at 111 SW Fifth Avenue, Suite 2300, Portland, OR 97204.
" Contingent Obligation " means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.
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" Conversion Price " shall have the meaning ascribed to such term in the Debentures.
" Conversion Shares " means the shares of Common Stock issuable upon the conversion of the Debentures.
" Debentures " means the 8% Senior Secured Convertible Debentures due, subject to the terms therein, 36 months from their date of issuance, issued by the Company to the Purchasers hereunder, in the form of Exhibit A attached hereto.
" Disclosure Schedules " means the Disclosure Schedules delivered by the Company concurrently with the execution and delivery of this Agreement.
" Disqualification Event " shall have the meaning ascribed to such term in Section 3.1(rr).
" EGS " means Ellenoff Grossman & Schole LLP, with offices located at 1345 Avenue of the Americas, New York, New York 10105-0302.
" Effective Date " means the earliest of the date that (a) the initial Registration Statement has been declared effective by the Commission, (b) all of the Underlying Shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale restrictions or (c) following the one-year anniversary of the Closing Date provided that a holder of Securities is not an Affiliate of the Company, all of the Underlying Shares may be sold pursuant to an exemption from registration under Section 4(1) of the Securities Act without volume or manner-of-sale restrictions and Company Counsel has delivered to such holders a standing written unqualified opinion that resales may then be made by such holders of the Securities pursuant to such exemption which opinion shall be in form and substance reasonably acceptable to such holders.
" Environmental Laws " shall have the meaning ascribed to such term in Section 3.1(m).
" Escrow Agent " means Alerus Financial, with offices located at 401 Demers Avenue, Grand Forks, North Dakota 58206-6001.
" Escrow Agreement " means the escrow agreement entered into prior to the date hereof, by and among the Company, the Escrow Agent and the Placement Agent pursuant to which the Purchasers shall deposit Subscription Amounts with the Escrow Agent to be applied to the transactions contemplated hereunder.
" Evaluation Date " shall have the meaning ascribed to such term in Section 3.1(s).
" Exchange Act " means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
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" Exempt Issuance " means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose for services rendered to the Company, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, including without limitation, securities issued upon exercise of outstanding Class B Warrants, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with stock splits or combinations) or to extend the term of such securities, (c) securities issued pursuant to acquisitions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, and (d) up to 300,000 shares of Common Stock (as adjusted for any stock dividends, stock split, stock combination, reclassification or similar transactions occurring after the date hereof) issued in a transaction with Bioceres, S.A., a joint-venture partner of the Company.
" FCPA " means the Foreign Corrupt Practices Act of 1977, as amended.
" Federal Reserve " has the meaning ascribed to such term in Section 3.1(pp).
" GAAP " shall have the meaning ascribed to such term in Section 3.1(h).
" Guarantee Agreement " means the Guarantee Agreement, dated as of the date hereof, among the U.S. Subsidiaries and the Collateral Agent, in the form of Exhibit L attached hereto.
" Hazardous Materials " shall have the meaning ascribed to such term in Section 3.1(m).
" Indebtedness " of any Person means, without duplication (a) all indebtedness for borrowed money, (b) all obligations issued, undertaken or assumed as the deferred purchase price of property or services, including, without limitation, "capital leases" in accordance with GAAP (other than trade payables entered into in the ordinary course of business consistent with past practice), (c) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (d) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses,
4
(e) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (f) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a "capital lease", (g) all indebtedness referred to in clauses (a) through (f) above secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (h) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (a) through (g) above.
" Indemnification Allocation Percentage " shall have the meaning ascribed to such term in Section 4.22(a).
" Indemnitee-Related Purchaser Entities " shall have the meaning ascribed to such term in Section 4.10(d).
" Intellectual Property Rights " shall have the meaning ascribed to such term in Section 3.1(p).
" Intercreditor Agreement " means the Intercreditor agreement, dated as of the Closing Date, by and among the Company, the Lead Investor as agent for the holders of the Debentures, Pioneer Hi-Bred International, Inc. and Wells Fargo National Association.
" Irrevocable Transfer Agent Instructions " means the Irrevocable Transfer Agent Instructions, in the form of Exhibit G attached hereto.
" Issuer Covered Person " shall have the meaning ascribed to such term in Section 3.1(rr).
" Jointly Indemnifiable Purchaser Claim " shall have the meaning ascribed to such term in Section 4.10(d).
" Lead Investor " means Hudson Bay Master Fund Ltd.
" Legend Removal Date " shall have the meaning ascribed to such term in Section 4.1(d).
" Liens " means a lien, charge, pledge, security interest, encumbrance, tax, right of first refusal, preemptive right or other restriction.
5
" Limitation Period " shall have the meaning ascribed to such term in Section 4.13(a).
" Limitation Period Allowed Issuance " shall have the meaning ascribed to such term in Section 4.13(a).
" Limitation Period Issuances " shall have the meaning ascribed to such term in Section 4.13(a).
" Lock-Up Agreements " means the Lock-Up Agreements, dated as of the date hereof, among the parties thereto, in the form of Exhibit I attached hereto.
" Material Adverse Effect " shall have the meaning assigned to such term in Section 3.1(b).
" Material Permits " shall have the meaning ascribed to such term in Section 3.1(n).
" Maximum Rate " shall have the meaning ascribed to such term in Section 5.17.
" MFP Documents " shall have the meaning ascribed to the term "Transaction Documents" in the Purchase Agreement, dated on or about the date hereof, by and among the Company and MFP Investors, LLC.
" Money Laundering Laws " shall have the meaning ascribed to such term in Section 3.1(qq).
" Mortgage Policy " shall have the meaning ascribed to such term in Section 2.2(a)(xix).
" OFAC " shall have the meaning ascribed to such term in Section 3.1(nn).
" Participation Maximum " shall have the meaning ascribed to such term in Section 4.12(a).
" Permitted Lien " shall have the meaning ascribed to such term in the Debentures.
" Person " means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
" Pioneer 8-K Filing " shall have the meaning ascribed to such term in Section 4.6.
" Pioneer Documents " shall have the meaning ascribed to the term "Transaction Documents" in the Asset Purchase and Sale Agreement, dated on or about the date hereof, by and among the Company and Pioneer Hi-Bred International, Inc.
" Pioneer Termination Date " shall have the meaning ascribed to such term in Section 4.23.
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" PIPE 8-K Filing " shall have the meaning ascribed to such term in Section 4.6.
" Placement Agent " means, collectively, Craig-Hallum Capital Group LLC and ROTH Capital Partners LLC.
" Principal Shareholders " means the shareholders set forth on Schedule 1.1 , holding in the aggregate no less than such percentage of the issued and outstanding Common Stock as set forth in Appendix A attached to the Voting Agreement.
" Pro Rata Indemnification Amount " shall have the meaning ascribed to such term in Section 4.22(a).
" Pro Rata Portion " shall have the meaning ascribed to such term in Section 4.12(d).
" Proceeding " means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.
" Public Information Failure " shall have the meaning ascribed to such term in Section 4.3(b).
" Public Information Failure Payments " shall have the meaning ascribed to such term in Section 4.3(b).
" Purchaser Party " shall have the meaning ascribed to such term in Section 4.10(a).
" Real Property Collateral " shall have the meaning ascribed to such term in Section 3.1(o).
" Registration Rights Agreement " means the Registration Rights Agreement, dated the date hereof, among the Company and the Purchasers, in the form of Exhibit B attached hereto.
" Registration Statement " means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale of the Underlying Shares by each Purchaser as provided for in the Registration Rights Agreement.
" Required Approvals " shall have the meaning ascribed to such term in Section 3.1(e).
" Required Holders " means the Holders of at least a majority of the number of Underlying Shares issued and issuable pursuant to the terms of the Warrants and pursuant to the terms of the Debentures and shall include the Lead Investor so long as the Lead Investor or any of its Affiliates holds any Securities.
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" Required Minimum " means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise in full of all Warrants or conversion in full of all Debentures (including Underlying Shares issuable as payment of interest on the Debentures), ignoring any conversion or exercise limits set forth therein, and assuming that the Conversion Price is at all times on and after the date of determination 75% of the then Conversion Price on the Trading Day immediately prior to the date of determination.
" Rule 144 " means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.
" Rule 424 " means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
" SEC Reports " shall have the meaning ascribed to such term in Section 3.1(h).
" Securities " means the Debentures, the Warrants and the Underlying Shares.
" Securities Act " means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
" Security Agreement " means the Security Agreement, dated the date hereof, among the Company and the Purchasers, in the form of Exhibit E attached hereto.
" Security Documents " means the Security Agreement, the Guarantee Agreement, the Intercreditor Agreement, any account control agreement, any and all financing statements, fixture filings, security agreements, pledges, assignments, mortgages, deeds of trust, opinions of counsel, and all other documents requested by the Collateral Agent or the Purchasers to create, perfect, and continue perfected or to better perfect the Purchasers' security interests in and Liens on the assets of the Company (whether now owned or hereafter arising or acquired, tangible or intangible, real or personal), as provided in the Security Agreement, and in order to fully consummate all of the transactions contemplated hereby and under the other Transaction Documents.
" Shareholder Approval " means such approval required by the applicable rules and regulations of the Nasdaq Stock Market (or any successor entity) from the shareholders of the Company with respect to the transactions contemplated by the Transaction Documents, including the issuance of all of the Underlying Shares in excess of 19.99% of the issued and outstanding Common Stock on the Closing Date.
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" Short Sales " means all "short sales" as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).
" Subscription Amount " means, as to each Purchaser, the aggregate amoun t to be paid for Debentures and Warrants purchased hereunder as specified below such Purchaser's name on the signature page of this Agreement and next to the heading "Subscription Amount," in United States dollars and in immediately available funds.
" Subsequent Financing " shall have the meaning ascribed to such term in Section 4.12(a).
" Subsequent Financing Notice " shall have the meaning ascribed to such term in Section 4.12(b).
" Subsidiary " means any entity in which the Company, directly or indirectly, owns any of the capital stock or holds an equity or similar interest.
" Trading Day " means a day on which the principal Trading Market is open for trading; provided that "Trading Day" shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or on any date that the Common Stock is suspended from trading during the final hour of such exchange or market (or if such exchange or market does not announce in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00 p.m. (New York City time)).
" Trading Market " means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).
" Transaction Documents " means this Agreement, the Debentures, the Warrants, the Registration Rights Agreement, the Security Documents, the Escrow Agreement, the Voting Agreement, the Irrevocable Transfer Agent Instructions, the Lock-Up Agreements, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated thereunder and hereunder.
" Transfer Agent " means Transfer Online, Inc., the current transfer agent of the Company, with a mailing address of 512 SW Salmon Street, Portland, OR 97214 and a facsimile number of (503) 227-6874, and any successor transfer agent of the Company.
" Underlying Shares " means the Warrant Shares and shares of Common Stock issued and issuable pursuant to the terms of the Debenture, including without limitation, shares of Common Stock issued and issuable in lieu of the cash payment of interest on the Debentures in accordance with the terms of the Debentures, in each case without respect to any limitation or restriction on the conversion of the Debentures or the exercise of the Warrants.
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" Undersubscription Amount " shall have the meaning ascribed to such term in Section 4.12(a).
" U.S. Subsidiary " means any Subsidiary formed in the United States.
" Variable Rate Transaction " shall have the meaning ascribed to such term in Section 4.13(b).
" Voting Agreement " means the written agreement among the Company and the Principal Shareholders, in the form of Exhibit F attached hereto to vote all of the shares of Common Stock set forth in Schedule 1.1 hereof (unless previously sold pursuant to the exemptions set forth in the Voting Agreement) and such other shares of Common Stock as may be acquired by such Principal Shareholders as of the record date for the meeting of the shareholders of the Company.
" VWAP " means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the "Pink Sheets" published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Required Holders and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
" Warrants " means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which Warrants shall be exercisable six months from the Closing Date and have a term of exercise equal to five (5) years from the date of exercisability, in the form of Exhibit C attached hereto.
" Warrant Shares " means the shares of Common Stock issuable upon exercise of the Warrants.
" Working Capital Loan Agreements " shall have the meaning ascribed to such term in the Intercreditor Agreement.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing . On the Closing Date, upon the terms and subject to the conditions set
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forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, up to an aggregate of $27,000,000 in principal amount of the Debentures and related Warrants. The Purchasers and the Company agree that the Debentures and the Warrants constitute an "investment unit" for the purposes of Section 1273(c)(2) of the Internal Revenue Code of 1986, as amended (the " Code "). Each Purchaser shall pay $1,000 for each $1,000 of principal amount of Debentures and related Warrants to be purchased by such Purchaser at the Closing. The Purchasers and the Company mutually agree that the allocation of the issue price of such investment unit between the Debentures and the Warrants in accordance with Section 1273(c)(2) of the Code and Treasury Regulation Section 1.1273 2(h) shall be an aggregate amount of $135,000 allocated to the Warrants and the balance of the Subscription Amounts allocated to the Debentures, and neither the Purchasers nor the Company shall take any position inconsistent with such allocation in any tax return or in any Proceeding in respect of taxes. Each Purchaser shall deliver to the Escrow Agent, via wire transfer or a certified check, immediately available funds equal to such Purchaser's Subscription Amount (less, in the case of the Lead Investor, the amounts withheld pursuant to Section 5.2) as set forth on the signature page hereto executed by such Purchaser, and the Company shall deliver to each Purchaser its respective Debenture and a Warrant, as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2(b) deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of EGS or such other location as the parties shall mutually agree.
2.2 Deliveries .
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the Security Agreement, (B) the original stock certificates representing all of the equity interests and all promissory notes required to be pledged thereunder, accompanied by undated stock powers and allonges executed in blank and other proper instruments of transfer, and (C) any other Security Documents reasonably requested by the Purchasers or the Collateral Agent;
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2.3 Closing Conditions .
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principal Trading Market and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities, nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing; and
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company . Except as set forth in the correspondingly numbered Disclosure Schedules, the Company hereby makes the following representations and warranties to each Purchaser:
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Transaction Documents, (ii) the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, individually or taken as a whole, or (iii) the Company's ability to perform on a timely basis its obligations under any Transaction Document (any of clauses (i), (ii) or (iii), a " Material Adverse Effect "). No Proceeding has been instituted in any applicable jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power, authority or qualification of the Company or its Subsidiaries.
(i) The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out the Company's obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company, and no further action is required by the Company, the Board of Directors or the Company's shareholders in connection herewith or therewith, other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which the Company is a party have been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (A) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, (B) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (C) insofar as indemnification and contribution provisions may be limited by applicable law.
(ii) With respect to the Guarantee Agreement, each of the U.S. Subsidiaries has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by such agreement and otherwise to carry out its obligations thereunder. The execution and delivery of the Guarantee Agreement and the consummation by the U.S. Subsidiaries of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the U.S. Subsidiaries, and no further action is required by the respective U.S. Subsidiary, its managers or its members in connection therewith. The Guarantee Agreement has been (or upon delivery will have been) duly executed by the respective U.S. Subsidiaries and, when delivered in accordance with the terms thereof, will constitute the valid and binding obligation of the respective U.S. Subsidiary enforceable against such U.S. Subsidiary in accordance with its terms, except: (A) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, (B) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (C) insofar as indemnification and contribution provisions may be limited by applicable law.
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Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof. The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of stock options under the Company's equity incentive plans, the issuance of shares of Common Stock to employees and the Company's former chairman pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Securities, pursuant to the Company's equity incentive plan and the outstanding Class B Warrants originally issued in connection with the Company's initial public offering, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock or the capital stock of any Subsidiary, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock, Common Stock Equivalents or capital stock of any Subsidiary. The issuance and sale of the Securities will not obligate the Company or any Subsidiary to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. There are no outstanding securities or instruments of the Company or any Subsidiary that contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to redeem a security of the Company or such Subsidiary. The Company does not have any stock appreciation rights or "phantom stock" plans or agreements or any similar plan or agreement. All of the outstanding shares of capital stock of the Company and each Subsidiary are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. Other than for Shareholder Approval, no further approval or authorization of any shareholder, the Board of Directors or others is required for the issuance and sale of the Securities. Other than as contemplated by the Transaction Documents, there are no shareholders agreements, voting agreements or other similar agreements with respect to the Company's capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company's shareholders.
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received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company is not and has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (" GAAP "), except as may be otherwise specified in such financial statements or the notes thereto, and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.
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local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case of clauses (i), (ii) and (iii) as could not have or reasonably be expected to result in a Material Adverse Effect.
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as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the principal Trading Market.
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securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve (12) months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.
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arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, or any Subsidiary, threatened.
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3.2 Representations and Warranties of the Purchasers . Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein):
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and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
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other advisors, employees, agents and Affiliates, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions in the future.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions .
[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD (I) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (II) PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AS
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EVIDENCED BY A LEGAL OPINION OF COUNSEL SELECTED BY THE HOLDER TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY OR (III) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
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(such third Trading Day, the " Legend "Removal Date "), deliver or cause to be delivered to such Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4. Certificates for Underlying Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting the account of the Purchaser's prime broker with the Depository Trust Company System as directed by such Purchaser.
4.2 Acknowledgment of Dilution . The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations under the Transaction Documents, including, without limitation, its obligation to issue the Underlying Shares pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against any Purchaser and
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regardless of the dilutive effect that such issuance may have on the ownership of the other shareholders of the Company.
4.3 Furnishing of Information; Public Information .
4.4 Integration . The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any "security" (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities or that would be integrated
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with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.
4.5 Conversion and Exercise Procedures . Each of the form of Notice of Exercise included in the Warrants and the form of Notice of Conversion included in the Debentures set forth the totality of the procedures required of the Purchasers in order to exercise the Warrants or convert the Debentures. Without limiting the preceding sentences, no ink-original Notice of Exercise or Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise or Notice of Conversion form be required in order to exercise the Warrants or convert the Debenture. No additional legal opinion, other information or instructions shall be required of the Purchasers to exercise their Warrants or convert their Debentures. The Company shall honor exercises of the Warrants and conversions of the Debentures and shall deliver Underlying Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.
4.6 Securities Laws Disclosure; Publicity . The Company shall by 8:30 a.m. (New York City time) on the Trading Day immediately following the date hereof, (a) issue a press release disclosing the material terms of the transactions contemplated hereby and by the MFP Documents (b) file with the Commission (i) a Current Report on Form 8-K disclosing the material terms of the transactions contemplated by the Transaction Documents and the MFP Documents, including the Transaction Documents as exhibits thereto (the " PIPE 8-K Filing ") and (ii) a Current Report on Form 8-K disclosing the material terms of the transactions contemplated by the Pioneer Documents (the " Pioneer 8-K Filing " and together with the PIPE 8-K Filing, the " 8-K Filings "). From and after the 8-K Filings, the Company represents to the Purchasers that it shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents, the MFP Documents and the Pioneer Documents. In addition, effective upon the 8-K Filings, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates on the one hand, and any of the Purchasers or any of their Affiliates on the other hand, shall terminate. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated by the Transaction Documents, the MFP Documents and the Pioneer Documents, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of the Required Holders, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except: (a) as required by federal securities law in connection with (i) any Registration Statement contemplated by the Registration Rights Agreement and (ii) the filing of final Transaction Documents with the Commission and (b) to the
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extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).
4.7 Shareholder Rights Plan . No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any Purchaser is an "Acquiring Person" under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.
4.8 Non-Public Information . The Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have entered into a written agreement with the Company regarding the confidentiality and use of such information. To the extent that the Company delivers any material, non-public information to a Purchaser without such Purchaser's consent, the Company hereby covenants and agrees that such Purchaser shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates, or a duty to the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates not to trade on the basis of, such material, non-public information. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.
4.9 Use of Proceeds . The Company shall use the net proceeds from the sale of the Securities hereunder for the payment of a portion of the purchase price for the acquisition of assets of Pioneer Hi-Bred International, Inc. as contemplated by the Pioneer Documents and for working capital purposes and shall not use such proceeds: (a) for the satisfaction of any portion of the Company's Indebtedness, (b) for the redemption of any Common Stock or Common Stock Equivalents, (c) for the settlement of any outstanding litigation or (d) in violation of FCPA or OFAC regulations.
4.10 Indemnification of Purchasers .
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judgments, amounts paid in settlements, court costs and reasonable attorneys' fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of, arising out of, or relating to (i) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (ii) any Action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any Person who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents, any transaction financed in whole or in part, directly or indirectly, with the proceeds from the issuance of the Securities, any disclosure made by such Purchaser Party pursuant to Section 4.6, or the status of such Purchaser Party as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents (other than (x) an Action by the Company based solely upon such Purchaser Party's breach of the Transaction Documents, (y) an Action by governmental authorities based solely upon violations by such Purchaser Party of state or federal securities laws or (z) an Action arising solely as a result of any conduct by such Purchaser Party which has been determined by a final, non-appealable judicial decision to constitute fraud, gross negligence or willful misconduct).
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4.11 Reservation and Listing of Securities .
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Trading Market as soon as possible thereafter, (iii) provide to the Purchasers evidence of such listing or quotation and (iv) maintain the listing or quotation of such Common Stock on any date at least equal to the Required Minimum on such date on such Trading Market or another Trading Market. The Company agrees to maintain the eligibility of the Common Stock for electronic transfer through the Depository Trust Company or another established clearing corporation, including, without limitation, by timely payment of fees to the Depository Trust Company or such other established clearing corporation in connection with such electronic transfer. In addition, the Company shall provide each shareholder entitled to vote at a special or annual meeting of the shareholders of the Company, at the earliest practical date after the Closing Date, but in no event later than 90 days after the Closing Date, a proxy statement, substantially in the form which has been previously reviewed by the Purchasers and Schulte Roth & Zabel, LLP, at the expense of the Company (not to exceed $5,000 with respect to the fees and expenses incurred by Schulte Roth & Zabel, LLP in connection with its review of each proxy statement for a shareholders meeting), soliciting each shareholder's vote at such shareholder's meeting for approval of resolutions providing for the Shareholder Approval, with the recommendation of the Board of Directors that such proposal be approved, and the Company shall solicit proxies from its shareholders in connection therewith in the same manner as all other management proposals in such proxy statement, and all management-appointed proxyholders shall vote their proxies in favor of such proposal. The Company shall use its reasonable best efforts to obtain such Shareholder Approval. If the Company does not obtain Shareholder Approval at the first meeting, the Company shall call a meeting every three (3) months thereafter to seek Shareholder Approval until the earlier of the date Shareholder Approval is obtained or the Securities are no longer outstanding.
4.12 Participation in Future Financing .
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such Subsequent Financing, the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and shall include a term sheet or similar document relating thereto as an attachment.
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4.13 Subsequent Equity Sales .
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conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may issue securities at a future determined price. Notwithstanding the foregoing or anything to the contrary in this Agreement, a "Variable Rate Transaction" shall not include a transaction in which the lowest price at which Common Stock may be issued is not less than the Conversion Price. Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.
4.14 Equal Treatment of Purchasers . No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of the Transaction Documents unless the same consideration (other than the reimbursement of legal fees provided in Section 5.2) is also offered to all of the parties to the Transaction Documents, holders of the Debentures or holders of the Warrants, as the case may be. Further, the Company shall not make any payment of principal or interest on the Debentures in amounts which are disproportionate to the respective principal amounts outstanding on the Debentures at any applicable time. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.
4.15 Certain Transactions and Confidentiality . Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales, of any of the Company's securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.6. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company
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pursuant to the initial press release as described in Section 4.6, such Purchaser will maintain the confidentiality of the existence and terms of the transactions contemplated by, and the information included in, the Transaction Documents. Notwithstanding the foregoing, and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (a) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.6, (b) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.6 and (c) no Purchaser shall have any duty of confidentiality or duty not to trade in the securities of the Company to the Company or its Subsidiaries after the issuance of the initial press release as described in Section 4.6. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser's assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser's assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.
4.16 Form D; Blue Sky Filings . The Company agrees to timely file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof promptly after such filing to each Purchaser upon request. The Company shall take such action, as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers on or before the Closing under applicable securities or "Blue Sky" laws of the states of the United States, and shall provide evidence of such actions promptly to each Purchaser. The Company shall make all filings and reports relating to the offer and sale of the Securities required under such laws following the Closing Date.
4.17 Capital Changes . Until the one (1) year anniversary of the Effective Date, the Company shall not undertake a reverse or forward stock split or reclassification of the Common Stock without the prior written consent of the Required Holders.
4.18 Lock-Up . The Company shall not amend, modify, waive or terminate any provision of any of the Lock-Up Agreements except to extend the term of the lock-up period and shall enforce the provisions of each Lock-Up Agreement in accordance with its terms. If any Person that is a party to a Lock-Up Agreement breaches any provision of a Lock-Up Agreement, the Company shall promptly use its best efforts to seek specific performance of the terms of such Lock-Up Agreement.
4.19 Voting Agreement . The Company shall use its best efforts to effectuate the transactions contemplated by the Voting Agreement. The Company shall not amend or waive any provision of the Voting Agreement and shall enforce the provisions of the Voting Agreement in accordance with its terms. If any of the Principal Shareholders breaches any provision of the
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Voting Agreement, the Company shall promptly use its best efforts to seek specific performance of the terms of such Voting Agreement in accordance with the terms thereof. In addition, if the Company receives any notice from any of the Principal Shareholders pursuant to the Voting Agreement, the Company shall promptly, but in no event later than two (2) Business Days, deliver a copy of such notice to each Purchaser
4.20 California Properties . In the event the Company does not effect the Real Estate Sale (as defined in the Debentures) of all or any of the California Properties on or prior to the date that is six (6) months immediately following the Closing Date, then the Collateral Agent shall be entitled, at the expense of the Company, to perfect its security interest in such California Properties by putting in place a mortgage thereon, which mortgage shall rank junior to any mortgage on such unsold California Property in existence and as in effect on the date hereof. The Company and any of the Subsidiaries shall be prohibited from allowing any Lien on any of the California Properties without the prior written consent of the Collateral Agent.
4.21 Stevia California, LLC . The Company shall cause Stevia California, LLC to be in good standing in the State of California on or before the date that is sixty (60) days after the date hereof.
4.22 Collateral Agent .
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to the Collateral Agent, by (ii) the fraction, the numerator of which is the sum of the aggregate principal amount of the Debentures held by such Purchaser and the denominator of which is the sum of the aggregate principal amount of the Debentures then outstanding excluding the aggregate principal amount of the Debenture held by any unpaying Purchaser. Each Purchaser may seek indemnification from other Purchasers to the extent it indemnified the Collateral Agent pursuant to this Section 4.22(a) in excess of such Purchaser's pro rata portion of the Debentures that are then outstanding calculated by multiplying (i) the aggregate dollar amount of such indemnification to the Collateral Agent, by (ii) the fraction, the numerator of which is the sum of the aggregate principal amount of the Debentures held by such Purchaser and the denominator of which is the sum of the aggregate principal amount of the Debentures then outstanding (such fraction with respect to each holder is referred to as its " Indemnification Allocation Percentage ," and such amount with respect to each holder is referred to as its " Pro Rata Indemnification Amount "); provided , however , that in the event that any holder's Pro Rata Indemnification Amount exceeds the outstanding principal amount of such holder's Debenture, then such excess Pro Rata Indemnification Amount shall be allocated amongst the remaining holders of Debentures in accordance with the foregoing formula. In the event that the initial holder of any Debentures shall sell or otherwise transfer any of such holder's Debentures, the transferee shall be allocated a pro rata portion of such holder's Indemnification Allocation Percentage and Pro Rata Indemnification Amount.
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Agent (or its successor), from time to time pursuant to the terms of this Section 4.22, to secure a successor Collateral Agent satisfactory to such requesting part(y)(ies), in their sole discretion, including, without limitation, by paying all fees of such successor Collateral Agent, by having the Company agree to indemnify any successor Collateral Agent and by executing a collateral agency agreement or similar agreement and/or any amendment to the Security Documents reasonably requested or required by the successor Collateral Agent.
4.23 Pioneer Acquisition . In the event the transactions contemplated by the Pioneer Documents are not consummated by the date that is five (5) Business Days immediately following the date hereof (the " Pioneer Termination Date "), the Company shall, or shall cause the Escrow Agent to, promptly but in any event on or prior to the second (2 nd ) Business Day after the Pioneer Termination Date wire to each Purchaser such Purchaser's Subscription Amount and the earnings on such Subscription Amount, if any, pursuant to wire instructions provided by such Purchaser in writing to the Company.
4.24 NASDAQ : The Company shall use its reasonable best efforts to convince NASDAQ not to integrate the transactions contemplated by the Transaction Documents with the transactions contemplated by the MFP Documents for purposes of any Shareholder Approval requirement by the Company.
ARTICLE V.
MISCELLANEOUS
5.1 Termination . This Agreement may be terminated by the Company or any Purchaser, as to such Purchaser's obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated on or before five (5) Business Days from the date hereof due to the Company's or such Purchaser's failure to satisfy the conditions set forth in Sections 2.3(a) or 2.3(b), respectively (and the nonbreaching party's failure to waive such unsatisfied condition(s)); provided , however , that if this Agreement is terminated pursuant to this Section 5.1, the Company shall remain obligated to reimburse the Lead Investor or its designee(s), as applicable, for the expenses described in Section 5.2.
5.2 Fees and Expenses . The Company has agreed to reimburse the Lead Investor, a Purchaser, or its designee (in addition to any other expense amounts paid to any Purchaser or its counsel prior to the date hereof) for all costs and expenses for up to $140,000 incurred in connection with the transactions contemplated hereby (including all legal fees, disbursements, documentation, due diligence and implementation in connection therewith). The Lead Investor may, in its sole discretion, withhold such reimbursement from its Subscription Amount at Closing to the extent not previously reimbursed by the Company. The Company shall be responsible for the payment of the Placement Agent's and any other placement agent's fees, financial advisory fees, or broker's commissions (other than for Persons engaged by any Purchaser) relating to or arising out of the transactions contemplated hereby, including any fees or commissions payable to the Placement Agent. The Company shall pay, and hold each Purchaser harmless against any liability, loss or expense (including reasonable attorneys' fees
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and out-of-pocket expenses) arising in connection with any claim relating to any such payment. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and any conversion or exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers. The Company shall pay to the Collateral Agent all Collateral Agent fees including, without limitation, an annual fee of $10,000, for its role as Collateral Agent for its services in connection with collecting the security interests and otherwise protecting, enforcing or preserving any rights or remedies of the Purchasers under this Agreement and the Security Documents and all costs, fees and expenses related thereto. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.
5.3 Entire Agreement . The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.4 Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment as set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2 nd ) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto. To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains any material non-public information regarding the Company or any of its Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.
5.5 Amendments; Waivers . No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Required Holders, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. Any proposed amendment or waiver that disproportionately and adversely affects the rights and obligations of any Purchaser relative to the comparable rights and obligations of the other Purchasers shall
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require the prior written consent of such adversely affected Purchaser. Any amendment effected in accordance with accordance with this Section 5.5 shall be binding upon each Purchaser and holder of Securities and the Company.
5.6 Headings . The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
5.7 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the Purchasers.
5.8 No Third Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Sections 4.10, 4.22 and 5.2.
5.9 Governing Law . All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action or Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Action or Proceeding is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such Action or Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If any party hereto shall commence an Action or Proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.10, the prevailing party in such Action or Proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys' fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action or Proceeding.
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5.10 Survival . Unless this Agreement is terminated under Section 5.1, the representations and warranties of the Company and each Purchaser contained in Article 3, and the agreements and covenants set forth in Articles 4 and 5 shall survive the Closing and the delivery of the Securities.
5.11 Execution . This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a ".pdf" format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or ".pdf" signature page were an original thereof.
5.12 Severability . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
5.13 Rescission and Withdrawal Right . Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights; provided , however , that in the case of a rescission of a conversion of a Debenture or exercise of a Warrant, the applicable Purchaser shall be required to return any shares of Common Stock subject to any such rescinded conversion or exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid to the Company for such shares and the restoration of such Purchaser's right to acquire such shares pursuant to such Purchaser's Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).
5.14 Replacement of Securities . If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
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5.15 Remedies . In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any Action for specific performance of any such obligation the defense that a remedy at law would be adequate.
5.16 Payment Set Aside . To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
5.17 Usury . To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any Action or Proceeding that may be brought by any Purchaser in order to enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the " Maximum Rate "), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at such Purchaser's election.
5.18 Independent Nature of Purchasers' Obligations and Rights . The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any
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Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any Proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents. For reasons of administrative convenience only, each Purchaser and its respective counsel have chosen to communicate with the Company through EGS. EGS does not represent any of the Purchasers and only represents the Placement Agent. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers.
5.19 Liquidated Damages . The Company's obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled.
5.20 Saturdays, Sundays, Holidays, etc . If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
5.21 Construction . The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.
5.22 WAIVER OF JURY TRIAL . IN ANY ACTION OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
(Signature Pages Follow)
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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
S&W Seed Company
|
Address for Notice: |
By:__________________________________________
With a copy to (which shall not constitute notice): |
Fax: |
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Email Address : |
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
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[PURCHASER SIGNATURE PAGES TO SANW SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
Name of Purchaser: ________________________________________________________
Signature of Authorized Signatory of Purchaser : __________________________________
Name of Authorized Signatory: ____________________________________________________
Title of Authorized Signatory: _____________________________________________________
Email Address of Authorized Signatory: _____________________________________________
Facsimile Number of Authorized Signatory: __________________________________________
Address for Notice to Purchaser:
Address for Delivery of Securities to Purchaser (if not same as address for notice):
Subscription Amount: _____________
Warrant Shares: _________________
EIN Number: _______________________
[SIGNATURE PAGES CONTINUE]
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EXHIBIT 10.2
EXHIBIT A
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD (I) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (II) PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL SELECTED BY THE HOLDER TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY OR (III) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
Original Issue Date:
December 31, 2014
Original Conversion Price (subject to adjustment herein): $5.00
$_______________
8% SENIOR SECURED CONVERTIBLE DEBENTURE
DUE november 30, 2017
THIS 8% SENIOR SECURED CONVERTIBLE DEBENTURE is one of a series of duly authorized and validly issued 8% Senior Secured Convertible Debentures of S&W Seed Company, a Nevada corporation, (the " Company "), having its principal place of business at 25552 South Butte Avenue, Five Points, CA 93624, designated as its 8% Senior Secured Convertible Debenture due November 30, 2017 (this debenture, the " Debenture " and, collectively with the Other Debentures (as defined herein) of such series, the " Debentures ").
FOR VALUE RECEIVED, the Company promises to pay to ________________________ or its registered assigns (the " Holder "), or shall have paid pursuant to the terms hereunder, the principal sum of $_______________ on November 30, 2017 (the " Maturity Date ") or such earlier date as this Debenture is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture in accordance with the provisions hereof. This Debenture is subject to the following additional provisions:
Section 1 . Definitions . For the purposes hereof, in addition to the terms defined elsewhere in this Debenture, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following meanings:
" Accelerated Amount " shall have the meaning set forth in Section 6(b) hereof.
" Acceleration Notice " shall have the meaning set forth in Section 6(b) hereof.
" Additional Pre-Monthly Redemption Shares " shall have the meaning set forth in Section 6(b) hereof.
" Additional Pre-Monthly Redemption Shares Delivery Date " shall have the meaning set forth in Section 6(b) hereof.
" Adjusted Conversion Price " means the greater of (i) the arithmetic average of the 10 lowest VWAPs of the Common Stock during the 20 consecutive Trading Days ending on the Trading Day that is immediately prior to the Adjustment Date (subject to adjustment for any stock dividend, stock split, stock combination or other similar event affecting the Common Stock during such 20 Trading Day period) and (ii) $4.15 (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after the Subscription Date).
" Adjustment Date " shall have the meaning set forth in Section 5(b).
" Allocation Percentage " shall have the meaning set forth in Section 6(f).
" Allocation Pro Rata Amount " shall have the meaning set forth in Section 6(f).
" Alternate Consideration " shall have the meaning set forth in Section 5(f).
2
" Attribution Parties " means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds or managed accounts, currently, or from time to time after the Original Issue Date, directly or indirectly managed or advised by the Holder's investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group (as defined in Rule 13d-5 under the Exchange Act) together with the Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Company's Common Stock would or could be aggregated with the Holder's and the other Attribution Parties for purposes of Section 13(d) of the Exchange Act. For clarity, the purpose of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Beneficial Ownership Limitation.
" Authorized Share Failure " shall have the meaning set forth in Section 4(c)(vi).
" Available Proceeds " means, with respect to the Real Estate Sale, one hundred percent (100%) of the aggregate cash proceeds generated by such event net of any bona fide fees and commissions incurred with respect thereto and the payoff of any Permitted Indebtedness secured by any Permitted Lien on the applicable property subject to such Real Estate Sale, and with respect to any Real Estate Sale Or Other Redemption not involving a Real Estate Sale, one hundred percent (100%) of the aggregate Real Estate Redemption Amounts of this Debenture and the Other Debentures that the Company has elected to redeem pursuant to a Real Estate Sale Or Other Redemption.
" Bankruptcy Event " means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts, (g) the Company or any Significant Subsidiary thereof admits in writing that it is generally unable to pay its debts as they become due, (h) the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing (without regard to the 60-day periods referenced in any of the foregoing).
" Beneficial Ownership Limitation " shall have the meaning set forth in Section 4(d).
" Business Day " means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
" Buy-In " shall have the meaning set forth in Section 4(c)(v).
" Buy-In Price " shall have the meaning set forth in Section 4(c)(v).
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" Change of Control Transaction " means any Fundamental Transaction other than (i) any reorganization, recapitalization or reclassification of the Common Stock in which holders of the Company's voting power immediately prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, are, in all material respect, the holders of the voting power of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification or (ii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company.
" Closing Bid Price " and " Closing Sale Price " means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the principal Trading Market, as reported by Bloomberg L.P., or, if the principal Trading Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may be, then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg L.P., or, if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg L.P., or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg L.P., the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the OTC Link or "pink sheets" by OTC Markets Group Inc. (formerly Pink OTC Markets Inc.). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as determined by an independent appraiser selected in good faith by the Required Holders and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction during the applicable calculation period.
" Company Accelerated Amount " shall have the meaning set forth in Section 6(b) hereof.
" Company Acceleration Notice " shall have the meaning set forth in Section 6(b) hereof.
" Conversion Date " shall have the meaning set forth in Section 4(a).
" Conversion Price " shall have the meaning set forth in Section 4(b).
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" Conversion Shares " means, collectively, the shares of Common Stock issuable pursuant to the terms of this Debenture.
" Convertible Securities " means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for Common Stock.
" Debenture Register " shall have the meaning set forth in Section 2(c).
" Deferral Amount " shall have the meaning set forth in Section 6(b) hereof.
" Deferral Notice " shall have the meaning set forth in Section 6(b) hereof.
" Disposition " means any transaction, or series of related transactions, pursuant to which any Person or any of its Subsidiaries sells, assigns, transfers, leases, licenses (as licensor) or otherwise disposes of any property or assets to any other Person, in each case, whether or not the consideration therefor consists of cash, securities or other assets owned by the acquiring Person.
" Distributions " shall have the meaning set forth in Section 5(e).
" DTC " shall have the meaning set forth in Section 2(a).
" Effectiveness Period " shall have the meaning set forth in the Registration Rights Agreement.
" Equity Conditions " means (a) during the Equity Conditions Measuring Period, the Company shall have duly honored all (x) exercises of Warrants to occur or occurring by virtue of one or more Notices of Exercise of any holder of Warrants, if any, and (y) conversions and redemptions scheduled to occur or occurring by virtue of one or more Notices of Conversion of the Holder or any holder of the Other Debentures, if any, (b) during the Equity Conditions Measuring Period, the Company shall have timely paid all liquidated damages and other amounts owing to the Holder in respect of this Debenture and the other Transaction Documents within 5 Business Days of when such payment is due pursuant to any such Transaction Documents, (c) there is an effective Registration Statement pursuant to which the Holder is permitted to utilize the prospectus thereunder to resell all of the shares of Common Stock issuable pursuant to the Transaction Documents, including without limitation, the shares of Common Stock issuable pursuant to Section 2 or 6, as applicable, and as of the applicable date of determination there is no event described in Section 3(k) of the Registration Rights Agreement (and the Company believes, in good faith, that such effectiveness will continue uninterrupted for the foreseeable future) or (ii) all of the shares of Common Stock issuable pursuant to the Transaction Documents, including without limitation, the shares of Common Stock issuable pursuant to Section 2 or 6, as applicable, may be resold pursuant to Rule 144 without volume or manner-of-sale restrictions or current public information requirements and the Company shall have no
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knowledge of any fact that would cause any such shares of Common Stock not to be eligible for sale without restriction pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1), (d) on each day during the Equity Conditions Measuring Period, the Common Stock is trading on a Trading Market and all of the shares issuable pursuant to the Transaction Documents, including, without limitation, the shares of Common Stock issuable pursuant to the event requiring the satisfaction of the Equity Conditions, are listed or quoted for trading on such Trading Market (and the Company believes, in good faith, that trading of the Common Stock on a Trading Market will continue uninterrupted for the foreseeable future), (e) on each day during the Equity Conditions Measuring Period, there is a sufficient number of authorized but unissued and otherwise unreserved shares of Common Stock for the issuance of all of the shares then issuable pursuant to the Transaction Documents, including, without limitation, for the issuance of the shares of Common Stock issuable pursuant to the event requiring the satisfaction of the Equity Conditions, (f) during the Equity Conditions Measuring Period, there is no existing Event of Default and no existing event which, with the passage of time or the giving of notice, would constitute an Event of Default, (g) the issuance of the shares requiring the satisfaction of the Equity Conditions to the Holder would not violate the limitations set forth in Section 4(d) and Section 4(e) herein, (h) during the Equity Conditions Measuring Period, there has been no public announcement of a pending or proposed Fundamental Transaction or Change of Control Transaction that has not been consummated, (i) during the Equity Conditions Measuring Period, the applicable Holder is not in possession of any information provided by the Company, any of its Subsidiaries or any of their respective agents, Affiliates, officers, directors or employees that constitutes material non-public information, (j) on at least 20 Trading Days during the Equity Conditions Measuring Period, the daily trading volume for the Common Stock on the principal Trading Market exceeds 75,000 shares (subject to adjustment for forward and reverse stock splits and the like occurring after the Subscription Date) per Trading Day, (k) if the event requiring the satisfaction of the Equity Conditions is the payment on interest in shares of Common Stock, the Optional Redemption or the Forced Conversion, the Company shall have obtained the Shareholder Approval, (l) if the event requiring the satisfaction of the Equity Conditions is an Optional Redemption, the Closing Sale Price of the Common Stock exceeds 150% of the Conversion Price on the Original Issue Date (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after the Subscription Date) on at least 20 Trading Days during the Equity Conditions Measuring Period and (m) if the event requiring the satisfaction of the Equity Conditions is a Forced Conversion, the Closing Sale Price of the Common Stock exceeds 200% of the Conversion Price on the Original Issue Date (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after the Subscription Date) on at least 20 Trading Days during the Equity Conditions Measuring Period.
" Equity Conditions Measuring Period " means each day during the period beginning thirty (30) Trading Days prior to the applicable date of determination and ending on and including the applicable date of determination.
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" Event of Default " shall have the meaning set forth in Section 9(a).
" Excess Shares " shall have the meaning set forth in Section 4(d) hereof.
" Forced Conversion " shall have the meaning set forth in Section 6(c).
" Forced Conversion Date " shall have the meaning set forth in Section 6(c).
" Forced Conversion Notice " shall have the meaning set forth in Section 6(c).
" Forced Conversion Notice Date " shall have the meaning set forth in Section 6(c).
" Forced Conversion Period " shall have the meaning set forth in Section 6(c).
" Fundamental Transaction " shall have the meaning set forth in Section 5(e).
" Initial Pre-Monthly Redemption Shares " shall have the meaning set forth in Section 6(b) hereof.
" Initial Pre-Monthly Redemption Shares Delivery Date " shall mean the date that is 21 st Trading Days immediately preceding the applicable Monthly Redemption Date.
" Intercreditor Agreement " shall have the meaning set forth in the Purchase Agreement.
" Interest Balance Shares " means, for any applicable Interest Payment Date, a number of shares of Common Stock, if any, equal to (i) the Interest Shares for such date determined by dividing the applicable Interest Share Amount by the Interest Conversion Price minus (ii) the amount of any Pre-Interest Shares delivered in respect of the applicable Interest Payment Date; provided , that in the event that the amount of Pre-Interest Shares exceeds the number of Interest Shares set forth in clause (i) above (such excess, the " Interest Shares Excess "), the Interest Balance Shares shall equal zero (0) for such date and in no event shall the Interest Shares Excess reduce the number of Pre-Interest Shares payable on the next applicable Pre-Interest Shares Delivery Date, if any.
" Interest Conversion Price " means the lesser of (a) the Conversion Price or (b) 90% of the lesser of (i) the arithmetic average of the 10 lowest VWAPs of the Common Stock during the 20 consecutive Trading Days ending on the Trading Day that is immediately prior to the applicable Interest Payment Date or (ii) the arithmetic average of the 10 lowest VWAPs of the Common Stock during the 20 consecutive Trading Days ending on the Trading Day that is immediately prior to the date the applicable Interest Balance Shares are issued and delivered to the Holder if such delivery is after the applicable Interest Payment Date. All such determinations to be appropriately adjusted
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for any stock split, stock dividend, stock combination, reclassification or other similar transaction during such period.
" Interest Interim Period " shall have the meaning set forth in Section 2(b).
" Interest Notice " shall have the meaning set forth in Section 2(b).
" Interest Notice Date " shall have the meaning set forth in Section 2(b).
" Interest Notice Period " shall have the meaning set forth in Section 2(a).
" Interest Payment Date " shall have the meaning set forth in Section 2(a).
" Interest Rate " means 8% per annum, subject to adjustment as set forth herein.
" Interest Share Amount " shall have the meaning set forth in Section 2(a).
" Interest Shares " shall have the meaning set forth in Section 2(a).
" Issuable Maximum " shall have the meaning set forth in Section 4(e).
" Late Fees " shall have the meaning set forth in Section 2(d).
" Lead Investor " means Hudson Bay Master Fund Ltd.
" Lien " means any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by the Company or any of its Subsidiaries.
" Mandatory Default Amount " means the sum of (a) the greater of (i) the outstanding principal amount of this Debenture, plus all accrued and unpaid interest hereon, divided by the lowest Conversion Price in effect during the period beginning on the date immediately preceding such Event of Default and ending on the date the Company pays the Mandatory Default Amount in full, multiplied by the greatest Closing Sale Price of the Common Stock during such period, or (ii) 130% of the outstanding principal amount of this Debenture, plus 130% of accrued and unpaid interest hereon, and (b) 130% of all other amounts, costs, expenses and liquidated damages due in respect of this Debenture.
" Monthly Conversion Amount " shall have the meaning set forth in Section 6(b).
" Monthly Conversion Period " shall have the meaning set forth in Section 6(b) hereof.
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" Monthly Conversion Price " shall have the meaning set forth in Section 6(b) hereof.
" Monthly Redemption " means the redemption of this Debenture pursuant to Section 6(b) hereof.
" Monthly Redemption Amount " means, as to a Monthly Redemption, $______ 1 , plus accrued but unpaid interest, liquidated damages and any other amounts then owing to the Holder in respect of this Debenture as to the applicable Monthly Redemption Amount, including, without limitation, any applicable Accelerated Amount(s), Company Accelerated Amount(s) and/or Deferral Amount(s), subject to adjustment by the Holder pursuant to Section 6(b).
" Monthly Redemption Balance Shares " means, for any applicable Monthly Redemption Date, a number of shares of Common Stock, if any, equal to (i) the Monthly Redemption Shares for such date determined by dividing the applicable Monthly Redemption Amount by the Monthly Redemption Price minus (ii) the amount of any Pre- Monthly Redemption Shares delivered in respect of the applicable Monthly Redemption Date; provided , that in the event that the amount of Pre-Monthly Redemption Shares exceeds the number of Monthly Redemption Shares set forth in clause (i) above (such excess, the " Monthly Redemption Shares Excess "), the Monthly Redemption Balance Shares shall equal zero (0) for such date and in no event shall the Monthly Redemption Shares Excess reduce the number of Initial Pre-Monthly Redemption Shares or Monthly Redemption Balance Shares payable on the next applicable Initial Pre-Monthly Redemption Shares Delivery Date or Monthly Redemption Date, as applicable, if any.
" Monthly Redemption Date " means the 1 st Business Day of each month, commencing on July 1, 2015, and terminating upon the full redemption of this Debenture.
" Monthly Redemption Notice " shall have the meaning set forth in Section 6(b) hereof.
" Monthly Redemption Notice Date " shall have the meaning set forth in Section 6(b) hereof.
" Monthly Conversion Price " shall have the meaning set forth in Section 6(b) hereof.
" Monthly Redemption Shares " shall have the meaning set forth in Section 6(b) hereof.
" New York Courts " shall have the meaning set forth in Section 12(d).
___________________
1
Insert 1/28th of the principal amount outstanding on the Original Issue Date.
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" Notice of Conversion " shall have the meaning set forth in Section 4(a).
" Optional Redemption " shall have the meaning set forth in Section 6(a).
" Optional Redemption Amount " shall have the meaning set forth in Section 6(a).
" Optional Redemption Date " shall have the meaning set forth in Section 6(a).
" Optional Redemption Notice " shall have the meaning set forth in Section 6(a).
" Optional Redemption Notice Date " shall have the meaning set forth in Section 6(a).
" Optional Redemption Period " shall have the meaning set forth in Section 6(a).
" Optional Redemption Price " means 120% of the sum of (a) the then outstanding principal amount of the Debenture, (b) the accrued but unpaid interest (c) all other interest that would have accrued and been paid on the outstanding principal amount of the Debenture if such Debenture had been held until the Maturity Date and (d) all liquidated damages and other amounts due in respect of the Debenture.
" Options " means any rights, warrants or options to subscribe for or purchase (i) shares of Common Stock or (ii) Convertible Securities.
" Original Issue Date " means the date of the first issuance of the Debentures, regardless of any transfers of any Debenture and regardless of the number of instruments which may be issued to evidence such Debentures.
" Other Debentures " means the debentures of the same series as this Debenture issued by the Company pursuant to the Purchase Agreement.
" Permitted Indebtedness " means (a) the Indebtedness evidenced by this Debenture and the Other Debentures, (b) Indebtedness, liabilities or other obligations incurred by the Company in connection with (i) those certain Credit Facility Agreements, dated as of February 21, 2014, by and between the Company and Wells Fargo Bank, National Association (together, the " Wells Fargo Facility "), (ii) that certain Credit Facility Agreement, dated as of August 23, 2007, by and between Seed Genetics International Pty Ltd and National Australia Bank Limited so long as the Company is not a debtor or a pledgor of assets as security under such facility (the " NAB Facility "), (iii) any modification or amendments to the Wells Fargo Facility or NAB Facility, or (iv) any credit facility with a traditional bank lending institution replacing, refinancing or expanding the Wells Fargo Facility or NAB Facility, provided , that in the case of the Wells Fargo Facility, such credit facility is subject to an intercreditor agreement
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substantially on the same terms as the Intercreditor Agreement, provided , further , that no Indebtedness described in this clause (b) shall be or become convertible, exchangeable or exercisable into Common Stock or Common Stock Equivalents, (c) the Indebtedness existing and as in effect on the Subscription Date and set forth on Schedule 3.1(aa) attached to the Purchase Agreement, provided, that such Indebtedness is not increased, refinanced, amended, changed or modified on or after the Subscription Date, (d) lease obligations and purchase money indebtedness, incurred in connection with the acquisition of capital assets and lease obligations with respect to newly acquired or leased assets, (e) Indebtedness evidenced by the promissory note dated as of December 31, 2014 made by the Company for the benefit of Pioneer Hi-Bred International, Inc. with the terms, provisions and amounts as in effect on the Subscription Date, (f) Indebtedness that (i) is expressly subordinate to the Debentures pursuant to a written subordination agreement with the Purchasers that is acceptable to the Collateral Agent in its sole and absolute discretion and (ii) matures at a date later than the 91st day following the Maturity Date and (g) after the termination of the Wells Fargo Facility or the NAB Facility (and any refinancing or replacement facility in respect thereof), asset-backed lines of credit for working capital solely secured by accounts receivable and inventory.
" Permitted Lien " means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company) have been established in accordance with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of the Company's business, such as carriers', warehousemen's and mechanics' Liens, statutory landlords' Liens, and other similar Liens arising in the ordinary course of the Company's business, and which (x) do not individually or in the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business of the Company and its consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien and (c) Liens incurred in connection with Permitted Secured Indebtedness.
" Permitted Secured Indebtedness " means Permitted Indebtedness set forth in clauses (b), (e) and (g) of such definition.
" Pre-Interest Shares " shall have the meaning set forth in Section 2(a) hereof.
" Pre-Interest Shares Delivery Date " shall have the meaning set forth in Section 2(a).
" Pre-Monthly Redemption Shares " shall have the meaning set forth in Section 6(b) hereof.
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" Pro Rata Amount " means a fraction (i) the numerator of which is the principal amount of this Debenture on the Closing Date and (ii) the denominator of which is the aggregate principal amount of all Debentures issued to the initial holders of Debentures pursuant to the Purchase Agreement on the Closing Date.
" Purchase Agreement " means the Securities Purchase Agreement, dated as of the Subscription Date among the Company and the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.
" Purchase Rights " shall have the meaning set forth in Section 5(d) hereof.
" Real Estate Sale " means any Disposition of any real estate property owned by the Company or any of the Subsidiaries in (a) Imperial Valley, California and (b) Five Points, California.
" Real Estate Sale Or Other Redemption " shall have the meaning set forth in Section 6(a).
" Real Estate Sale Or Other Redemption Amount " shall have the meaning set forth in Section 6(d).
" Real Estate Sale Or Other Redemption Date " shall have the meaning set forth in Section 6(d).
" Real Estate Sale Or Other Redemption Notice " shall have the meaning set forth in Section 6(d).
" Real Estate Sale Or Other Redemption Notice Date " shall have the meaning set forth in Section 6(d).
" Real Estate Sale Or Other Redemption Price " shall have the meaning set forth in Section 6(d).
" Redemption " means, collectively, the Optional Redemption, the Monthly Redemptions, the Forced Conversion and the Real Estate Sale Or Other Redemption, each of the foregoing, individually, a Redemption.
" Redemption Date " means, collectively, the Optional Redemption Date, the Monthly Redemption Date, the Forced Conversion Date and the Real Estate Sale Or Other Redemption Date, each of the foregoing, individually, a Redemption Date.
" Redemption Price " means, collectively, the Optional Redemption Price, the Monthly Redemption Amount, the shares of Common Stock to be issued to the Holder
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pursuant to the Forced Conversion and the Real Estate Sale Or Other Redemption Price, each of the foregoing, individually, a Redemption Date.
" Registration Rights Agreement " means the Registration Rights Agreement, dated as of the date of the Purchase Agreement, among the Company and the original Holders, in the form of Exhibit B attached to the Purchase Agreement.
" Registration Statement " means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale of the Underlying Shares by the Holder and the holders of the Other Debentures as provided for in the Registration Rights Agreement.
" Reported Outstanding Share Number " shall have the meaning set forth in Section 4(d) hereof.
" Required Holders " means the holders of Debentures representing at least a majority of the aggregate principal amount of the Debentures then outstanding and shall include the Lead Investor so long as the Lead Investor or any of its Affiliates holds any Debentures.
" Required Reserve Amount " shall have the meaning set forth in Section 4(c)(vi) hereof.
" Securities Act " means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
" Share Delivery Date " shall have the meaning set forth in Section 4(c)(ii).
" Subscription Date " means December 30, 2014.
" Successor Entity " shall have the meaning set forth in Section 5(f).
" Trading Day " means a day on which the principal Trading Market is open for trading; provided that "Trading Day" shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00 p.m., New York Time).
" Trading Market " means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).
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" VWAP " means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:00 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the "Pink Sheets" published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Required Holders and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
Section 2 . Interest .
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indicates in the applicable Interest Notice that it shall pay all or any portion of interest due on such Interest Payment Date in shares of Common Stock, the Company shall deliver on the date which is the 21 st Trading Day prior to the applicable Interest Payment Date (each, an " Pre-Interest Shares Delivery Date "), to the Holder's account with The Depository Trust Company (or another established clearing corporation performing similar functions) (the " DTC ") a number of shares of Common Stock to be applied against such Interest Share Amount equal to the quotient of (x) the applicable Interest Share Amount divided by (y) the Interest Conversion Price assuming for purposes of the "Interest Conversion Price" definition that the Interest Payment Date is the applicable Pre-Interest Shares Delivery Date (such number of Interest Shares, the " Pre-Interest Shares "). On each Interest Payment Date, with respect to which the Company notified the Holder it shall pay Interest in whole or in portion in Common Stock, the Company shall deliver to the Holder a number of shares of Common Stock equal to the applicable Interest Balance Shares. If (i) the Company notified the Holder on the applicable Interest Notice Date that it shall pay Interest in whole or in portion in Common Stock and (ii) as a result of such payment of Interest in Common Stock, the Holder will exceed its Beneficial Ownership Limitation and the Holder does not waive the Equity Condition set forth in clause (g) of such definition, the Holder shall deliver a written notice to the Company on the Trading Day immediately following the applicable Interest Notice Date that such Equity Condition is not satisfied or waived and specifying how many shares of Common Stock the Holder is able to receive without exceeding its Beneficial Ownership Limitation.
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between the applicable Interest Notice Date and any time prior to the applicable Interest Payment Date (an " Interest Interim Period "), the Company shall provide the Holder a subsequent notice to that effect indicating that unless the Holder waives the Company's failure to satisfy the Equity Conditions, the interest shall be paid in cash. If the Company fails to satisfy any Equity Condition (which failure is not waived in writing by the Holder) during such Interest Interim Period, then at the option of the Holder, the Holder may (i) nevertheless require the Company to pay the amount of interest in shares of Common Stock or (ii) require the Company to pay the amount of interest (including any portion of the Pre-Interest Shares in which case the Holder shall return such related Pre-Interest Shares, which the Holder has not otherwise sold, transferred or disposed of, to the Company) payable on the applicable Interest Payment Date in cash. Subject to the aforementioned conditions, failure to timely deliver such written notice to the Holder shall be deemed an election by the Company to pay the interest on such Interest Payment Date in shares of Common Stock. At any time the Company delivers a notice to the Holder of its election to pay the interest in shares of Common Stock, the Company shall timely file a prospectus supplement pursuant to Rule 424 disclosing such election. The aggregate number of shares of Common Stock otherwise issuable to the Holder on an Interest Payment Date shall be reduced by the number of Pre-Interest Shares previously issued to the Holder in connection with such Interest Payment Date on the related Pre-Interest Shares Delivery Date. All shares of Common Stock issued on an Pre-Interest Shares Delivery Date or an Interest Payment Date shall be validly issued, fully paid and nonassessable shares of Common Stock.
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required by Section 4(c)(ii) herein. Interest hereunder will be paid to the Person in whose name this Debenture is registered on the records of the Company regarding registration and transfers of this Debenture (the " Debenture Register "). Except as otherwise provided herein, if at any time the Company pays interest partially in cash and partially in shares of Common Stock to the holders of the Debentures, then such payment of cash shall be distributed ratably among the holders of the then-outstanding Debentures based on their (or their predecessor's) initial purchases of Debentures pursuant to the Purchase Agreement.
Section 3. Registration of Transfers and Exchanges .
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Section 4. Conversion .
18
19
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then the Company shall within 3 Trading Days after the Holder's request, at the Holder's discretion either (A) pay in cash to the Holder (in addition to any other remedies available to or elected by the Holder) the Holder's total purchase price (including any brokerage commissions and other out-of-pocket expenses, if any) for the Common Stock so purchased (the " Buy-In Price "), at which point the Company's obligation to issue and deliver such certificate or credit the Holder's balance account with DTC for the shares of Common Stock to which the Holder is entitled upon the Holder's conversion of the applicable portion of this Debenture shall terminate or (B) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such shares of Common Stock or credit the Holder's balance account with DTC for such shares of Common Stock, as applicable, and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) any trading price as in effect at any time during the period beginning on the date of the applicable Notice of Conversion and ending on the applicable Share Delivery Date, and at the option of the Holder, either reinstate the Debenture for which such conversion was not honored (in which case such conversion shall be deemed rescinded) or deliver in the manner required by Section 4(c)(ii) to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its conversion and delivery obligations hereunder. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder's right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver shares of Common Stock upon conversion of this Debenture as required pursuant to the terms hereof.
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Registration Statement (subject to such Holder's compliance with its obligations under the Registration Rights Agreement). If at any time while any of the Debentures remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Debentures at least a number of shares of Common Stock equal to the Required Reserve Amount (an " Authorized Share Failure "), then the Company shall immediately take all action necessary to increase the Company's authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Debentures then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall either (x) obtain the written consent of its shareholders for the approval of an increase in the number of authorized shares of Common Stock and provide each shareholder with an information statement with respect thereto or (y) hold a meeting of its shareholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each shareholder with a proxy statement and shall use its best efforts to solicit its shareholders' approval of such increase in authorized shares of Common Stock and to cause its Board of Directors to recommend to the shareholders that they approve such proposal. Notwithstanding the foregoing, if during any such time of an Authorized Share Failure, the Company is able to obtain the written consent of a majority of the shares of its issued and outstanding Common Stock to approve the increase in the number of authorized shares of Common Stock, the Company may satisfy this obligation by obtaining such consent and submitting for filing with the Commission an Information Statement on Schedule 14C. If, upon any conversion of this Debenture, the Company does not have sufficient authorized shares to deliver in satisfaction of such conversion, then unless the Holder elects to rescind such attempted conversion, the Holder may require the Company to pay to the Holder within three (3) Trading Days of the applicable attempted conversion in exchange for cancellation of the principal amount of this Debenture that is subject to such Notice of Conversion, cash in an amount equal to the product of (i) the number of Conversion Shares that the Company is unable to deliver pursuant to this Section 4(c)(vi), and (ii) the greater of (x) the arithmetic average of the daily VWAPs of the Common Stock during the 5 consecutive Trading Days immediately preceding the attempted conversion and (ii) the highest trading price of the Common Stock at any time on the date of the attempted conversion (or if such date is not a Trading Day, the last Trading Day prior to such date).
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such conversion, the Company shall round such fraction of a share of Common Stock up to the nearest whole share.
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securities of the Company, including this Debenture, by the Holder or the other Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. If the Company receives a Notice of Conversion from the Holder at a time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that such Notice of Conversion would otherwise cause the Holder's beneficial ownership, as determined pursuant to this Section 4(d), to exceed the Beneficial Ownership Limitation, the Holder must notify the Company of a reduced number of shares of Common Stock to be purchased pursuant to such Notice of Conversion. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Debenture, by the Holder and any other Attribution Parties since the date as of which the Reported Outstanding Share Number was reported. In the event that the issuance of shares of Common Stock to the Holder upon conversion of this Debenture results in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Beneficial Ownership Limitation (as determined under Section 13(d) of the Exchange Act), the number of shares so issued by which the Holder's and the other Attribution Parties aggregate beneficial ownership exceeds the Beneficial Ownership Limitation (the " Excess Shares ") shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have the power to vote or to transfer the Excess Shares. The " Beneficial Ownership Limitation " shall be 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Debenture held by the Holder. The Holder may, from time to time, increase (with such increase not effective until the sixty-first (61 st ) day after delivery of such notice) or decrease the Beneficial Ownership Limitation provisions of this Section 4(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Debenture held by the Holder and the provisions of this Section 4(d) shall continue to apply. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Debenture.
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the Debentures and (ii) in connection with the exercise of any Warrants issued pursuant to the Purchase Agreement, would exceed 1,036,594 shares of Common Stock (subject to adjustment for forward and reverse stock splits, recapitalizations and the like occurring after the Subscription Date) (or in the event the transactions contemplated by the Transaction Documents are not integrated with the transactions contemplated by the MFP Documents for purposes of any Shareholder Approval requirement, 2,330,594 shares of Common Stock (subject to adjustment for forward and reverse stock splits, recapitalizations and the like occurring after the Subscription Date)) (such number of shares, the " Issuable Maximum "). The Holder shall be entitled to a portion of the Issuable Maximum equal to the quotient obtained by dividing (x) the original principal amount of the Holder's Debenture, by (y) the aggregate original principal amount of all Debentures issued on the Original Issue Date to all Holders. In addition, the Holder may allocate its pro-rata portion of the Issuable Maximum among Debentures and Warrants held by it in its sole discretion. Such portion shall be adjusted upward ratably in the event the Holder no longer holds any Debentures or Warrants and the amount of shares issued to the Holder pursuant to the Holder's Debentures and Warrants was less than the Holder's pro-rata share of the Issuable Maximum. In the event that the Company is prohibited from issuing any shares of Common Stock for which a Notice of Conversion has been received as a result of not obtaining Shareholder Approval by March 31, 2015, then unless the Holder elects to rescind such conversion, the Company shall pay cash in exchange for cancellation of the principal amount of this Debenture that is subject to such Notice of Conversion, at a price per share of Common Stock that would have been issued upon such conversion if this Section 4(e) were not in effect, equal to the greater of (i) the arithmetic average of the daily VWAPs of the Common Stock during the 5 consecutive Trading Days immediately preceding the attempted conversion and (ii) the highest trading price of the Common Stock at any time during the date of the attempted conversion (or if such date is not a Trading Day, the last Trading Day prior to such date).
Section 5 . Certain Adjustments .
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pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
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rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a " Distribution "), at any time after the issuance of this Debenture, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Debenture (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution ( provided , however , to the extent that the Holder's right to participate in any such Distribution would result in the Holder and the other Attribution Parties exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation at which time or times the Holder shall be entitled to participate in such Distribution (and any Distribution in respect of such Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no such limitation).
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least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such Persons as of the date of this Debenture calculated as if any shares of Common Stock held by all such Persons were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Persons to effect a statutory short form merger or other transaction requiring other shareholders of the Company to surrender their shares of Common Stock without approval of the shareholders of the Company or (3) issue or enter into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition, in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction (each a " Fundamental Transaction "), then, upon any subsequent conversion of this Debenture, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 4(d) and Section 4(e) on the conversion of this Debenture), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the " Alternate Consideration ") receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Debenture is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) and Section 4(e) on the conversion of this Debenture). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion
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Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Debenture following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the " Successor Entity ") to assume in writing all of the obligations of the Company under this Debenture and the other Transaction Documents in accordance with the provisions of this Section 5(f) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Debenture, deliver to the Holder in exchange for this Debenture a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Debenture which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Debenture (without regard to any limitations on the conversion of this Debenture) prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Debenture immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Debenture and the other Transaction Documents referring to the "Company" shall refer instead to the Company and the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Debenture and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. The provisions of this Section 5(f) shall apply similarly and equally to successive Fundamental Transactions.
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promptly deliver to the Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
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Section 6 . Optional Redemption; Monthly Redemptions; Forced Conversion; Real Estate Sale Or Other Redemption; Other .
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by the Holder after the Optional Redemption Notice Date shall reduce the Optional Redemption Amount of this Debenture required to be redeemed on the Optional Redemption Date, unless the Holder otherwise indicates in the applicable Notice of Conversion. The Company's determination to effect an Optional Redemption shall be applied ratably to all of the holders of the then outstanding Debentures based on their (or their predecessor's) initial purchases of Debentures pursuant to the Purchase Agreement. To the extent redemptions required by this Section 6(a) are deemed or determined by a court of competent jurisdiction to be prepayments of the Debenture by the Company, such redemptions shall be deemed to be voluntary prepayments. In the event of a partial redemption of this Debenture pursuant hereto, the principal amount redeemed shall be deducted in reverse order starting from the final Monthly Redemption Amount to be paid hereunder on the final Monthly Redemption Date, unless the Holder otherwise indicates and allocates among any Monthly Redemption Dates hereunder in a written notice to the Company. The parties hereto agree that in the event of the Company's redemption of any portion of the Debenture under this Section 6(a), the Holder's damages would be uncertain and difficult to estimate because of the parties' inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder.
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Redemption is paid in full, the Equity Conditions have been satisfied, unless waived in writing by the Holder and (z) as to such Monthly Redemption, on the Initial Pre-Monthly Redemption Shares Delivery Date, the Company shall have delivered to the Holder's account with the DTC a number of shares of Common Stock to be applied against such Monthly Redemption Amount equal to the quotient of (x) the applicable Monthly Redemption Amount divided by (y) the lesser of (A) the Conversion Price and (B) 90% of the lesser of (I) the arithmetic average of the 10 lowest VWAPs of the Common Stock during the 20 Trading Day period ending on the Trading Day immediately prior to the applicable Initial Pre-Monthly Redemption Shares Delivery Date and (II) the arithmetic average of the 10 lowest VWAPs of the Common Stock during the 20 consecutive Trading Days ending on the Trading Day that is immediately prior to the date the applicable Initial Pre-Monthly Redemption Shares are issued and delivered to the Holder if such delivery is after the applicable Initial Pre-Monthly Redemptions Shares Delivery Date (in each case, subject to adjustment for any stock dividend, stock split, stock combination or other similar event affecting the Common Stock during such 20 Trading Day period) (such number of shares, the " Initial Pre-Monthly Redemption Shares "). In addition, in the event the Holder delivers an Acceleration Notice (as defined below) in accordance with the provisions set forth below, the Company shall deliver on the Trading Day immediately following receipt of such Acceleration Notice (such date, the " Additional Pre-Monthly Redemption Shares Delivery Date ") to the Holder's account with the DTC a number of shares of Common Stock to be applied against such Monthly Redemption Amount equal to the quotient of (x) the applicable Accelerated Amount divided by (y) the lesser of (A) the Conversion Price and (B) 90% of the lesser of (I) the arithmetic average of the 10 lowest VWAPs of the Common Stock during the 20 Trading Day period ending on the Trading Day immediately prior to the date of delivery of such Acceleration Notice and (II) the arithmetic average of the 10 lowest VWAPs of the Common Stock during the 20 consecutive Trading Days ending on the Trading Day that is immediately prior to the date the applicable Additional Pre-Monthly Redemption Shares are issued and delivered to the Holder if such delivery is after the applicable Additional Pre-Monthly Redemption Shares Delivery Date (in each case, subject to adjustment for any stock dividend, stock split, stock combination or other similar event affecting the Common Stock during such 20 Trading Day period) (such number of shares, the " Additional Pre-Monthly Redemption Shares " and together with the Initial Pre-Monthly Redemption Shares, the " Pre-Monthly Redemption Shares "). In lieu of paying any Monthly Redemption Amount in shares of Common Stock, the Company may elect to pay all or part of a Monthly Redemption Amount in cash by wire transfer of immediately available funds pursuant to wire instructions provided by the Holder in writing to the Company. On each Monthly Redemption Date, with respect to which the Company notified the Holder it shall pay the applicable Monthly Redemption Amount in whole or in portion in Common Stock, the Company shall deliver to the Holder a number of shares of Common Stock equal to the applicable Monthly Redemption Balance Shares. If (i) the Company notified the Holder on the applicable Monthly Redemption Notice Date that it shall pay the applicable Monthly Redemption Amount in whole or in portion in Common Stock and (ii) as a result of such payment of Monthly Redemption Amount
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in Common Stock, the Holder will exceed its Beneficial Ownership Limitation and the Holder does not waive the Equity Condition set forth in clause (g) of such definition, the Holder shall deliver a written notice to the Company on the Trading Day immediately following the applicable Monthly Redemption Notice Date that such Equity Condition is not satisfied or waived and specifying how many shares of Common Stock the Holder is able to receive without exceeding its Beneficial Ownership Limitation. If the Company fails to satisfy any Equity Condition (which failure is not waived in writing by the Holder) during the applicable Monthly Redemption Period, then at the option of the Holder, the Holder may (i) nevertheless require the Company to pay the applicable Monthly Redemption Amount in shares of Common Stock or (ii) require the Company to pay the applicable Monthly Redemption Amount (including any portion of the Pre-Monthly Redemption Shares in which case the Holder shall return such related Pre- Monthly Redemption Shares, which the Holder has not otherwise sold, transferred or disposed of, to the Company) payable on the applicable Monthly Redemption Date in cash. The Holder may convert, pursuant to Section 4(a), any principal amount of this Debenture subject to a Monthly Redemption at any time prior to the date that the Monthly Redemption Amount, plus accrued but unpaid interest, liquidated damages and any other amounts then owing to the Holder are due and paid in full. Unless otherwise indicated by the Holder in any such applicable Notice of Conversion, any principal amount of this Debenture converted during the applicable Monthly Conversion Period until the date the Monthly Redemption Amount is paid in full shall be first applied to the principal amount subject to the Monthly Redemption Amount payable in cash and then to the Monthly Redemption Amount payable in Conversion Shares. Unless otherwise indicated by the Holder in any such applicable Notice of Conversion, any principal amount of this Debenture converted during the applicable Monthly Conversion Period in excess of the Monthly Redemption Amount shall be applied against the last principal amount of this Debenture scheduled to be redeemed hereunder, in reverse time order from the Maturity Date. The Company covenants and agrees that it will honor all Notices of Conversion tendered up until such amounts are paid in full. The Company's determination to pay a Monthly Redemption in cash, shares of Common Stock or a combination thereof shall be applied ratably to all of the holders of the then outstanding Debentures based on their (or their predecessor's) initial purchases of Debentures pursuant to the Purchase Agreement. Notwithstanding anything herein to the contrary, at the election of the Holder in its sole discretion, at any time prior to the second Trading Day immediately preceding any Monthly Redemption Date, the Holder may deliver one or more (I) written notices (each, an " Acceleration Notice ") to the Company electing to accelerate the payment of all or any portion of up to 3 Monthly Redemption Amount(s) scheduled to be paid on future Monthly Redemption Dates after the applicable Monthly Redemption Date (such amount(s) accelerated, the " Accelerated Amount(s) ") to be paid on the applicable Monthly Redemption Date (in addition to the Monthly Redemption Amount scheduled to be due on such Monthly Redemption Date), in which case, such Accelerated Amount(s) shall be added to (or create), and become part of, the Monthly Redemption Amount payable on such applicable Monthly Redemption Date only in Common Stock by including such Accelerated Amount(s) in the Monthly Redemption
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Amount payable only in shares of Common Stock for the applicable Monthly Redemption Date, such Accelerated Amounts to be deducted in reverse order starting from the final Monthly Redemption Amount to be paid hereunder on the final Monthly Redemption Date unless the Holder otherwise indicates and allocates among any Monthly Redemption Dates hereunder the applicable Acceleration Notice, and/or (II) written notices (each, a " Deferral Notice ") to the Company electing to have the payment of all or any portion of a Monthly Redemption Amount payable on such Monthly Redemption Date deferred (such amount(s) deferred, the " Deferral Amount ") until any subsequent Monthly Redemption Date selected by the Holder, in its sole discretion, in which case, the Deferral Amount shall be added to, and become part of, the Monthly Redemption Amount to be paid on such subsequent Monthly Redemption Date and such Deferral Amount shall continue to accrue Interest hereunder; provided , however , that the Holder may only elect to defer up to 4 Monthly Redemption Amount(s). Any Acceleration Notice delivered by the Holder pursuant to this Section 6(b) shall set forth the Accelerated Amount(s). Any Deferral Notice delivered by the Holder pursuant to this Section 6(b) shall set forth (i) the Deferral Amount and (ii) the date that such Deferral Amount shall be deferred to. All shares of Common Stock issued on a Monthly Redemption Date, an Initial Pre-Monthly Redemption Shares Delivery Date or an Additional Pre-Monthly Redemption Shares Delivery Date shall be validly issued, fully paid and nonassessable shares of Common Stock. Notwithstanding anything herein to the contrary, at the election of the Company in its sole discretion, the Company may deliver one or more written notices (each, a " Company Acceleration Notice ") to the Holder and all the holders of the Other Debentures at any time on or prior to the Monthly Redemption Notice Date immediately preceding the applicable Monthly Redemption Date electing to have the payment of all or any portion of up to an aggregate of 2 Monthly Redemption Amount(s) (without giving effect to any Accelerated Amounts, Deferral Amounts or Company Accelerated Amounts) scheduled to be paid on future Monthly Redemption Dates after the applicable Monthly Redemption Date accelerated (such amount(s) accelerated, the " Company Accelerated Amount(s) ") and paid on the applicable Monthly Redemption Date (in addition to the Monthly Redemption Amount scheduled to be due on such Monthly Redemption Date), in which case, such Company Accelerated Amount(s) shall be added to, and become part of, the Monthly Redemption Amount payable on such applicable Monthly Redemption Date but which shall only be paid in cash by wire transfer of immediately available funds pursuant to wire instructions delivered to the Company by the Holder in writing by including such Company Accelerated Amount(s) in the Monthly Redemption Amount but payable solely in cash for the applicable Monthly Redemption Date, such Company Accelerated Amounts to be deducted in reverse order starting from the final Monthly Redemption Amount to be paid hereunder on the final Monthly Redemption Date. In no event shall the aggregate of all Company Accelerated Amounts under the Debentures exceed an aggregate of two (2) Monthly Redemption Amounts (without giving effect to any Accelerated Amounts, Deferral Amounts or Company Accelerated Amounts). Any Company Acceleration Notice delivered by the Holder pursuant to this Section 6(b) shall set forth the Company Accelerated Amount(s). If the Company elects to deliver a Company Acceleration
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Notice, then it must simultaneously take the same action in the same proportion with respect to the Other Debentures. Notwithstanding anything herein to the contrary, the Company shall not be permitted to deliver an Acceleration Notice, unless immediately after giving effect to the Monthly Redemption taking into account the payment of the applicable Monthly Redemption Amount including the applicable Company Accelerated Amount(s), (i) the Company shall maintain on deposit cash in an amount not less than $2,000,000 and (ii) the Company shall not be in violation of any financial covenant set forth in the Wells Fargo Facility.
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be null and void with respect to all or any part designated by the Holder of the unconverted Forced Conversion and the Holder shall be entitled to all the rights of a holder of this Debenture with respect to such amount of the Forced Conversion Amount. Unless the Holder otherwise indicates in a written notice to the Company, any Forced Conversion shall be applied ratably to all Holders based on their initial purchases of Debentures pursuant to the Purchase Agreement, provided that any voluntary conversions by a Holder shall be applied against the Holder's pro rata allocation, thereby decreasing the aggregate amount forcibly converted hereunder if only a portion of this Debenture is forcibly converted. The Company covenants and agrees that, until the Forced Conversion has occurred, the Forced Conversion Amount may be converted, in whole or in part, by the Holder into shares of Common Stock pursuant to Section 4. For purposes of clarification, a Forced Conversion shall be subject to all of the provisions of Section 4, including, without limitation, the provision requiring payment of liquidated damages and limitations on conversions. In the event of a partial Forced Conversion of this Debenture pursuant hereto, the principal amount converted shall be deducted in reverse order starting from the final Monthly Redemption Amount to be paid hereunder on the final Monthly Redemption Date, unless the Holder otherwise indicates and allocates among any Monthly Redemption Dates hereunder in a written notice to the Company. If (i) the Company notified the Holder on the Forced Conversion Notice Date that it shall effect a Forced Conversion and (ii) as a result of such Forced Conversion, the Holder will exceed its Beneficial Ownership Limitation and the Holder does not waive the Equity Condition set forth in clause (g) of such definition, the Holder shall deliver a written notice to the Company on the Trading Day immediately following the applicable Forced Conversion Notice Date that such Equity Condition is not satisfied or waived and specifying how many shares of Common Stock the Holder is able to receive without exceeding its Beneficial Ownership Limitation.
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Real Estate Sale Or Other Redemption and all Real Estate Sale Or Other Redemption(s), if any, effected prior to the applicable Real Estate Sale Or Other Redemption, from (y) the Holder's Pro Rata Amount of $5,000,000, provided , that if the dollar amount set forth in the foregoing clause (x) exceeds the dollar amount set forth in the foregoing clause (y), the dollar amount set forth in the this clause (II) shall equal zero (0) (the " Real Estate Sale Or Other Redemption Price ") on the date such Real Estate Sale, if any, occurs or is consummated or otherwise within five (5) Business Days of the Real Estate Sale Or Other Redemption Notice Date (such date, as applicable, the " Real Estate Sale Or Other Redemption Date "). Each Real Estate Sale Or Other Redemption Notice shall (i) state the applicable Real Estate Sale Or Other Redemption Date and (ii) state the aggregate principal amount of Debentures which is subject to such Real Estate Sale Or Other Redemption from the Holder and all of the holders of the Other Debentures pursuant to this Section 6(d) (and analogous provisions under the Other Debentures) on the applicable Real Estate Sale Or Other Redemption Date. Each Real Estate Sale Or Other Redemption Notice shall be irrevocable. Each Real Estate Sale Or Other Redemption Price is payable in full on the applicable Real Estate Sale Or Other Redemption Date in cash by wire transfer of immediately available funds pursuant to wire instructions provided by the Holder in writing to the Company. The Company covenants and agrees that it will honor all Notices of Conversion tendered from the time of delivery of any Real Estate Sale Or Other Redemption Notice through the date all amounts owing thereon are due and paid in full. All principal amounts of this Debenture converted by the Holder after a Real Estate Sale Or Other Redemption Notice Date shall reduce the applicable Real Estate Sale Or Other Redemption Amount of this Debenture required to be redeemed on the applicable Real Estate Sale Or Other Redemption Date, unless the Holder otherwise indicates in the applicable Notice of Conversion. Each Real Estate Sale Or Other Redemption shall be applied ratably to all of the holders of the then outstanding Debentures based on their (or their predecessor's) initial purchases of Debentures pursuant to the Purchase Agreement. To the extent redemptions required by this Section 6(d) are deemed or determined by a court of competent jurisdiction to be prepayments of the Debenture by the Company, such redemptions shall be deemed to be voluntary prepayments. In the event of a partial redemption of this Debenture pursuant hereto, the principal amount redeemed shall be deducted in reverse order starting from the final Monthly Redemption Amount to be paid hereunder on the final Monthly Redemption Date, unless the Holder otherwise indicates and allocates among any Monthly Redemption Dates hereunder in a written notice to the Company. The parties hereto agree that in the event of the Company's redemption of any portion of the Debenture under this Section 6(d), the Holder's damages would be uncertain and difficult to estimate because of the parties' inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder.
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applicable Redemption Date. If any portion of the payment pursuant to a Redemption shall not be paid by the Company by the applicable due date, interest shall accrue thereon at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law until such amount is paid in full. Notwithstanding anything herein contained to the contrary, if any portion of a Redemption Price remains unpaid after such date, the Holder may elect, by written notice to the Company given at any time thereafter, to invalidate such Redemption, ab initio , and, with respect to the Company's failure to honor such Redemption, the Company shall have no further right to exercise such Redemption. Notwithstanding anything to the contrary in this Section 6, the Company's determination to redeem in cash or its elections under Section 6 shall be applied ratably among the holders of Debentures. The Holder may elect to convert the outstanding principal amount of the Debenture pursuant to Section 4 prior to actual payment in cash for any redemption under this Section 6 by the delivery of a Notice of Conversion to the Company.
Section 7 . Negative Covenants . As long as any portion of this Debenture remains outstanding, unless the Required Holders shall have otherwise given prior written consent, the Company shall not, and shall not permit any of the Subsidiaries to, directly or indirectly:
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like protections, including improvements, divisions, continuations, renewals, reissues, extensions, and continuations-in-part of the same, trademarks, service marks and, to the extent permitted under applicable law, any applications therefor, whether registered or not, and the goodwill of the business of the Company and its Subsidiaries connected with and symbolized thereby, know-how, operating manuals, trade secret rights, rights to unpatented inventions, and any claims for damage by way of any past, present, or future infringement of any of the foregoing, other than Permitted Liens;
Section 8 . Affirmative Covenants . As long as any portion of this Debenture remains outstanding, unless the Required Holders shall have otherwise given prior written consent, the Company shall, and shall cause it Subsidiaries to:
Section 9 . Events of Default .
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created, and (b) results in such Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;
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mail and overnight courier (an " Event of Default Notice ") to the Holder. At any time after the earlier of the Holder's receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder may require the Company to redeem (an " Event of Default Redemption ") all or any portion of this Debenture by delivering written notice thereof (the " Event of Default Redemption Notice ") to the Company, which Event of Default Redemption Notice shall indicate the portion of this Debenture the Holder is electing to require the Company to redeem. Each portion of this Debenture subject to redemption by the Company pursuant to this Section 9(b) shall be redeemed by the Company in cash by wire transfer of immediately available funds at a price equal to the Mandatory Default Amount. To the extent redemptions required by this Section 9(b) are deemed or determined by a court of competent jurisdiction to be prepayments of the Debenture by the Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section 9(b), but subject to Section 4(d), until the Mandatory Default Amount (together with any interest thereon) is paid in full, the principal amount of this Debenture submitted for redemption under this Section 9(b) (together with any interest thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 4. In the event of a partial redemption of this Debenture pursuant hereto, the principal amount redeemed shall be deducted in reverse order starting from the final Monthly Redemption Amount to be paid hereunder on the final Monthly Redemption Date, unless the Holder otherwise indicates and allocates among any Monthly Redemption Dates hereunder in the applicable Event of Default Redemption Notice. The parties hereto agree that in the event of the Company's redemption of any portion of the Debenture under this Section 9(b), the Holder's damages would be uncertain and difficult to estimate because of the parties' inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any Event of Default redemption premium due under this Section 9(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder's actual loss of its investment opportunity and not as a penalty. Commencing on the occurrence of any Event of Default that results in the eventual acceleration of this Debenture, the Interest Rate on this Debenture shall accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. In the event that such Event of Default is subsequently cured, the adjustment referred to in the preceding sentence shall cease to be effective as of the date of such cure; provided , that the interest as calculated and unpaid at such increased rate during the continuance of such Event of Default shall continue to apply to the extent relating to the days after the occurrence of such Event of Default through and including the date of cure of such Event of Default. Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Debenture to or as directed by the Company. In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder
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shall have all rights as a holder of the Debenture until such time, if any, as the Holder receives full payment pursuant to this Section 9(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.
Section 10 . Rank . All payments due under this Debenture (a) shall rank pari passu with all Other Debentures and (b) shall rank senior to all other Indebtedness of the Company and its Subsidiaries, except as provided herein, in the Intercreditor Agreement or in any other intercreditor agreement entered into in connection with the Debentures.
Section 11 . Disclosure . Upon receipt or delivery by the Company of any notice in accordance with the terms of this Debenture, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the Company or its Subsidiaries, the Company shall within two (2) Business Days after any such receipt or delivery publicly disclose such material, nonpublic information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, nonpublic information relating to the Company or its Subsidiaries, the Company so shall indicate to the Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute material, nonpublic information relating to the Company or its Subsidiaries.
Section 12 . Miscellaneous .
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p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto or email to the email address set forth on the signature pages attached to the Purchase Agreement, in each case on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, (iv) when sent if sent by electronic mail, or (v) upon actual receipt by the party to whom such notice is required to be given.
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obligations of the Company under Section 4.10 of the Purchase Agreement, the prevailing party in such Action or Proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys' fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action or Proceeding. Nothing contained herein shall be deemed or operate to preclude the Holder from an Action or Proceeding against the Company in any other jurisdiction to collect on the Company's obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder.
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provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company's compliance with the terms and conditions of this Debenture.
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calculations and notify the Company and the Holder of the results no later than five (5) Business Days from the time it receives the disputed determinations or calculations. Such investment bank's or accountant's determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.
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(Signature Pages Follow)
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IN WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by a duly authorized officer as of the date first above indicated.
S&W SEED COMPANY
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By:__________________________________________
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ANNEX A
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal under the 8% Senior Secured Convertible Debenture due ________ of S&W Seed Company, a Nevada corporation (the " Company "), into shares of common stock (the " Common Stock "), of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.
By the delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not exceed the amounts specified under Section 4 of this Debenture, as determined in accordance with Section 13(d) of the Exchange Act.
The undersigned agrees to comply with any applicable prospectus delivery requirements under the applicable securities laws (or an exemption therefrom) in connection with any transfer of the aforesaid shares of Common Stock.
Conversion calculations:
Date to Effect Conversion:
Principal Amount of Debenture to be Converted:
Number of shares of Common Stock to be issued:
Signature:
Name:
Address for Delivery of Common Stock Certificates:
Or
DWAC Instructions:
Broker No: _____________________
Account No: ___________________
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Schedule 1
CONVERSION SCHEDULE
The 8% Senior Secured Convertible Debentures due on November 30, 2017 in the aggregate principal amount of $____________ are issued by S&W Seed Company, a Nevada corporation. This Conversion Schedule reflects conversions made under Section 4 of the above referenced Debenture.
Dated:
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EXHIBIT 10.3
EXHIBIT C
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (II) PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL SELECTED BY THE HOLDER TO SUCH EFFECT IN GENERALLY ACCEPTABLE FORM OR UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
S&W SEED COMPANY
Warrant Shares: _______ |
Issuance Date: December 31, 2014 Initial Exercise Date: June 30, 2015 |
THIS COMMON STOCK PURCHASE WARRANT (the " Warrant ") certifies that, for value received, the receipt and sufficiency of which is hereby acknowledged, _____________ or its assigns (the " Holder ") is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date that is six (6) months immediately following the Issuance Date set forth above (the " Initial Exercise Date ") and on or prior to the close of business on the five (5) year anniversary of the Initial Exercise Date (the " Termination Date ") but not thereafter, to subscribe for and purchase from S&W Seed Company, a Nevada corporation (the " Company "), up to ______ fully paid, nonassessable shares (as subject to adjustment hereunder, the " Warrant Shares ") of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1 . Definitions . Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the " Purchase Agreement "), dated December 30, 2014 (the " Subscription Date "), among the Company and the purchasers signatory thereto.
Section 2 . Exercise .
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(A) = the arithmetic average of the VWAP of the Common Stock for the five (5) consecutive Trading Days ending on the date immediately preceding the date of the applicable Notice of Exercise;
(B) = the Exercise Price of this Warrant then in effect at the time of exercise, as adjusted hereunder;
(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise; and
(Y) = the VWAP of the Common Stock on the date of the applicable Notice of Exercise.
For purposes of Rule 144(d) promulgated under the Securities Act, as in effect on the date hereof, it is intended that the Warrant Shares issued in a cashless exercise shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued pursuant to the Purchase Agreement. Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c); provided , however , that to the extent that such cashless exercise would result in the Holder and the other Attribution Parties (as defined below) exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to such Warrant Shares to such extent (and shall not be entitled to beneficial ownership of such Warrant Shares as a result of such cashless exercise (and beneficial ownership) to such extent) and such Warrant Shares issuable via cashless exercise on the Termination Date to such extent shall be held in abeyance for the Holder until such time or times as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Beneficial Ownership Limitation, at which time or times the Holder shall be granted such right (and such Warrant Shares to be held similarly in abeyance) to the same extent as if there had been no such limitation.
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in the Notice of Exercise by the date that is three (3) Trading Days after the delivery to the Company of the Notice of Exercise so long as the Holder delivers the aggregate Exercise Price (or notice of a "cashless exercise" pursuant to Section 2(c)) on or prior to the second (2 nd ) Trading Day following the date on which the Company has received the Notice of Exercise (such date, the " Warrant Share Delivery Date ") (provided that if the aggregate Exercise Price (or notice of a "cashless exercise" pursuant to Section 2(c) is delivered) has not been delivered by such date, the Warrant Share Delivery Date shall be one (1) Trading Day after the aggregate Exercise Price (or notice of a "cashless exercise" pursuant to Section 2(c)) is delivered. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise, if permitted).
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by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
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available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
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Warrants) beneficially owned by the Holder or any other Attribution Party. For purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. In addition, determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company's most recent periodic or annual report or other public filing with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding (the " Reported Outstanding Share Number "). If the Company receives a Notice of Exercise from the Holder at a time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall (i) notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that such Notice of Exercise would otherwise cause the Holder's beneficial ownership, as determined pursuant to this Section 2(e), to exceed the Beneficial Ownership Limitation, the Holder must notify the Company of a reduced number of Warrant Shares to be purchased pursuant to such Exercise Notice (the number of shares by which such purchase is reduced, the " Reduction Shares ") and (ii) as soon as reasonably practicable, the Company shall return to the Holder any exercise price paid by the Holder for the Reduction Shares, if any. Upon the written or oral request of a Holder for any reason and at any time, the Company shall within one (1) Business Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding Share Number was reported. In the event that the issuance of shares of Common Stock to the Holder upon exercise of this Warrant results in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Beneficial Ownership Limitation (as determined under Section 13(d) of the 1934 Act), the number of shares so issued by which the Holder's and the other Attribution Parties' aggregate beneficial ownership exceeds the Beneficial Ownership Limitation (the " Excess Shares ") shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have the power to vote or to transfer the Excess Shares. As soon as reasonably practicable after the issuance of the Excess Shares has been deemed null and void, the Company shall return to the Holder the exercise price paid by the Holder for the Excess Shares. The " Beneficial Ownership Limitation " shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, may, from time to time increase (with such increase not effective until the 61 st day after delivery of such notice) or decrease the Beneficial Ownership
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Limitation provisions of this Section 2(e); provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply; provided further that any such increase will not be effective until the 61 st day after such notice is delivered to the Company. The " Attribution Parties " means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds or managed accounts, currently, or from time to time after the Initial Exercise Date, directly or indirectly managed or advised by the Holder's investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Company's Common Stock would or could be aggregated with the Holder's and the other Attribution Parties' for purposes of Section 13(d) of the 1934 Act). The purpose of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Beneficial Ownership Limitation. For purposes of clarity, the shares of Common Stock issuable pursuant to the terms of this Warrant in excess of the Beneficial Ownership Limitation shall not be deemed to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to exercise this Warrant pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of exercisability. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph may not be waived and shall apply to a successor holder of this Warrant.
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Maximum "). The Holder and the holders of the other Warrants issued pursuant to the Purchase Agreement shall be entitled to a portion of the Issuable Maximum equal to the quotient obtained by dividing (x) the Holder's original Subscription Amount by (y) the aggregate original Subscription Amount of all holders pursuant to the Purchase Agreement. In addition, the Holder may allocate its pro-rata portion of the Issuable Maximum among Warrants and Debentures held by it in its sole discretion. Such portion shall be adjusted upward ratably in the event a Purchaser no longer holds any Warrants and the amount of shares issued to such Purchaser pursuant to its Warrants was less than such Purchaser's pro-rata share of the Issuable Maximum. In the event that the Company is prohibited from issuing any Warrant Shares for which a Notice of Exercise (including, for the avoidance of doubt, unless the Warrant is being exercised via a "cashless exercise" pursuant to Section 2(c), payment by the Holder of the applicable aggregate Exercise Price) has been received as a result of the operation of this Section 2(f), then unless the Holder elects to rescind such exercise, the Company shall pay cash in exchange for cancellation of the number of Warrant Shares that is subject to such Notice of Exercise, at a price per share of Common Stock that would have been issued upon such exercise if this Section 2(f) were not in effect, equal to the greater of (i) the arithmetic average of the daily VWAPs of the Common Stock during the 5 consecutive Trading Days immediately preceding the attempted exercise and (ii) the highest trading price of the Common Stock at any time on the date of the attempted exercise (or if such date is not a Trading Day, the last Trading Day prior to such date).
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Common Stock to approve the increase in the number of authorized shares of Common Stock, the Company may satisfy this obligation by obtaining such consent and submitting for filing with the Commission an Information Statement on Schedule 14C. If, upon any exercise of this Warrant, the Company does not have sufficient authorized shares to deliver in satisfaction of such exercise, then unless the Holder elects to rescind such attempted exercise, the Holder may require the Company to pay to the Holder within three (3) Trading Days of the applicable exercise, cash in an amount equal to the product of (i) the quotient determined by dividing (x) the number of Warrant Shares that the Company is unable to deliver pursuant to this Section 2(g), by (y) the total number of Warrant Shares issuable upon exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant) and (ii) the Black Scholes Value; provided, that (x) references to "the day immediately following the public announcement of the applicable Fundamental Transaction" in the definition of "Black Scholes Value" shall instead refer to "the date the Holder exercises this Warrant and the Company cannot deliver the required number of Warrant Shares because of an Authorized Share Failure" and (y) clause (iii) of the definition of "Black Scholes Value" shall instead refer to "the underlying price per share used in such calculation shall be the highest trading price during the period beginning on the date of the applicable date of exercise and the date that the Company makes the applicable cash payment."
Section 3 . Certain Adjustments .
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Price then in effect exceeds the Adjusted Exercise Price, the Exercise Price hereunder shall be reset to the Adjusted Exercise Price (defined below) as of such Adjustment Date. In no event shall the Exercise Price be increased pursuant to provisions of this Section 3(b). For the avoidance of doubt, the adjustment of the Exercise Price contemplated by this Section 3(b) is intended to decrease the Exercise Price, but makes no change to the number of Warrant Shares issuable hereunder.
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exercisable or exchangeable for shares of Common Stock (" Convertible Securities ") issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 3(c)(i), the "lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of the Option, upon exercise of the Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option less any consideration paid or payable by the Company with respect to such one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion exercise or exchange of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.
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the Exercise Price or number of Warrant Shares shall be made by reason of such issue or sale.
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shares of Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Required Holders. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the " Valuation Event "), the fair value of such consideration will be determined within five (5) Business Days after the tenth (10 th ) day following the Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Required Holders (defined below). The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.
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exercisable at such time, but excluding any Common Shares owned or held by or for the account of the Company or issuable upon conversion or exercise, as applicable, of the Notes and the Warrants or issued as Interest Shares.
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Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder's right to participate in any such Purchase Right would result in the Holder and the other Attribution Parties exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Beneficial Ownership Limitation, at which time or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right held similarly in abeyance) to the same extent as if there had been no such limitation).
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(whether or not the Company is the surviving corporation) with or into another Person or Persons, or (ii) sell, assign, transfer, convey, lease, license or otherwise dispose of all or substantially all of the properties or assets of the Company or any of its "significant subsidiaries" (as defined in Rule 1-02 of Regulation S-X) to one or more Persons, or (iii) make, or allow one or more Persons to make, or allow the Company to be subject to or have its Common Stock be subject to or party to one or more Persons making, a purchase, tender or exchange offer (whether by the Company or another Person) that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Persons making or party to, or Affiliated with any Persons making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Persons making or party to, or Affiliated with any Persons making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the Exchange Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Persons whereby all such Persons, individually or in the aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all the Persons making or party to, or Affiliated with any Persons making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock such that such Persons become collectively the beneficial owners (as defined in Rule 13d-3 under the Exchange Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock or effect any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (2) allow any Person individually or Persons in the aggregate to be or become the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such Persons as of the date of this Warrant calculated as if any shares of Common Stock held by all such Persons were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Persons to effect a statutory short form merger or other transaction requiring other shareholders of the Company to surrender their shares of Common Stock without approval of the shareholders of the Company or (3) issue or enter into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition, in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this
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definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction (each a " Fundamental Transaction "), upon the occurrence or consummation of such Fundamental Transaction, and it shall be a required condition to the occurrence or consummation of any such Fundamental Transaction that:
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Fundamental Transaction or the record, eligibility or other determination date for the event resulting in such Fundamental Transaction (without regard to any limitations on the exercise of this Warrant) (the " Aggregate Consideration ") divided by (ii) the per share Closing Price of such Successor Capital Stock on the Trading Day immediately prior to the consummation or occurrence of the Fundamental Transaction and (B) the product of (i) the Aggregate Consideration and (ii) the highest exchange ratio pursuant to which any shareholder of the Company may exchange Common Stock for Successor Capital Stock) (provided, however, to the extent that the Holder's right to receive any such shares of publicly traded common stock (or their equivalent) of the Successor Entity would result in the Holder and its other Attribution Parties exceeding the Beneficial Ownership Limitation, if applicable, then the Holder shall not be entitled to receive such shares to such extent (and shall not be entitled to beneficial ownership of such shares of publicly traded common stock (or their equivalent) of the Successor Entity as a result of such consideration to such extent) and the portion of such shares shall be held in abeyance for the Holder until such time or times, as its right thereto would not result in the Holder and its other Attribution Parties exceeding the Beneficial Ownership Limitation, at which time or times the Holder shall be delivered such shares to the extent as if there had been no such limitation), and such security shall be satisfactory to the Holder, and with an identical exercise price to the Exercise Price hereunder (such adjustments to the number of shares of capital stock and such exercise price being for the purpose of protecting after the consummation or occurrence of such Fundamental Transaction the economic value of this Warrant that was in effect immediately prior to the consummation or occurrence of such Fundamental Transaction, as elected by the Holder solely at its option); and
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regard to any limitations on the exercise of this Warrant), as adjusted in accordance with the provisions of this Warrant and, in each case, reflecting any election of the Holder in respect of the form of such consideration if and to the extent such an election was afforded to the holders of Common Stock in connection with such Fundamental Transaction.
In addition to and not in substitution for any other rights hereunder, prior to the occurrence or consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities, cash, assets or other property with respect to or in exchange for shares of Common Stock (a " Corporate Event "), the Company shall make appropriate provision to insure that, and any applicable Successor Entity or Successor Entities shall ensure that, and it shall be a required condition to the occurrence or consummation of such Corporate Event that, the Holder will thereafter have the right to receive upon exercise of this Warrant at any time after the occurrence or consummation of the Corporate Event, shares of Common Stock or Successor Capital Stock or, if so elected by the Holder, in lieu of the shares of Common Stock (or other securities, cash, assets or other property) purchasable upon the exercise of this Warrant prior to such Corporate Event (but not in lieu of such items still issuable under Sections 3(d) and 3(e), which shall continue to be receivable on the Common Stock or on the such shares of stock, securities, cash, assets or any other property otherwise receivable with respect to or in exchange for shares of Common Stock), such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights and any shares of Common Stock) which the Holder would have been entitled to receive upon the occurrence or consummation of such Corporate Event or the record, eligibility or other determination date for the event resulting in such Corporate Event, had this Warrant been exercised immediately prior to such Corporate Event or the record, eligibility or other determination date for the event resulting in such Corporate Event (without regard to any limitations on exercise of this Warrant), as adjusted in accordance with the provisions of this Warrant and, in each case, reflecting any election of the Holder in respect of the form of such consideration if and to the extent such an election was afforded to the holders of Common Stock in connection with such Fundamental Transaction. Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Holder. The provisions of this Section 3(g) shall apply similarly and equally to successive Fundamental Transactions and Corporate Events. Notwithstanding the foregoing, in the event of Change of Control Transaction (as defined in the Debentures), at the request of the Holder delivered before the ninetieth (90 th ) day after the occurrence or consummation of such Change of Control Transaction, the Company (or the Successor Entity) shall purchase this Warrant from the Holder by paying to the Holder, within five (5) Business Days after such request (or, if later, on the effective date of the Change of Control Transaction), cash in an amount equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of such Change of Control Transaction. For purposes of this Warrant, " Black Scholes Value " means the value of this Warrant based on the Black-Scholes Option Pricing Model obtained from the "OV" function on Bloomberg Financial Markets (" Bloomberg ") determined as of the day immediately following the public announcement of the applicable Change of Control Transaction, or,
20
if the Change of Control Transaction is not publicly announced, the date the Change of Control Transaction is consummated, for pricing purposes and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of this Warrant as of such date of request, (ii) an expected volatility equal to the greater of 75% and the 150 day volatility obtained from the HVT function on Bloomberg as of the day immediately following the public announcement of the applicable Change of Control Transaction, or, if the Change of Control Transaction is not publicly announced, the date the Change of Control Transaction is consummated, (iii) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in the Change of Control Transaction, (iv) a zero cost of borrow and (v) a 360 day annualization factor.
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to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section 4 . Transfer of Warrant .
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Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
Section 5 . Optional Redemption .
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defined in the Debentures) have been satisfied (unless waived in writing by the Holder) on each Trading Day during the period commencing on the Optional Redemption Notice Date (as defined below) through the later of (x) the Optional Redemption Date (as defined below) and (y) the date the Optional Redemption Price (as defined below) is actually paid to the Holder in full (the " Optional Redemption Period "), and provided further that the Closing Sale Price (as defined in the Debentures) of the Common Stock equals or exceeds $12.00 (as adjusted for any stock dividends, stock split, stock combination, reclassification or similar transaction occurring after the Subscription Date) for at least fifteen (15) consecutive Trading Days (the " Price Condition ") the Company may redeem all or any portion of this Warrant then remaining for cash in an amount equal to the Optional Redemption Price on the 30 th calendar day following the Optional Redemption Notice Date (such date, the " Optional Redemption Date ") (the " Optional Redemption "). The Company may exercise its right to require redemption under this Section 5(a) by delivering a written notice thereof by facsimile or electronic mail and overnight courier to the Holder and all, but not less than all, of the holders of the Other Warrants (the " Optional Redemption Notice " and the date such notice is deemed delivered hereunder, the " Optional Redemption Notice Date "). The Optional Redemption Notice shall (i) state the Optional Redemption Date, (ii) state the aggregate Optional Redemption Price for the redemption of this Warrant and the Other Warrants which the Company has elected to be subject to an Optional Redemption from the Holder and all of the holders of such Other Warrants pursuant to this Section 5(a) (and analogous provisions under such other warrants) on the Optional Redemption Date and (iii) certify that the Price Condition and the Equity Conditions have been satisfied as of the Optional Redempti on Notice Date. The Optional Redemption Notice shall be irrevocable. The Company may not effect more than one (1) Optional Redemption. The Optional Redemption Price is payable in full on the Optional Redemption Date in cash by wire transfer of immediately available funds pursuant to wire instructions provided by the Holder in writing to the Company. If the Price Condition or any of the Equity Conditions shall cease to be satisfied at any time during the Optional Redemption Period, the Company shall provide the Holder a subsequent notice to that effect. If the Price Condition or any Equity Condition fails to be satisfied (which failure is not waived in writing by the Holder) between the applicable Optional Redemption Notice Date and any time through the applicable Optional Redemption Date, then at the option of the Holder the Optional Redemption shall be null and void with respect to all or any part designated by the Holder of the Warrants that were subject to the Optional Redemption and the Holder shall be entitled to all the rights under this Warrant. The Company covenants and agrees that it will honor all Notices of Exercise tendered from the time of delivery of the Optional Redemption Notice through the date the Optional Redemption Price is due and paid in full. All purchase rights under this Warrant exercised by the Holder after the Optional Redemption Notice Date shall reduce the number of Warrants that are subject to the Optional Redemption required to be redeemed on the Optional Redemption Date, unless the Holder otherwise indicates in the applicable Notice of Exercise. The Company's determination to effect an Optional Redemption shall be applied ratably to the Holder and all of the holders of the Other Warrants based on their (or their predecessor's) initial purchases of such Warrants or Other Warrants pursuant to the Purchase Agreement.
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Section 6 . Miscellaneous .
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consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a shareholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6(a), the Company shall provide the Holder with copies of the same notices and other information given to the shareholders of the Company generally, contemporaneously with the giving thereof to the shareholders.
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consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
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party for its reasonable attorneys' fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action or Proceeding. Nothing contained herein shall be deemed or operate to preclude the Holder from an Action or Proceeding against the Company in any other jurisdiction to collect on the Company's obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder.
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Holder or (b) the disputed arithmetic calculation of the Warrant Shares to the Company's independent, outside accountant. The Company shall cause at its expense the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than ten (10) Business Days from the time it receives the disputed determinations or calculations. Such investment bank's or accountant's determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.
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********************
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
S&W SEED COMPANY
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By:__________________________________________
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NOTICE OF EXERCISE
To: S&W Seed Company
(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] if permitted, the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
(4) Accredited Investor . The undersigned is an "accredited investor" as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
[SIGNATURE OF HOLDER]
Name of Investing Entity: ________________________________________________________________________
Signature of Authorized Signatory of Investing Entity
: _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: ________________________________________________________________________________________
EXHIBIT B
(To assign the foregoing Warrant, execute this form and supply required information. Do not use
this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
Name:
___________________________________
(Please Print)
Address:
___________________________________
(Please Print)
Dated: _______________ __, ______
Holder's Signature: ______________________
Holder's Address: _________________________
EXHIBIT 10.4
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this " Agreement ") is made and entered into as of December __, 2014, between S&W Seed Company, a Nevada corporation (the " Company "), and each of the several purchasers signatory hereto (each such purchaser, a " Purchaser " and, collectively, the " Purchasers ").
This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof, between the Company and each Purchaser (the " Purchase Agreement ").
The Company and each Purchaser hereby agrees as follows:
1. Definitions .
Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:
" Advice " shall have the meaning set forth in Section 6(d).
" Conversion Shares " means any shares of Common Stock issued and issuable pursuant to the Debentures.
" Effectiveness Date " means, with respect to the Initial Registration Statement required to be filed hereunder, the 90 th calendar day following the date hereof (or, in the event of a "full review" by the Commission, the 120 th calendar day following the date hereof), provided , however , such deadlines are meant only to specify the dates by which the Company shall attempt (using its reasonable best efforts) to obtain effectiveness of the Initial Registration Statement and not as deadlines subject to penalties under this Agreement, and with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section 3(c), the 60 th calendar day following the earlier of (i) the date on which an additional Registration Statement is required to be filed hereunder and (ii) the date such additional Registration Statement has been filed with the Commission (or, in the event of a "full review" by the Commission, the 90 th calendar day following the earlier of (x) the date such additional Registration Statement is required to be filed hereunder and (y) the date such additional Registration Statement has been filed with the Commission); provided , however , that in the event the Company is notified by the Commission that one or more of the above Registration Statements will not be reviewed or is no longer subject to further review and comments, the Effectiveness Date as to such Registration Statement shall be the fifth Trading Day following the date on which the Company is so notified if such date precedes the dates otherwise required above, provided further , if such Effectiveness Date falls on a day that is not a Trading Day, then the Effectiveness Date shall be the next succeeding Trading Day.
" Effectiveness Period " shall have the meaning set forth in Section 2(a).
" Event " shall have the meaning set forth in Section 2(d).
" Event Date " shall have the meaning set forth in Section 2(d).
" Filing Date " means, with respect to the Initial Registration Statement required hereunder, the 30 th calendar day following the Closing Date and, with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section 3(c), the later of (i) the date sixty (60) days after the date substantially all of the Registrable Securities registered under the immediately preceding Registration Statement are sold and (ii) the date six (6) months from the date the most recent Registration Statement has been declared effective by the Commission.
" Grace Period " shall have the meaning set forth in Section 2(d).
" Holder " or " Holders " means the holder or holders, as the case may be, from time to time of Registrable Securities.
" Indemnified Party " shall have the meaning set forth in Section 5(c).
" Indemnifying Party " shall have the meaning set forth in Section 5(c).
" Initial Registration Statement " means the initial Registration Statement filed pursuant to this Agreement.
" Lead Purchaser " shall mean Hudson Bay Master Fund Ltd.
" Losses " shall have the meaning set forth in Section 5(a).
" Plan of Distribution " shall have the meaning set forth in Section 2(a).
" Prospectus " means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
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" Registrable Securities " means, as of any date of determination, (a) 130% of the Required Minimum of Underlying Securities, (b) 1,294,000 shares of Common Stock (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after the date hereof) issued to MFP Investors, LLC pursuant to that certain Securities Purchase Agreement dated as of the date hereof by and between the Company and MFP Investors, LLC and (c) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however , that any such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain the effectiveness of any, or file another, Registration Statement hereunder with respect thereto) for so long as (x) a Registration Statement with respect to the sale of such Registrable Securities is declared effective by the Commission under the Securities Act and such Registrable Securities have been disposed of by the Holder in accordance with such effective Registration Statement, (y) such Registrable Securities have been previously sold in accordance with Rule 144, or (z) such securities become eligible for resale without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 Holders.
" Registration Statement " means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional registration statements contemplated by Section 2(c) or Section 3(c), including (in each case) the Prospectus, amendments and supplements to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in any such registration statement.
" Required Holders " means the holders of at least a majority of the Registrable Securities and shall include the Lead Purchaser so long as the Lead Purchaser or any of its Affiliates holds any Registrable Securities.
" Rule 415 " means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
" Rule 424 " means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
" Selling Stockholder Questionnaire " shall have the meaning set forth in Section 3(a).
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" SEC Guidance " means (i) any publicly-available written or oral guidance of the Commission staff, or any comments, requirements or requests of the Commission staff and (ii) the Securities Act.
2. Shelf Registration .
4
In the event of a cutback hereunder, the Company shall give the Holder at least five (5) Trading Days prior written notice along with the calculations as to such Holder's allotment. In the event the Company amends the Initial Registration Statement in accordance with the foregoing, the Company will use its reasonable
5
best efforts to file with the Commission, as soon as practicable but by no later than the applicable Filing Date, one or more registration statements on Form S-3 or such other form available to register for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended.
6
liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior to the cure of an Event. Notwithstanding anything herein to the contrary, no payment under this Section 2(d) shall be required to be made by the Company after the date that is three (3) months following an Event Date, provided , however , that the Holders may then sell all of the Registrable Securities without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1) (or any successor thereto) promulgated under the Securities Act; provided further , that any payment incurred prior to such date shall continue to be payable by the Company. For purposes of clarity, in the event the Company complies with the provisions set forth in clause (i) through (v) above, the partial liquidated damages provided in this Section 2(d) shall not be assessed, provided , however , that nothing herein shall derogate from the Company's requirement in the event of a Public Information Failure to make the payment required pursuant to Section 4.3(b) of the Purchase Agreement.
3. Registration Procedures .
In connection with the Company's registration obligations hereunder, the Company shall:
7
reasonably object in good faith, provided that, the Company is notified of such objection in writing no later than five (5) Trading Days after the Holders have been so furnished copies of a Registration Statement or three (3) Trading Days after the Holders have been so furnished copies of any related Prospectus or amendments or supplements thereto. Each Holder agrees to furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex B (a " Selling Stockholder Questionnaire ") on a date that is not less than two (2) Trading Days prior to the Filing Date or by the end of the fourth (4 th ) Trading Day following the date on which such Holder receives draft materials in accordance with this Section.
8
reasonably practicable, but in any case prior to the applicable Filing Date, an additional Registration Statement covering the resale by the Holders of not less than the number of such Registrable Securities.
9
qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.
10
11
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4. Registration Expenses . All fees and expenses incident to the performance of or compliance with, this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses of the Company's counsel and independent registered public accountants) (A) with respect to filings made with the Commission, (B) with respect to filings required to be made with any Trading Market on which the Common Stock is then listed for trading, (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities) and (D) if not previously paid by the Company in connection with an Issuer Filing, with respect to any filing that may be required to be made by any broker through which a Holder intends to make sales of Registrable Securities with FINRA pursuant to FINRA Rule 5110, so long as the broker is receiving no more than a customary brokerage commission in connection with such sale, (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the
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Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar commissions of any Holder or, except to the extent provided for in the Transaction Documents, or other costs of the Holders. The Company shall also reimburse the Lead Purchaser for the fees and disbursements of legal counsel in connection with registration, filing, or qualification pursuant to Sections 2 or 3 of this Agreement, which shall be limited to $5,000 for each such registration, filing, or qualification.
5. Indemnification .
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furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder's proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (ii) in the case of an occurrence of an event of the type specified in Sections 3(d)(iii)-(vi), the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 6(d), but only if and to the extent that following the receipt of the Advice the misstatement or omission giving rise to such Loss would have been corrected. The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified person and shall survive the transfer of any Registrable Securities by any of the Holders in accordance with Section 6(h).
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such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 6(d), but only if and to the extent that following the receipt of the Advice the misstatement or omission giving rise to such Loss would have been corrected. In no event shall the liability of any selling Holder under this Section 5(b) be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.
An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding, or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.
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Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party; provided , that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) not to be entitled to indemnification hereunder.
The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute pursuant to this Section 5(d), in the aggregate, any amount in excess of
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the amount by which the net proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.
The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.
6. Miscellaneous .
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any other registration statements until all Registrable Securities are registered pursuant to a Registration Statement that is declared effective by the Commission; provided that this Section 6(b) (i) shall not prohibit the Company from filing amendments to registration statements filed prior to the date of this Agreement and (ii) shall not prohibit the Company from filing a shelf registration statement on Form S-3 for a primary offering by the Company or a registration statements on Form S-8 (or its then equivalent form) in connection with any equity incentive plans of the Company; provided further , in each case, that no such filing shall be declared effective at any time prior to the date (x) that the Company has obtained Shareholder Approval (as defined in the Purchase Agreement) and (y) that is the 60 th day after the earlier of (A) the time of the registration of all of the Registrable Securities pursuant to and in accordance with this Agreement, which registration statement remains in effect or (B) such time as all of the Registrable Securities, if a registration statement is not available for the resale of all of the Registrable Securities, may be sold without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1).
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pursuant to Rule 144 (without volume restrictions or current public information requirements) promulgated by the Commission pursuant to the Securities Act or that are the subject of a then effective Registration Statement.
20
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purpose. The use of a single agreement with respect to the obligations of the Company contained was solely in the control of the Company, not the action or decision of any Holder, and was done solely for the convenience of the Company and not because it was required or requested to do so by any Holder. It is expressly understood and agreed that each provision contained in this Agreement is between the Company and a Holder, solely, and not between the Company and the Holders collectively and not between and among Holders.
********************
(Signature Pages Follow)
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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.
S&W SEED COMPANY
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By:__________________________________________
|
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[SIGNATURE PAGE OF HOLDERS FOLLOWS]
[SIGNATURE PAGE OF HOLDERS TO s&w RRA]
Name of Holder: __________________________
Signature of Authorized Signatory of Holder : __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
[SIGNATURE PAGES CONTINUE]
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Annex A
Plan of Distribution
Each Selling Stockholder (the " Selling Stockholders ") of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the principal Trading Market or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. The shares of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling securities:
1
The Selling Stockholders may also sell securities under Rule 144 under the Securities Act of 1933, as amended (the " Securities Act "), if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.
In connection with the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The selling shareholders may pledge or grant a security interest in some or all of the convertible notes, warrants or shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933, as amended, amending, if necessary, the list of selling shareholders to include the pledgee, transferee or other successors in interest as selling shareholders under this prospectus. The selling shareholders also may transfer and donate the shares of common stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
The Selling Stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.
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The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
Selling Stockholders will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. The Selling Stockholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale securities by the Selling Stockholders.
We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the common stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
Once sold under the registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands of persons other than our affiliates.
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Annex B
S&W SEED COMPANY
Selling Stockholder Notice and Questionnaire
The undersigned beneficial owner of common stock (the " Registrable Securities ") of S&W Seed Company, a Nevada corporation (the " Company "), understands that the Company has filed or intends to file with the Securities and Exchange Commission (the " Commission ") a registration statement (the " Registration Statement ") for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the " Securities Act "), of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement (the " Registration Rights Agreement ") to which this document is annexed. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.
Certain legal consequences arise from being named as a selling stockholder in the Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling stockholder in the Registration Statement and the related prospectus.
NOTICE
The undersigned beneficial owner (the " Selling Stockholder ") of Registrable Securities hereby elects to include the Registrable Securities owned by it in the Registration Statement.
1
The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:
QUESTIONNAIRE
1. Name.
(a) Full Legal Name of Selling Stockholder
__________________________________________________________________
(b) Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities are held:
__________________________________________________________________
(c) Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by this Questionnaire):
__________________________________________________________________
2. Address for Notices to Selling Stockholder:
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
Telephone: ____________________________________________________
Fax: ____________________________________________________
Contact Person: ____________________________________________________
3. Broker-Dealer Status:
(a) Are you a broker-dealer?
Yes No
(b) If "yes" to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services to the Company?
Yes No
Note: If "no" to Section 3(b), the Commission's staff has indicated that you should be identified as an underwriter in the Registration Statement.
2
(c) Are you an affiliate of a broker-dealer?
Yes No
(d) If you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities?
Yes No
Note: If "no" to Section 3(d), the Commission's staff has indicated that you should be identified as an underwriter in the Registration Statement.
4. Beneficial Ownership of Securities of the Company Owned by the Selling Stockholder.
Except as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities issuable pursuant to the Purchase Agreement.
(a) Type and Amount of other securities beneficially owned by the Selling Stockholder:
__________________________________________________________________
__________________________________________________________________
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5. Relationships with the Company:
Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.
State any exceptions here:
__________________________________________________________________
__________________________________________________________________
The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time until the Registration Statement is declared effective.
By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 5 and the inclusion of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus and any amendments or supplements thereto.
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.
Date: ___________________________________ |
Beneficial Owner: ______________________________________
By: _________________________________
|
PLEASE FAX A COPY (OR EMAIL A .PDF COPY) OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:
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EXHIBIT 10.5
EXHIBIT E
This SECURITY AGREEMENT, dated as of December __, 2014 (this " Agreement "), is by S&W Seed Company, a Nevada corporation (the " Company ") and the Subsidiaries of the Company listed on the signature pages hereto as Guarantors (each a " Guarantor " and collectively, the " Guarantors "; together with the Company, collectively referred to herein as the " Debtor ") in favor of Hudson Bay Fund LP (the " Agent "), in its capacity as collateral agent for the Purchasers of the Company's 8% Senior Secured Convertible Debentures due 35 months years following their issuance, in the original aggregate principal amount of $27,000,000 (collectively, the " Debentures ") signatory hereto, their endorsees, transferees and assigns (the Agent and the Purchasers are, collectively, the " Secured Parties ").
WHEREAS, pursuant to the Purchase Agreement (as defined in the Debentures), the Secured Parties have severally agreed to extend the loans to the Company evidenced by the Debentures; and
WHEREAS, in order to induce the Secured Parties to extend the loans evidenced by the Debentures, the Debtor has agreed to execute and deliver to the Secured Parties this Agreement and to grant the Secured Parties, pari passu with each other Secured Party and through the Agent, a security interest in certain property of the Debtor to secure the prompt payment, performance and discharge in full of all of the Company's obligations under the Debentures and the Guarantors' obligations under the Guarantee.
NOW, THEREFORE, in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain Definitions . Reference is hereby made to the Purchase Agreement and the Debentures for a statement of the terms thereof. As used in this Agreement, (i) capitalized terms used but not defined herein or in the UCC shall have the meanings set forth in the Debentures and the Purchase Agreement, and (ii) the following terms shall have the meanings set forth in this Section 1. Terms used but not otherwise defined in this Agreement that are defined in Article 9 of the UCC (including, without limitation, "accounts", "account debtor", "cash proceeds", "chattel paper", "commercial tort claim", "deposit account", "documents", "electronic chattel paper", "equipment", "fixtures", "general intangibles", "goods", "instruments", "inventory", "investment property", "letter-of-credit rights", "noncash proceeds", "proceeds", "promissory notes", "record", "security account", "software", "supporting obligations" and "tangible chattel paper") shall have the respective meanings given such terms in Article 9 of the UCC.
(a) " Collateral " means the collateral in which the Secured Parties are granted a security interest by this Agreement and which shall include the following personal property of the Debtor, whether presently owned or existing or hereafter acquired or coming into existence, wherever situated, and all additions and accessions thereto and all substitutions and replacements thereof, and all proceeds, products and accounts thereof, including, without limitation, all proceeds from the sale or transfer of the Collateral and of insurance covering the same and of any tort claims in connection therewith :
(i) All goods, including, without limitation, (A) all machinery, equipment, computers, motor vehicles, trucks, tanks, boats, ships, appliances, furniture, special and general tools, fixtures, test and quality control devices and other equipment of every kind and nature and wherever situated, together with all documents of title and documents representing the same, all additions and accessions thereto, replacements therefor, all parts therefor, and all substitutes for any of the foregoing and all other items used and useful in connection with the Debtor's businesses and all improvements thereto; and (B) all inventory;
(ii) All contract rights and other general intangibles, including, without limitation, all partnership interests, membership interests, stock or other securities or other investment property, rights under any of the Organizational Documents, licenses, distribution and other agreements, computer software (whether "off-the-shelf", licensed from any third party or developed by the Debtor), computer software development rights, leases, franchises, customer lists, quality control procedures, grants and rights, goodwill, Intellectual Property, Licenses and income tax refunds;
(iii) All accounts, together with all instruments, all documents of title representing any of the foregoing, all rights in any merchandising, goods, equipment, motor vehicles and trucks which any of the same may represent, and all right, title, security and guaranties with respect to each account, including any right of stoppage in transit;
(iv) All documents, letter-of-credit rights, instruments and chattel paper (whether tangible or electronic);
(v) All commercial tort claims;
(vi) All deposit accounts and all cash (whether or not deposited in such deposit accounts);
(vii) All investment property, including, without limitation, the Pledged Interests;
(ix) All files, records, books of account, business papers, and computer programs;
(x) All other tangible and intangible personal property of the Debtor (whether or not subject to the UCC), including, without limitation, all bank and other accounts and all cash and all investments therein, all proceeds, products, offspring, accessions, rents, profits, income, benefits, substitutions and replacements of and to any of the property of the Debtor described in the preceding clauses of this Section 1(a) (including, without limitation, any proceeds of insurance thereon and all causes of action, claims and warranties now or hereafter held by the Debtor in respect of any of the items listed above), and all books, correspondence, files and other records, including, without limitation, all tapes, disks, cards, software, data and computer programs in the possession or under the control of the Debtor or any other Person from time to time acting for the Debtor that at any time evidence or contain information relating to any of the property described in the preceding clauses of this Section 1(a) hereof or are otherwise necessary or helpful in the collection or realization thereof; and
(xi) the products and proceeds of all of the foregoing Collateral set forth in clauses (i) through (x) above.
Notwithstanding the foregoing, nothing herein shall be deemed to constitute an assignment of any lease, permit, license, license agreement, contract or agreement to which Debtor is a party which, in the event of an assignment, becomes void by operation of applicable law or the assignment of which is otherwise prohibited by under the terms of such lease, permit, license, license agreement, contract or agreement (in each case other than to the extent that (A) would be overridden by Sections 9-406, 9-407, 9-408 and/or 9-409 of the UCC or other applicable provisions of the UCC or any other applicable law, (B) the consent of the other party to such lease, permit, license, license agreement, contract or agreement has been obtained, or (C) any such term has been waived); provided , however , that to the extent permitted by applicable law, this Agreement shall create a valid security interest in such asset and, to the extent permitted by applicable law, this Agreement shall create a valid security interest in the proceeds of such asset; provided , further , that (x) immediately upon the ineffectiveness, lapse, termination or waiver of any such provision, the Collateral shall include, and the Debtor shall be deemed to have granted a security interest in, all such right, title and interest as if such provision had never been in effect and (y) the foregoing exclusion shall in no way be construed so as to limit, impair or otherwise affect the Secured Parties' unconditional continuing security interest in and liens upon any rights or interests of the Debtor in or to (1) the proceeds of, or any monies due or to become due under, any such lease, permit, license, license agreement,
contract or agreement (including any accounts, proceeds of inventory or investment property, and (2) the proceeds from the sale, license, lease, or other dispositions of any such lease, permit, license, license agreement, contract or agreement).
(b) " Intellectual Property " means the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, (i) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright Office, (ii) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof, and all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, (iii) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade dress, service marks, logos, domain names and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common law rights related thereto, (iv) all trade secrets arising under the laws of the United States, any other country or any political subdivision thereof, (v) all rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all licenses for any of the foregoing, and (vii) all causes of action for infringement of the foregoing.
(d) " Intercreditor Agreement " means, the Intercreditor Agreement, dated as of the date hereof by and among the Agent, Wells Fargo Bank, National
Association and Pioneer Hi-Bred International, Inc., as such agreement is amended, restated or otherwise modified from time to time.
(e) " Majority in Interest " means, at any time of determination, the majority in interest (based on then-outstanding principal amounts of Debentures at the time of such determination) of the Secured Parties.
( g) " Obligations " means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become due, or that are now or may be hereafter contracted or acquired, or owing to, of the Debtor to the Secured Parties, including, without limitation, all obligations under this Agreement, the Debentures, the Purchase Agreement and any other Transaction Documents, instruments, agreements or other documents executed and/or delivered in connection herewith or therewith, in each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from any of the Secured Parties as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified from time to time. Without limiting the generality of the foregoing, the term "Obligations" shall include, without limitation: (i) principal of, and interest on the Debentures and the loans extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities of the Debtor from time to time under or in connection with this Agreement, the Debentures and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith; and (iii) all amounts (including but not limited to post-petition interest) in respect of the foregoing that would be payable but for the fact that the obligations to pay such amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving the Debtor.
( h) " Organizational Documents " means with respect to the Debtor, the documents by which the Debtor was organized (such as a certificate of incorporation, certificate of limited partnership or articles of organization, and including, without limitation, any certificates of designation for preferred stock or other forms of preferred equity) and which relate to the internal governance of the Debtor (such as bylaws, a partnership agreement or an operating, limited liability or members agreement).
(i) " Permitted Debt " shall mean Permitted Indebtedness as defined in the Debenture.
(j) " Pledged Interests " means the shares of equity interests owned by the Debtor (i) described on Schedule I hereto and (ii) at any time and from time to time acquired by the Debtor.
(k) " Purchase Agreement " shall mean the Securities Purchase Agreement, dated as of December [__], 2014, between Company and the Purchasers.
(l) " Transaction Documents " has the meaning specified therefor in the Purchase Agreement.
(m) " UCC " means the Uniform Commercial Code of the State of New York and or any other applicable law of any state or states which has jurisdiction with respect to all, or any portion of, the Collateral or this Agreement, from time to time. It is the intent of the parties that defined terms in the UCC should be construed in their broadest sense so that the term "Collateral" will be construed in its broadest sense. Accordingly if there are, from time to time, changes to defined terms in the UCC that broaden the definitions, they are incorporated herein and if existing definitions in the UCC are broader than the amended definitions, the existing ones shall be controlling.
2. Grant of Security Interest in Collateral . As an inducement for the Secured Parties to extend the loans as evidenced by the Debentures and to secure the complete and timely payment, performance and discharge in full, as the case may be, of all of the Obligations, the Debtor hereby unconditionally and irrevocably pledges, grants and hypothecates to the Agent for the benefit of the Secured Parties a security interest in and to, a lien upon and a right of set-off against all of their respective right, title and interest of whatsoever kind and nature in and to, the Collateral (a " Security Interest " and, collectively, the " Security Interests ").
4. Representations, Warranties, Covenants and Agreements of the Debtor . Except as set forth under the corresponding section of the disclosure schedules delivered to the Secured Parties concurrently herewith (the " Disclosure Schedules "), which Disclosure Schedules shall be deemed a part hereof, the Debtor represents and warrants to, and covenants and agrees with, the Secured Parties as follows:
(a) The Debtor has the requisite corporate power and authority to enter into this Agreement and otherwise to carry out its obligations hereunder. The execution, delivery and performance by the Debtor of this Agreement and the filings contemplated therein have been duly authorized by all necessary action on the part of the Debtor and no further action is required by the Debtor. This Agreement has been duly executed by the Debtor. This Agreement constitutes the legal, valid and binding obligation of the Debtor, enforceable against the Debtor in accordance with its terms except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization and similar laws of general application relating to or affecting the rights and remedies of creditors and by general principles of equity.
(b) The Debtor has no place of business or office where its books of account and records are kept (other than temporarily at the offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule A attached hereto. Except as specifically set forth on Schedule A , the Debtor is the record owner of the real property where such Collateral is located, and there exist no mortgages or other liens on any such real property except for Permitted Liens (as defined in the Debentures). Except as disclosed on Schedule A , none of such Collateral is in the possession of any consignee, bailee, warehouseman, agent or processor.
(c) Except for Permitted Liens and except as set forth on Schedule B attached hereto, the Debtor is the sole owner of the Collateral (except for non-exclusive licenses granted by the Debtor in the ordinary course of business), free and clear of any liens, security interests, encumbrances, rights or claims, and is fully authorized to grant the Security Interests. Except as set forth on Schedule C attached hereto and except as filed in connection with the Permitted Liens, there is not on file in any governmental or regulatory authority, agency or recording office an effective financing statement, security agreement, license or transfer or any notice of any of the foregoing (other than those that will be filed in favor of the Secured Parties pursuant to this Agreement) covering or affecting any of the Collateral. Except as set forth on Schedule C attached hereto and except in connection with the Permitted Liens or pursuant to this Agreement, as long as this Agreement shall be in effect, the Debtor shall not execute and shall not knowingly permit to be on file in any such office or agency any other financing statement or other document or instrument (except to the extent filed or recorded in favor of the Secured Parties pursuant to the terms of this Agreement).
(d) No written claim has been received that any Collateral or the Debtor's use of any Collateral violates the rights of any third party. There has been no adverse decision to the Debtor's claim of ownership rights in or exclusive rights to use the Collateral in any jurisdiction or to the Debtor's right to keep and maintain such Collateral in full force and effect, and there is no proceeding involving said rights pending or, to the best knowledge of the Debtor, threatened
before any court, judicial body, administrative or regulatory agency, arbitrator or other governmental authority.
(e) The Debtor shall at all times maintain its books of account and records relating to the Collateral at its principal place of business and its Collateral at the locations set forth on Schedule A attached hereto and may not relocate such books of account and records or tangible Collateral unless it delivers to the Secured Parties at least 30 days prior to such relocation (i) written notice of such relocation and the new location thereof (which must be within the United States) and (ii) evidence that appropriate financing statements under the UCC and other necessary documents have been filed and recorded and other steps have been taken to perfect the Security Interests to create in favor of the Secured Parties a valid, perfected and continuing perfected first priority lien in the Collateral, subject only to Permitted Liens which have priority either by applicable law or by contractual arrangements with the Secured Parties.
(f) This Agreement creates in favor of the Secured Parties a valid first priority security interest in the Collateral (subject only to Permitted Liens (as defined in the Debentures) which have priority either by applicable law or by contractual arrangements with the Secured Parties) securing the payment and performance of the Obligations. Upon making the filings described in the immediately following paragraph, all security interests created hereunder in any Collateral which may be perfected by filing Uniform Commercial Code financing statements shall have been duly perfected. Except for the filing of the Uniform Commercial Code financing statements referred to in the immediately following paragraph, the recordation of the Intellectual Property Security Agreement (as defined in Section 4(p) hereof) with respect to copyrights and copyright applications in the United States Copyright Office referred to in paragraph (n) below, when permitted in accordance with the terms of the agreements in place as of the date hereof governing the Permitted Debt, including the Subordination Agreements, the execution and delivery of deposit account control agreements satisfying the requirements of Section 9-104(a)(2) of the UCC with respect to each deposit account of the Debtor, and the delivery of the certificates and other instruments provided in Section 3, no action is necessary to create, perfect or protect the security interests created hereunder. Without limiting the generality of the foregoing, except for the filing of said financing statements, the recordation of said Intellectual Property Security Agreement, and the execution and delivery of said deposit account control agreements, no consent of any third parties and no authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for (i) the execution, delivery and performance of this Agreement, (ii) the creation or perfection of the Security Interests created hereunder in the Collateral or (iii) the enforcement of the rights of the Agent and the Secured Parties hereunder.
(g) The Debtor hereby authorizes the Agent to file one or more financing statements under the UCC, with respect to the Security Interests, with the proper filing and recording agencies in any jurisdiction deemed proper by it.
(h) The execution, delivery and performance of this Agreement by the Debtor does not (i) violate any of the provisions of any Organizational Documents of the Debtor or any judgment, decree, order or award of any court, governmental body or arbitrator or any applicable law, rule or regulation applicable to the Debtor or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing the Debtor's debt or otherwise) or other understanding to which the Debtor is a party or by which any property or asset of the Debtor is bound or affected. If any, all required consents (including, without limitation, from stockholders or creditors of the Debtor) necessary for the Debtor to enter into and perform its obligations hereunder have been obtained.
(i) The Debtor shall at all times maintain the liens and Security Interests provided for hereunder as valid and perfected first priority liens and security interests (subject only to Permitted Liens which have priority either by applicable law or by contractual arrangements with the Secured Parties) in the Collateral in favor of the Secured Parties until this Agreement and the Security Interest hereunder shall be terminated pursuant to Section 14 hereof. The Debtor hereby agrees to defend the same against the claims of any and all persons and entities. The Debtor shall safeguard and protect all Collateral for the account of the Secured Parties. At the request of the Agent, the Debtor will sign and deliver to the Agent on behalf of the Secured Parties at any time or from time to time one or more financing statements pursuant to the UCC in form reasonably satisfactory to the Agent and will pay the cost of filing the same in all public offices wherever filing is, or is deemed by the Agent to be, necessary or desirable to effect the rights and obligations provided for herein. Without limiting the generality of the foregoing, the Debtor shall pay all fees, taxes, expenses and other amounts necessary to maintain the Collateral and the Security Interests hereunder, and the Debtor shall obtain and furnish to the Agent from time to time, upon demand, such releases and/or subordinations of claims and liens which may be required to maintain the priority of the Security Interests hereunder.
( j) The Debtor will not transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose of any of the Collateral (except for non-exclusive licenses granted by the Debtor in its ordinary course of business and sales of inventory by the Debtor in its ordinary course of business) without the prior written consent of a Majority in Interest .
( k) The Debtor shall keep and preserve its equipment, inventory and other tangible Collateral in good condition, repair and order and shall not operate
or locate any such Collateral (or cause to be operated or located) in any area excluded from insurance coverage.
( l) The Debtor shall maintain with financially sound and reputable insurers, insurance with respect to the Collateral, including Collateral hereafter acquired, against loss or damage of the kinds and in the amounts customarily insured against by entities of established reputation having similar properties similarly situated and in such amounts as are customarily carried under similar circumstances by other such entities and otherwise as is prudent for entities engaged in similar businesses but in any event sufficient to cover the full replacement cost thereof. The Debtor shall cause each insurance policy issued in connection herewith to provide, and the insurer issuing such policy to certify to the Agent, that (a) the Agent will be named as lender loss payee and additional insured under each such insurance policy; (b) if such insurance be proposed to be cancelled or materially changed for any reason whatsoever, such insurer will promptly notify the Agent and such cancellation or change shall not be effective as to the Agent for at least thirty (30) days after receipt by the Agent of such notice, unless the effect of such change is to extend or increase coverage under the policy; and (c) the Agent will have the right (but no obligation) at its election to remedy any default in the payment of premiums within thirty (30) days of notice from the insurer of such default. If no Event of Default (as defined in the Debentures) exists and if the proceeds arising out of any claim or series of related claims do not exceed $100,000, loss payments in each instance will be applied by the applicable Debtor to the repair and/or replacement of property with respect to which the loss was incurred to the extent reasonably feasible, and any loss payments or the balance thereof remaining, to the extent not so applied, shall be payable to the applicable Debtor; provided , however , that payments received by the Debtor after an Event of Default occurs and is continuing or in excess of $100,000 for any occurrence or series of related occurrences shall be paid to the Agent on behalf of the Secured Parties and, if received by the Debtor, shall be held in trust for the Secured Parties and immediately paid over to the Agent unless otherwise directed in writing by the Agent. Copies of such policies or the related certificates, in each case, naming the Agent as lender loss payee and additional insured shall be delivered to the Agent at least annually and at the time any new policy of insurance is issued.
(m) The Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the Secured Parties promptly, in sufficient detail, of any material adverse change in the Collateral, and of the occurrence of any event which would have a material adverse effect on the value of the Collateral or on the Secured Parties' security interest, through the Agent, therein.
( n) The Debtor shall promptly execute and deliver to the Agent such further deeds, mortgages, assignments, security agreements, financing statements or other instruments, documents, certificates and assurances and take such further action as the Agent may from time to time request and may in its sole discretion
deem necessary to perfect, protect or enforce the Secured Parties' security interest in the Collateral including, without limitation, if applicable, the execution and delivery of a separate security agreement with respect to the Debtor's Intellectual Property (" Intellectual Property Security Agreement ") in which the Secured Parties have been granted a security interest hereunder, substantially in a form reasonably acceptable to the Agent, which Intellectual Property Security Agreement, other than as stated therein, shall be subject to all of the terms and conditions hereof.
( o) The Debtor shall permit the Agent and its representatives and agents to inspect the Collateral during normal business hours and upon reasonable prior notice, and to make copies of records pertaining to the Collateral as may be reasonably requested by the Agent from time to time.
( p) The Debtor shall take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights, claims, causes of action and accounts receivable in respect of the Collateral.
( q) The Debtor shall promptly notify the Secured Parties in sufficient detail upon becoming aware of any attachment, garnishment, execution or other legal process levied against any Collateral and of any other information received by the Debtor that may materially affect the value of the Collateral, the Security Interest or the rights and remedies of the Secured Parties hereunder.
( r) All information heretofore, herein or hereafter supplied to the Secured Parties by or on behalf of the Debtor with respect to the Collateral is accurate and complete in all material respects as of the date furnished.
( s) The Debtor shall at all times preserve and keep in full force and effect its valid existence and good standing and any rights and franchises material to its business.
( t) The Debtor not will change its name, type of organization, jurisdiction of organization, organizational identification number (if it has one), legal or corporate structure, or identity, or add any new fictitious name unless it provides at least 30 days prior written notice to the Secured Parties of such change and, at the time of such written notification, the Debtor provides any financing statements or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.
( u) Except in the ordinary course of business, no Debtor may consign any of its inventory or sell any of its inventory on bill and hold, sale or return, sale on approval, or other conditional terms of sale without the consent of the Agent which shall not be unreasonably withheld.
( v) The Debtor will not relocate its chief executive office to a new location without providing 30 days prior written notification thereof to the Secured Parties and so long as, at the time of such written notification, the Debtor provides any financing statements or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.
( w) The Debtor was organized and remains organized solely under the laws of the state set forth next to the Debtor's name in Schedule D attached hereto, which Schedule D sets forth the Debtor's organizational identification number or, if the Debtor does not have one, states that one does not exist.
( x) (i) The actual name of the Debtor is the name set forth in Schedule D attached hereto; (ii) the Debtor has no trade names except as set forth on Schedule E attached hereto; (iii) the Debtor has not used any name other than that stated in the preamble hereto or as set forth on Schedule E for the preceding five years; and (iv) no entity has merged into the Debtor or been acquired by the Debtor within the past five years except as set forth on Schedule E .
( y) Subject to the Subordination Agreements, at any time and from time to time that any Collateral consists of instruments, certificated securities or other items that require or permit possession by the secured party to perfect the security interest created hereby, the applicable Debtor shall deliver such Collateral to the Agent.
(z) Subject to the Subordination Agreements, the Debtor shall cause all tangible chattel paper constituting Collateral to be delivered to the Agent, or, if such delivery is not possible, then to cause such tangible chattel paper to contain a legend noting that it is subject to the security interest created by this Agreement. To the extent that any Collateral consists of electronic chattel paper, the applicable Debtor shall cause the underlying chattel paper to be "marked" within the meaning of Section 9-105 of the UCC (or successor section thereto).
( aa) Set forth on Schedule J hereto is a list of all deposit and securities accounts of the Debtor. Within 60 days after the date hereof, the Debtor shall cause such an account control agreement, in form and substance in each case satisfactory to the Agent, to be entered into and delivered to the Agent for the benefit of the Secured Parties with respect to all such accounts set forth on Schedule J and for any accounts opened or maintained from time to time after the date hereof.
( bb) To the extent that any Collateral consists of letter-of-credit rights, the Debtor shall cause the issuer of each underlying letter of credit to consent to an assignment of the proceeds thereof to the Secured Parties.
( cc) To the extent that any Collateral is in the possession of any third party, the Debtor shall join with the Agent in notifying such third party of the
Secured Parties' security interest in such Collateral and shall use its best efforts to obtain an acknowledgement and agreement from such third party with respect to the Collateral, in form and substance reasonably satisfactory to the Agent.
( bb) If the Debtor shall at any time hold or acquire a commercial tort claim, the Debtor shall promptly notify the Secured Parties in a writing signed by the Debtor of the particulars thereof and grant to the Secured Parties in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Agent.
( cc) The Debtor shall immediately provide written notice to the Secured Parties of any and all accounts which arise out of contracts with any governmental authority and, to the extent necessary to perfect or continue the perfected status of the Security Interests in such accounts and proceeds thereof, shall execute and deliver to the Agent an assignment of claims for such accounts and cooperate with the Agent in taking any other steps required, in its judgment, under the Federal Assignment of Claims Act or any similar federal, state or local statute or rule to perfect or continue the perfected status of the Security Interests in such accounts and proceeds thereof.
(dd) On or prior to the date hereof (with respect to the Intellectual Property set forth on Schedule F attached hereto, and after the date hereof (with respect to any Intellectual Property acquired after the date hereof), the Debtor shall promptly (i) cause to be registered at the United States Copyright Office all of its material copyrights, (ii) cause the security interest contemplated hereby with respect to all Intellectual Property registered at the United States Copyright Office or United States Patent and Trademark Office to be duly recorded at the applicable office, and (iii) give the Agent notice whenever it acquires (whether absolutely or by license) or creates any additional material Intellectual Property.
( ee) The Debtor will from time to time, at the expense of the Debtor, promptly execute and deliver all such further instruments and documents, proxies in respect of Pledged Interests and take all such further action as may be necessary or desirable, or as the Agent may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Secured Parties to exercise and enforce their rights and remedies hereunder and with respect to any Collateral or to otherwise carry out the purposes of this Agreement.
( ff) Schedule F attached hereto lists all of the patents, patent applications, trademarks, trademark applications, registered copyrights, and domain names owned by the Debtor as of the date hereof. Schedule F lists all material licenses in favor of the Debtor for the use of any patents, trademarks, copyrights and domain names as of the date hereof. All material patents and trademarks of the Debtor have been duly recorded at the United States Patent and
Trademark Office and all material copyrights of the Debtor have been duly recorded at the United States Copyright Office.
( gg) Except as set forth on Schedule G attached hereto, none of the account debtors or other persons or entities obligated on any of the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or any similar federal, state or local statute or rule in respect of such Collateral.
6. Defaults . The following events shall be " Events of Default ":
(a) The occurrence of an Event of Default (as defined in the Debentures) under the Debentures or any other Transaction Document;
(b) Any representation or warranty of the Debtor in this Agreement shall prove to have been incorrect in any material respect when made;
(c) The failure by the Debtor to observe or perform any of its obligations hereunder for five (5) Trading Days after delivery to the Debtor of notice of such failure by or on behalf of a Secured Party; or
(d) If any provision of this Agreement or any of the agreements, documents or instruments executed and/or delivered in connection herewith shall at any time for any reason be declared to be null and void, or the validity or enforceability thereof shall be contested by the Debtor, or a proceeding shall be commenced by the Debtor, or by any governmental authority having jurisdiction over the Debtor, seeking to establish the invalidity or unenforceability thereof, or the Debtor shall deny that the Debtor has any liability or obligation purported to be created under this Agreement or any of the agreements, documents or instruments executed and/or delivered in connection herewith.
7. Duty To Hold In Trust . Upon the occurrence of any Event of Default and at any time thereafter, the Debtor shall, upon receipt of any revenue, income, dividend, interest or other sums subject to the Security Interests, whether payable pursuant to the Debentures, the other Transaction Documents or otherwise, or of any check, draft, note, trade acceptance or other instrument evidencing an obligation to pay any such sum, hold the same in trust for the Secured Parties and shall forthwith endorse
and transfer any such sums or instruments, or both, to the Secured Parties, pro-rata in proportion to their respective then-currently outstanding principal amount of Debentures for application to the satisfaction of the Obligations (and if any Debenture is not outstanding, pro-rata in proportion to the initial purchases of the remaining Debentures).
8. Rights and Remedies Upon Default .
(a) Upon the occurrence of any Event of Default and at any time thereafter, the Secured Parties, acting through the Agent, shall have the right to exercise all of the remedies conferred hereunder and under the Debentures and the other Transaction Documents, and the Secured Parties shall have all the rights and remedies of a secured party under the UCC. The Agent, for the benefit of the Secured Parties, shall have the following rights and powers:
( i ) The Agent shall have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance of any person, any premises where the Collateral, or any part thereof, is or may be placed and remove the same, and the Debtor shall assemble the Collateral and make it available to the Agent at places which the Agent shall reasonably select, whether at the Debtor's premises or elsewhere, and make available to the Agent, without rent, all of the Debtor's respective premises and facilities for the purpose of the Agent taking possession of, removing or putting the Collateral in saleable or disposable form.
( ii) Upon notice to the Debtor by Agent, all rights of the Debtor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise and all rights of the Debtor to receive the dividends and interest which it would otherwise be authorized to receive and retain, shall cease. Upon such notice, Agent shall have the right to receive, for the benefit of the Secured Parties, any interest, cash dividends or other payments on the Collateral and, at the option of Agent, to exercise in such Agent's discretion all voting rights pertaining thereto. Without limiting the generality of the foregoing, Agent shall have the right (but not the obligation) to exercise all rights with respect to the Collateral as it were the sole and absolute owner thereof, including, without limitation, to vote and/or to exchange, at its sole discretion, any or all of the Collateral in connection with a merger, reorganization, consolidation, recapitalization or other readjustment concerning or involving the Collateral or the Debtor or any of its direct or indirect subsidiaries.
(iii ) The Agent shall have the right to operate the business of the Debtor using the Collateral and shall have the right to assign, sell, lease or otherwise dispose of and deliver all or any part of the Collateral, at public or private sale or otherwise, either with or without special conditions or stipulations, for cash or on credit or for future delivery, in such parcel or parcels and at such time or times and at such place or places, and upon
such terms and conditions as the Agent may deem commercially reasonable, all without (except as shall be required by applicable statute and cannot be waived) advertisement or demand upon or notice to the Debtor or right of redemption of a Debtor, which are hereby expressly waived. Upon each such sale, lease, assignment or other transfer of Collateral, the Agent, for the benefit of the Secured Parties, may, unless prohibited by applicable law which cannot be waived, purchase all or any part of the Collateral being sold, free from and discharged of all trusts, claims, right of redemption and equities of the Debtor, which are hereby waived and released.
( iv ) The Agent shall have the right (but not the obligation) to notify any account debtors and any obligors under instruments or accounts to make payments directly to the Agent, on behalf of the Secured Parties, and to enforce the Debtor's rights against such account debtors and obligors.
( v ) The Agent, for the benefit of the Secured Parties, may (but is not obligated to) direct any financial intermediary or any other person or entity holding any investment property to transfer the same to the Agent, on behalf of the Secured Parties, or its designee.
( vi ) The Agent may (but is not obligated to) transfer any or all Intellectual Property registered in the name of the Debtor at the United States Patent and Trademark Office and/or Copyright Office into the name of the Secured Parties or any designee or any purchaser of any Collateral.
may be recorded or stored and to all computer software and programs used for the compilation or printout thereof.
9. Applications of Proceeds . The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from payments made on account of any insurance policy insuring any portion of the Collateral shall be applied first, to the expenses of retaking, holding, storing, processing and preparing for sale, selling, and the like (including, without limitation, any taxes, fees and other costs incurred in connection therewith) of the Collateral, to the reasonable attorneys' fees and expenses incurred by the Agent in enforcing the Secured Parties' rights hereunder and in connection with collecting, storing and disposing of the Collateral, and then to satisfaction of the Obligations pro rata among the Secured Parties (based on then-outstanding principal amounts of Debentures at the time of any such determination), and to the payment of any other amounts required by applicable law, after which the Secured Parties shall pay to the Debtor any surplus proceeds. If, upon the sale, license or other disposition of the Collateral, the proceeds thereof are insufficient to pay all amounts to which the Secured Parties are legally entitled, the Debtor will be liable for the deficiency, together with interest thereon, at the rate of 18% per annum or the lesser amount permitted by applicable law (the " Default Rate "), and the reasonable fees of any attorneys employed by the Secured Parties to collect such deficiency. To the extent permitted by applicable law, the Debtor waives all claims, damages and demands against the Secured Parties arising out of the repossession, removal, retention or sale of the Collateral, unless due solely to the gross negligence or willful misconduct of the Secured Parties as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction.
10. Costs and Expenses . The Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection with any filing required hereunder, including without limitation, any financing statements pursuant to the UCC, continuation statements, partial releases and/or termination statements related thereto or any expenses of any searches reasonably required by the Agent. The Debtor shall also pay all other claims and charges which in the reasonable opinion of the Agent is reasonably likely to prejudice, imperil or otherwise affect the Collateral or the Security Interests therein. The Debtor will also, upon demand, pay to the Agent the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, which the Agent, for the benefit of the Secured Parties, may incur in connection with the creation, perfection, protection, satisfaction, foreclosure, collection or enforcement of the Security Interest and the preparation, administration, continuance, amendment or enforcement of this Agreement and pay to the Agent the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, which the Agent, for the benefit of the Secured Parties, and the Secured Parties may incur in connection with (i) the enforcement of this Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Collateral, or (iii) the exercise or enforcement of any of the rights of the Secured Parties under the Debentures or any other Transaction Documents. Until so paid, any fees payable hereunder shall be added to the principal amount of the Debentures and shall bear interest at the Default Rate.
11. Responsibility for Collateral . The Debtor assumes all liabilities and responsibility in connection with all Collateral, and the Obligations shall in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the Collateral or its unavailability for any reason. Without limiting the generality of the foregoing, (a) neither the Agent nor any Secured Party (i) has any duty (either before or after an Event of Default) to collect any amounts in respect of the Collateral or to preserve any rights relating to the Collateral, or (ii) has any obligation to clean-up or otherwise prepare the Collateral for sale, and (b) the Debtor shall remain obligated and liable under each contract or agreement included in the Collateral to be observed or performed by the Debtor thereunder. Neither the Agent nor any Secured Party shall have any obligation or liability under any such contract or agreement by reason of or arising out of this Agreement or the receipt by the Agent or any Secured Party of any payment relating to any of the Collateral, nor shall the Agent or any Secured Party be obligated in any manner to perform any of the obligations of the Debtor under or pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment received by the Agent or any Secured Party in respect of the Collateral or as to the sufficiency of any performance by any party under any such contract or agreement, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to the Agent or to which the Agent or any Secured Party may be entitled at any time or times.
12. Security Interests Absolute . All rights of the Secured Parties and all obligations of the Debtor hereunder, shall be absolute and unconditional, irrespective of: (a) any lack of validity or enforceability of this Agreement, the Debentures, any Transaction Document or any agreement entered into in connection with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place of payment or performance of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Debentures, any Transaction Document or any other agreement entered into in connection with the foregoing; (c) any exchange, release or nonperfection of any of the Collateral, or any release or amendment or waiver of or consent to departure from any other collateral for, or any guarantee, or any other security, for all or any of the Obligations; (d) any action by the Secured Parties to obtain, adjust, settle and cancel in its sole discretion any insurance claims or matters made or arising in connection with the Collateral; or (e) any other circumstance which might otherwise constitute any legal or equitable defense available to the Debtor, or a discharge of all or any part of the Security Interests granted hereby. Until the Obligations shall have been paid and performed in full, the rights of the Secured Parties shall continue even if the Obligations are barred for any reason, including, without limitation, the running of the statute of limitations or bankruptcy. The Debtor expressly waives presentment, protest, notice of protest, demand, notice of nonpayment and demand for performance. In the event that at any time any transfer of any Collateral or any payment received by the Secured Parties hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall be deemed to be otherwise due to any party other than the Secured Parties, then, in any such event, the Debtor's obligations hereunder shall survive cancellation of this Agreement,
and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this Agreement, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof. The Debtor waives all right to require the Secured Parties to proceed against any other person or entity or to apply any Collateral which the Secured Parties may hold at any time, or to marshal assets, or to pursue any other remedy. The Debtor waives any defense arising by reason of the application of the statute of limitations to any obligation secured hereby.
13. Term of Agreement . This Agreement and the Security Interests set forth herein shall terminate on the date on which all payments under the Debentures and the other Transaction Documents have been indefeasibly paid in full and all other Obligations have been paid or discharged; provided, however, that all indemnities of the Debtor contained in this Agreement shall survive and remain operative and in full force and effect regardless of the termination of this Agreement.
14. Power of Attorney; Further Assurances .
(a) The Debtor authorizes the Agent, and does hereby make, constitute and appoint the Agent and its officers, agents, successors or assigns with full power of substitution, as the Debtor's true and lawful attorney-in-fact, with power, in the name of the Agent or the Debtor, to, after the occurrence and during the continuance of an Event of Default, (i) endorse any note, checks, drafts, money orders or other instruments of payment (including payments payable under or in respect of any policy of insurance) in respect of the Collateral that may come into possession of the Agent; (ii) to sign and endorse any financing statement pursuant to the UCC or any invoice, freight or express bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications and notices in connection with accounts, and other documents relating to the Collateral; (iii) to pay or discharge taxes, liens, security interests or other encumbrances at any time levied or placed on or threatened against the Collateral; (iv) to demand, collect, receipt for, compromise, settle and sue for monies due in respect of the Collateral; (v) to transfer any Intellectual Property or provide licenses respecting any Intellectual Property; and (vi) generally, at the option of the Agent, and at the expense of the Debtor, at any time, or from time to time, to execute and deliver any and all documents and instruments and to do all acts and things which the Agent deems necessary to protect, preserve and realize upon the Collateral and the Security Interests granted therein in order to effect the intent of this Agreement and the Debentures and the other Transaction Documents all as fully and effectually as the Debtor might or could do; and the Debtor hereby ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long as any of the Obligations shall be outstanding. The designation set forth herein shall be deemed to amend and supersede any inconsistent provision in the Organizational Documents or other documents or agreements to which the Debtor is subject or to which the Debtor is a party. Without limiting the generality of the foregoing, after the occurrence and
during the continuance of an Event of Default, each Secured Party is specifically authorized to execute and file any applications for or instruments of transfer and assignment of any patents, trademarks, copyrights or other Intellectual Property with the United States Patent and Trademark Office and the United States Copyright Office.
(b) On a continuing basis, the Debtor will make, execute, acknowledge, deliver, file and record, as the case may be, with the proper filing and recording agencies in any jurisdiction, including, without limitation, the jurisdictions indicated on Schedule C attached hereto, all such instruments, and take all such action as may reasonably be deemed necessary or advisable, or as reasonably requested by the Agent, to perfect the Security Interests granted hereunder and otherwise to carry out the intent and purposes of this Agreement, or for assuring and confirming to the Agent the grant or perfection of a perfected security interest in all the Collateral under the UCC.
(c) If the Debtor shall hereafter create or acquire any U.S. Subsidiary, simultaneously with the creation of acquisition of such U.S. Subsidiary, the Debtor shall cause such U.S. Subsidiary to become a party to this Agreement as an additional "Debtor" hereunder and to become a party to the Guaranty as an additional "Guarantor" thereunder, and to duly execute and/or deliver such opinions of counsel and other documents, in form and substance acceptable to the Agent, as the Agent shall reasonably request with respect thereto.
(d) The Debtor hereby irrevocably appoints the Agent as the Debtor's attorney-in-fact, with full authority in the place and instead of the Debtor and in the name of the Debtor, from time to time in the Agent's discretion, to take any action and to execute any instrument which the Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including the filing, in its sole discretion, of one or more financing or continuation statements and amendments thereto, relative to any of the Collateral without the signature of the Debtor where permitted by law, which financing statements may (but need not) describe the Collateral as "all assets" or "all personal property" or words of like import, and ratifies all such actions taken by the Agent. This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long as any of the Obligations shall be outstanding.
15. Notices . All notices, requests, demands and other communications hereunder shall be subject to the notice provision of the Purchase Agreement.
16. Other Security . To the extent that the Obligations are now or hereafter secured by property other than the Collateral or by the guarantee, endorsement or property of any other person, firm, corporation or other entity, then the Agent shall have the right, in its sole discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any way modifying or affecting any of the Secured Parties' rights and remedies hereunder.
17. [Intentionally omitted].
18. Miscellaneous .
(a) No course of dealing between the Debtor and the Secured Parties, nor any failure to exercise, nor any delay in exercising, on the part of the Secured Parties, any right, power or privilege hereunder or under the Debentures or any other Transaction Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
(b) All of the rights and remedies of the Secured Parties with respect to the Collateral, whether established hereby or by the Debentures or any other Transaction Documents or by any other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.
(c) This Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into this Agreement and the exhibits and schedules hereto. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Debtor and the Secured Parties holding 67% or more of the principal amount of Debentures then outstanding, or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.
(d) If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
(e) No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
(f) This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Secured Party (other than by merger). Any Secured Party may assign any or all of its rights under this Agreement to any Person (as defined in the Purchase Agreement) to whom such Secured Party assigns or transfers any Obligations, provided such transferee agrees in writing to be bound, with respect to the transferred Obligations, by the provisions of this Agreement that apply to the "Secured Parties."
(g) Each party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order to carry out the provisions and purposes of this Agreement.
(h) Except to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, all questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Except to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, the Debtor agrees that all proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement, the Debentures and the other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan. Except to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, the Debtor hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
(i) This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.
(j) The Debtor shall indemnify, reimburse and hold harmless the Agent and the Secured Parties and their respective partners, members, shareholders, officers, directors, employees and agents (and any other persons with other titles that have similar functions) (collectively, " Indemnitees ") from and against any and all losses, claims, liabilities, damages, penalties, suits, costs and expenses, of any kind or nature, (including fees relating to the cost of investigating and defending any of the foregoing) imposed on, incurred by or asserted against such Indemnitee in any way related to or arising from or alleged to arise from this Agreement or the Collateral, except any such losses, claims, liabilities, damages, penalties, suits, costs and expenses which result from the gross negligence or willful misconduct of the Indemnitee as determined by a final, nonappealable decision of a court of competent jurisdiction. This indemnification provision is in addition to, and not in limitation of, any other indemnification provision in the Debentures, the Purchase Agreement, the other Transaction Documents or any other agreement, instrument or other document executed or delivered in connection herewith or therewith.
17. Intercreditor Agreement . Anything herein to the contrary notwithstanding, the liens and security interests securing the obligations described in this Agreement, the exercise of any right or remedy with respect thereto, and certain of the rights of the holder of such obligations are subject to the provisions of the Intercreditor
Agreement. In the event of any conflict between the terms of the Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement shall govern and control.
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed on the day and year first above written.
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By:__________________________________________
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Seed HOLDING, LTD.
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By:__________________________________________
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STEVIA CALIFORNIA, LLC
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By:__________________________________________
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[SIGNATURE PAGE OF HOLDERS FOLLOWS]
ACCEPTED AND AGREED:
HUDSON BAY FUND LP
By:____________________________
Name:
Title:
Principal Place of Business of Debtor:
Locations Where Collateral is Located or Stored:
SCHEDULE B
SCHEDULE C
SCHEDULE D
Legal Names and Organizational Identification Numbers
SCHEDULE E
Names; Mergers and Acquisitions
SCHEDULE F
Intellectual Property
SCHEDULE G
Account Debtors
SCHEDULE H
Licenses
SCHEDULE I
Pledged Interests
SCHEDULE J
Deposit and Securities Accounts
EXHIBIT 10.6
GUARANTY
GUARANTY, dated as of December [__], 2014, made by each of the undersigned (each a " Guarantor ", and collectively, the " Guarantors "), in favor of the "Purchasers" (as defined below) party to the Securities Purchase Agreement referenced below.
W I T N E S S E T H :
WHEREAS, S&W Seed Company, a Nevada corporation (the " Company "), and each party listed as a "Purchaser" thereunder (together with their respective successors and assigns, each a " Purchaser ", and collectively, the " Purchasers ") are parties to that certain Securities Purchase Agreement, dated as of December [__], 2014 (the " Securities Purchase Agreement "), pursuant to which, among other things, the Purchasers shall purchase from the Company certain senior secured convertible "Debentures" (as defined in the Securities Purchase Agreement) (collectively, the " Debentures ");
WHEREAS, the Purchasers have requested, and the Guarantors have agreed, that the Guarantors shall execute and deliver to the Purchasers, a guaranty guaranteeing all of the obligations of the Company under the Securities Purchase Agreement, the Debentures and the other "Transaction Documents" (as defined in the Securities Purchase Agreement, the " Transaction Documents ");
WHEREAS, pursuant to a Pledge and Security Agreement, dated as of the date hereof (the " Security Agreement "), the Company and the Guarantors have granted to Hudson Bay Fund LP , as collateral agent for the Purchasers (in such capacity, the " Collateral Agent "), a security interest in and lien on their assets to secure their respective obligations under this Guaranty, the Securities Purchase Agreement, the Debentures and the other Transaction Documents; and
WHEREAS, each Guarantor has determined that the execution, delivery and performance of this Guaranty directly benefits, and is in the best interest of, such Guarantor.
NOW, THEREFORE, in consideration of the premises and the agreements herein and for other consideration, the sufficiency of which is hereby acknowledged, each Guarantor hereby agrees with each Purchaser as follows:
SECTION 1. Definitions . Reference is hereby made to the Securities Purchase Agreement and the Debentures for a statement of the terms thereof. All terms used in this Guaranty, which are defined in the Securities Purchase Agreement or the Debentures and not otherwise defined herein, shall have the same meanings herein as set forth therein.
SECTION 2. Guaranty . The Guarantors, jointly and severally, hereby unconditionally and irrevocably, guaranty (a) the punctual payment, as and when due and payable, by stated maturity or otherwise, of all obligations and any other amounts now or hereafter owing by the Company in respect of the Securities Purchase Agreement, the Debentures and the other Transaction Documents, including, without limitation, all interest that accrues after the commencement of any proceeding commenced by or against any the Company or any Guarantor under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of the
United States Code) or under any other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, or extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief (an " Insolvency Proceeding "), whether or not the payment of such interest is unenforceable or is not allowable due to the existence of such Insolvency Proceeding, and all fees, commissions, expense reimbursements, indemnifications and all other amounts due or to become due under any of the Transaction Documents, and any and all expenses (including reasonable counsel fees and expenses) reasonably incurred by the Purchasers or the Collateral Agent in enforcing any rights under this Guaranty (such obligations, to the extent not paid by the Company, being the " Guaranteed Obligations ") and (b) the punctual and faithful performance, keeping, observance and fulfillment by the Company of all of the agreements, conditions, covenants and obligations of the Company contained in the Securities Purchase Agreement, the Debentures and the other Transaction Documents. Without limiting the generality of the foregoing, each Guarantor's liability hereunder shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by the Company to the Purchasers under the Securities Purchase Agreement and the Debentures but for the fact that they are unenforceable or not allowable due to the existence of an Insolvency Proceeding involving any Guarantor or the Company (each, a " Transaction Party ").
SECTION 3. Guaranty Absolute; Continuing Guaranty; Assignments .
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This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by any Purchaser or any other Person upon the insolvency, bankruptcy or reorganization of any Transaction Party or otherwise, all as though such payment had not been made.
SECTION 4. Waivers . To the extent permitted by applicable law, each Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that the Purchasers or the Collateral Agent exhaust any right or take any action against any Transaction Party or any other Person or any Collateral (as defined in the Security Agreement). Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated herein and that the waiver set forth in this Section 4 is knowingly made in contemplation of such benefits. The Guarantors hereby waive any right to revoke this Guaranty, and acknowledge that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future.
SECTION 5. Subrogation . No Guarantor may exercise any rights that it may now or hereafter acquire against any Transaction Party or any other guarantor that arise from the existence, payment, performance or enforcement of any Guarantor's obligations under this Guaranty, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the
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Purchasers or the Collateral Agent against any Transaction Party or any other guarantor or any Collateral (as defined in the Security Agreement), whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Transaction Party or any other guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security solely on account of such claim, remedy or right, unless and until the complete conversion of all of the Company's obligations under the Debentures to equity securities of the Company and/or indefeasible payment in full in cash of all obligations under the Debentures (together with any matured indemnification obligations as of the date of such conversion and/or payment, but excluding any inchoate or unmatured contingent indemnification obligations) and payment of all other amounts payable under this Guaranty (excluding any inchoate or unmatured contingent indemnification obligations). If any amount shall be paid to a Guarantor in violation of the immediately preceding sentence at any time prior to the later of the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty, such amount shall be held in trust for the benefit of the Purchasers and shall forthwith be paid ratably to the Purchasers to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Transaction Documents, or to be held as collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If (a) any Guarantor shall make payment to the Purchasers of all or any part of the Guaranteed Obligations, and (b) the Purchasers receive the complete conversion of all of the Company's obligations under the Debentures to equity securities of the Company and/or indefeasible payment in full in cash of all obligations under the Debentures (together with any matured indemnification obligations as of the date of such conversion and/or payment, but excluding any inchoate or unmatured contingent indemnification obligations) and payment of all other amounts payable under this Guaranty (excluding any inchoate or unmatured contingent indemnification obligations), the Purchasers will, at such Guarantor's request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment by such Guarantor.
SECTION 6. Representations, Warranties and Covenants .
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indemnification obligations), it will comply with each of the covenants (except to the extent applicable only to a public company) which are set forth in Section 4 of the Securities Purchase Agreement as if the Guarantor were a party thereto.
SECTION 7. Right of Set-off . Upon the occurrence and during the continuance of any Event of Default, the Collateral Agent and any Purchaser may, and is hereby authorized to, at any time and from time to time, without notice to the Guarantors (any such notice being expressly waived by each Guarantor) and to the fullest extent permitted by law, set-off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by any Purchaser to or for the credit or the account of any Guarantor against any and all obligations of the Guarantors now or hereafter existing under this Guaranty or any other Transaction Document, irrespective of whether or not Collateral Agent or any Purchaser shall have made any demand under this Guaranty or any other Transaction Document and although such obligations may be contingent or unmatured. Collateral Agent and each Purchaser agrees to notify the relevant Guarantor promptly after any such set-off and application made by such Purchaser, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Collateral Agent or any Purchaser under this Section 7 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Collateral Agent or such Purchaser may have under this Guaranty or any other Transaction Document in law or otherwise.
SECTION 8. Notices, Etc. All notices and other communications provided for hereunder shall be in writing and shall be mailed (by overnight mail or by certified mail, postage prepaid and return receipt requested), telecopied or delivered, if to any Guarantor, to the address for such Guarantor set forth on the signature page hereto, or if to any Purchaser, to it at its respective address set forth in the Securities Purchase Agreement; or as to any Person at such other address as shall be designated by such Person in a written notice to such other Person complying as to delivery with the terms of this Section 8 . All such notices and other communications shall be effective (i) if mailed (by certified mail, postage prepaid and return receipt requested), when received or three Business Days after deposited in the mails, whichever occurs first; (ii) if telecopied, when transmitted and confirmation is received, provided same is on a Business Day and, if not, on the next Business Day; or (iii) if delivered by hand, upon delivery, provided same is on a Business Day and, if not, on the next Business Day.
SECTION 9. CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE . ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER TRANSACTION DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH GUARANTOR HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE PURCHASERS TO SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST EACH GUARANTOR IN ANY OTHER JURISDICTION. ANY GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
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BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH GUARANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS GUARANTY AND THE OTHER TRANSACTION DOCUMENTS.
SECTION 10. WAIVER OF JURY TRIAL, ETC . EACH GUARANTOR HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS GUARANTY OR THE OTHER TRANSACTION DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS GUARANTY OR THE OTHER TRANSACTION DOCUMENTS, AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH GUARANTOR CERTIFIES THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PURCHASER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT ANY PURCHASER WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS. EACH GUARANTOR HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PURCHASERS ENTERING INTO THE OTHER TRANSACTION DOCUMENTS.
SECTION 11. Taxes .
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SECTION 12. Miscellaneous .
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exclusive of, any rights or remedies provided by law. The rights of the Collateral Agent and the Purchasers under any Transaction Document against any party thereto are not conditional or contingent on any attempt by the Collateral Agent or any Purchaser to exercise any of their respective rights under any other Transaction Document against such party or against any other Person.
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed by its respective duly authorized officer, as of the date first above written.
SEED HOLDING, LTD. , a Nevada limited liability company
By: ____________________________
Name:
Title:
Address for Notices:
c/o S&W Seed Company
25552 South Butte Avenue
Five Points, CA 93624
Facsimile:_______________
STEVIA CALIFORNIA, LLC
By: ____________________________
Name:
Title:
Address for Notices:
c/o S&W Seed Company
25552 South Butte Avenue
Five Points, CA 93624
Facsimile:_______________
EXHIBIT 10.7
INTERCREDITOR AND SUBORDINATION AGREEMENT
THIS INTERCREDITOR AND SUBORDINATION AGREEMENT (this "Agreement") dated as of December [__], 2014, is by and between (i) Wells Fargo Bank, National Association (the "Working Capital Lender" as hereinafter further defined), (ii) Hudson Bay Fund LP, in its capacity as agent for the holders of the Term Loan Debt defined below (in such capacity, the "Term Loan Agent" as hereinafter further defined) and (iii) Pioneer Hi-Bred International, Inc., an Iowa corporation (the "Pioneer Lender" as hereinafter further defined).
R E C I T A L S :
In consideration of the mutual benefits accruing to Working Capital Lender, Term Loan Agent (on behalf of itself and the Term Loan Lenders) and the Pioneer Lender hereunder and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows:
1. DEFINITIONS
As used above and in this Agreement, the following terms shall have the meanings ascribed to them below:
" Accounts " means all now present and future "accounts" (as defined in Article 9 of the UCC).
" Agreements " shall mean, collectively, the Working Capital Loan Agreements, the Term Loan Agreements and the Pioneer Loan Agreements.
" Borrower " shall mean S&W Seed Company, a Nevada corporation, and its successors and assigns, including, without limitation, any receiver, trustee or debtor-in- possession on behalf of such person or on behalf of any successor or assign.
" Collateral " shall mean, collectively, the Working Capital Collateral, the Term Loan Collateral and the Pioneer Collateral.
" Equipment " means, as to each Grantor, all of such Grantor's now owned and hereafter acquired equipment, as defined in Article 9 of the UCC.
" Event of Default " means an "Event of Default" or similar term, as such term is defined in any Working Capital Loan Agreement, any Term Loan Agreement or any Pioneer Loan Agreement, so long as any such Agreement is in effect.
" Insolvency Proceeding " shall mean, as to any Person, any of the following: (i) any case or proceeding with respect to such Person under Title 11 of the United States Code, 11 U.S.C. 101 et seq. (the " U.S. Bankruptcy Code ") or any other Federal or State or foreign bankruptcy, insolvency, reorganization or other law affecting creditors' rights or any other or similar proceedings seeking any stay, reorganization, arrangement, composition or readjustment of the obligations and indebtedness of such Person or (ii) any proceeding seeking the appointment of any trustee, receiver, liquidator, custodian or other insolvency official with similar powers with respect to such Person or any of its assets or (iii) any proceeding for liquidation, dissolution or other winding up of the business of such Person or (iv) any assignment for the benefit of creditors or any marshalling of assets of such Person.
" Intellectual Property " means, all of the following in any jurisdiction throughout the world: (a) patents, patent applications and inventions, including all renewals, extensions, combinations, divisions, or reissues thereof (" Patents "); (b) trademarks, service marks, trade names, trade dress, logos, internet domain names and other business identifiers, together with the goodwill symbolized by any of the foregoing, and all applications, registrations, renewals and extensions thereof (" Trademarks "); (c) copyrights and all works of authorship including all registrations, applications, renewals, extensions and reversions thereof (" Copyrights "); (d) all computer software, source code, executable code, data, databases and documentation thereof; (e) all trade secret rights in information, including trade secret rights in any formula, pattern, compilation, program, device, method, technique, or process, that (1) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other Persons who can obtain economic value from its disclosure or use, and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy; (f) all other intellectual property or proprietary rights in any discoveries, concepts, ideas, research and development, know-how, formulae, patterns, inventions, compilations, compositions, manufacturing and production processes and techniques, program, device, method, technique, technical data, procedures, designs, recordings, graphs, drawings, reports, analyses, specifications, databases, and other proprietary or confidential information, including customer lists, supplier lists, pricing and cost information, business and marketing
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plans and proposals and advertising and promotional materials; and (g) all rights to sue at law or in equity for any past, present or future infringement or other impairment or violation thereof and all products and Proceeds of the foregoing.
" Inventory " means as to each Grantor, all of such Grantor's now owned and hereafter existing or acquired inventory, as defined in Article 9 of the UCC.
" Junior Priority Lenders " shall mean,
(a) with respect to the Working Capital Lender Priority Collateral, (i) prior to the payment in full of the Working Capital Debt, the Term Loan Lenders and the Pioneer Lender and (ii) after the payment in full of the Working Capital Debt, the Pioneer Lender,
(b) with respect to the Term Loan Lender Priority Collateral, (i) prior to the payment in full of the Term Loan Debt, the Working Capital Lender and the Pioneer Lender and (ii) after the payment in full of the Term Loan Debt, the Working Capital Lender,
(c) with respect to the Pioneer Lender Priority Collateral, (i) prior to the payment in full of the Pioneer Lender Debt, the Term Loan Lenders and the Working Capital Lender and (ii) after the payment in full of the Pioneer Lender Debt, the Working Capital Lender.
" Junior Priority Loan Documents " shall mean,
(a) with respect to the Working Capital Lender Priority Collateral, (i) prior to the payment in full of the Working Capital Debt, the Term Loan Agreements and the Pioneer Loan Agreements and (ii) after the payment in full of the Working Capital Debt, the Pioneer Loan Agreements,
(b) with respect to the Term Loan Lender Priority Collateral, (i) prior to the payment in full of the Term Loan Debt, the Working Capital Loan Agreements and the Pioneer Loan Agreements and (ii) after the payment in full of the Term Loan Debt, the Working Capital Loan Agreements,
(c) with respect to the Pioneer Lender Priority Collateral, (i) prior to the payment in full of the Pioneer Lender Debt, the Term Loan Agreements and the Working Capital Loan Agreements and (ii) after the payment in full of the Pioneer Lender Debt, the Working Capital Loan Agreements.
" Junior Priority Obligations " shall mean,
(a) with respect to the Working Capital Lender Priority Collateral, (i) prior to the payment in full of the Working Capital Debt, the Term Loan Debt and the Pioneer Lender Debt and (ii) after the payment in full of the Working Capital Debt, the Pioneer Lender Debt,
(b) with respect to the Term Loan Lender Priority Collateral, (i) prior to the payment in full the Term Loan Debt, the Working Capital Debt and the Pioneer Lender Debt and (ii) after the payment in full of the Term Loan Debt, the Working Capital Debt,
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(c) with respect to the Pioneer Lender Priority Collateral, (i) prior to the payment in full of the Pioneer Lender Debt, the Term Loan Debt and the Working Capital Debt and (ii) after the payment in full of the Pioneer Lender Debt, the Working Capital Debt.
" Lenders " shall mean, collectively, Working Capital Lender, Term Loan Lenders and the Pioneer Lender, and their respective successors and assigns, being sometimes referred to herein individually as a "Lender".
" Lien " shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance (including, but not limited to, easements, rights of way and the like), lien (statutory or other), security agreement or transfer intended as security, including without limitation, any conditional sale or other title retention agreement, the interest of a lessor under a capital lease or any financing lease having substantially the same economic effect as any of the foregoing.
" Lien Enforcement Action " means (a) any action by any Lender to foreclose, execute, levy or collect on the Lien of such Person in any of the Collateral, (ii) any action by any Lender to take possession of, sell, lease, license or otherwise dispose, or otherwise realize (judicially or non-judicially) upon or exercise or enforce any remedial rights with respect to any of the Collateral (including, without limitation, by setoff or notification of account debtors), (iii) to receive a transfer of Collateral in satisfaction of indebtedness or obligations secured thereby, and/or (iv) the commencement by any Lender of any legal proceedings against or with respect to all or any of the Collateral to facilitate the actions described in (i) - (iii) above.
" Maximum Debt Amount " shall mean
(a) with respect to the principal amount of the Working Capital Debt the sum of $28,000,000 less the principal amount of any DIP Financing incurred under Section 4.5 hereof, in each case reduced from time to time by the amount of any repayments of loans to the extent effected with a permanent reduction of the commitments thereunder (but excluding reductions from refinancings), provided that after such time as any Lender (or agent thereof) has taken any enforcement action against the Borrower, any Obligor or the Collateral or an Insolvency Proceeding has been commenced with respect to the Borrower or any Obligor, such amount shall only be reduced by payments in cash actually received by Working Capital Lender which it is permitted to retain under this Agreement,
(b) with respect to the principal amount of the Term Loan Debt, $35,000,000 reduced from time to time by the amount of any repayments of loans (but excluding reductions from refinancings), provided that after such time as any Lender (or agent thereof) have taken any enforcement action against the Borrower, any Obligor or the Collateral or an Insolvency Proceeding has been commenced with respect to the Borrower or any Obligor, such amount shall only be reduced by payments in cash actually received by Term Loan Lenders which they are permitted to retain under this Agreement, and
(c) with respect to the principal amount of the Pioneer Lender Debt, $15,000,000 reduced from time to time by the amount of any repayments of loans (but excluding reductions from refinancings), provided that after such time as any Lender (or agent thereof) has
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taken any enforcement action against the Borrower, any Obligor or the Collateral or an Insolvency Proceeding has been commenced with respect to the Borrower or any Obligor, such amount shall only be reduced by payments in cash actually received by Pioneer Lender which it is permitted to retain under this Agreement.
" Obligors " shall mean, individually and collectively, any person (other than Borrower) liable on or in respect of the Term Loan Debt, the Pioneer Lender Debt or the Working Capital Debt, and each of their successors and assigns, including, without limitation, a receiver, trustee or debtor-in-possession on behalf of such person or on behalf of any such successor or assign.
" Obligations " means, collectively and individually, the Pioneer Lender Debt, the Term Loan Debt and the Working Capital Debt.
" paid in full " and " payment in full " means, (i) for purposes of the Working Capital Debt, payment in full in cash of the Working Capital Debt and termination of the Working Capital Lender's commitments to extend loans and extensions of credit under the Working Capital Loan Agreements, (ii) for purposes of the Term Loan Debt, payment in full in cash of the Term Loan Debt and/or conversion of all Obligations in respect of the Term Loan Debt to common equity of the Borrower in accordance with the terms of the Term Loan Agreements and (iii) for purposes of the Pioneer Lender Debt, payment in full in cash of the Pioneer Lender Debt.
" Person " or " person " shall mean any individual, sole proprietorship, partnership, corporation (including without limitation, any corporation which elects subchapter S status under the Internal Revenue Code of 1986, as amended), limited liability company, limited liability partnership, business trust, unincorporated association, joint stock company, trust, joint venture, or other entity or any government or any agency or instrumentality or political subdivision thereof.
" Pioneer Assets " means the assets described on Annex I hereto.
" Pioneer Collateral " shall mean all Pioneer Assets on which the Pioneer Lender has a Lien under the Pioneer Loan Agreements.
" Pioneer Intellectual Property Collateral " means the Intellectual Property comprising the Pioneer Assets, as set forth on Annex II hereto, together with all products and Proceeds of the foregoing.
" Pioneer Lender Debt " shall mean all obligations, liabilities and indebtedness of every kind, nature and description owing by Borrower or any Obligor to the Pioneer Lender evidenced by or arising under the Pioneer Loan Agreements, whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, including principal, interest, charges, fees, costs, indemnities and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Pioneer Loan Agreements or after the commencement of any Insolvency Proceeding with respect to Borrower or any Obligor (and including, without limitation, the payment of interest which would accrue
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and become due but for the commencement of such Insolvency Proceeding, whether or not such interest is allowed or allowable in whole or in part in any such Insolvency Proceeding) ), provided that, for purposes of this Agreement, the term "Pioneer Lender Debt" shall not include the principal amount of loans and other credit accommodations in excess of the Maximum Debt Amount with respect to the Pioneer Lender Debt. The foregoing limitation shall not apply to, and the term "Pioneer Lender Debt" shall include, obligations consisting of interest, fees, costs, indemnities or expenses.
" Pioneer Lender " shall mean Pioneer Hi-Bred International, Inc., an Iowa corporation and its successors and assigns (including any other lender or group of lenders that at any time succeeds to or refinances, replaces or substitutes for all or any portion of the Pioneer Lender Debt at any time and from time to time).
" Pioneer Lender Priority Collateral " mean all Pioneer PP&E Assets constituting Collateral; provided , that "Pioneer Lender Priority Collateral" shall not include any Pioneer Intellectual Property Collateral.
" Pioneer Loan Agreements " shall mean the Promissory Note, dated as of December [__], 2014, between Borrower and the Pioneer Lender, and all security agreements, guarantees, pledge agreements and other agreements, documents and instruments at any time executed and/or delivered by Borrower or Obligor or any other person with, to or in favor of the Pioneer Lender in connection therewith or related thereto, as all of the foregoing now exist or may hereafter be amended, modified, supplemented, extended, renewed or restated in accordance with the terms of this Agreement; provided, however, that Pioneer Loan Agreements shall not include that certain Asset Purchase and Sale Agreement by and among Pioneer and Borrower, dated as of December [__], 2014 and the other documents set forth on Annex III hereto.
" Pioneer PP&E Assets " means the assets described in Annex IV hereto, which includes all Equipment and Real Estate Assets (and the buildings, fixtures, improvements and appurtenances thereto located on such Real Estate Assets) constituting Pioneer Assets, and all Proceeds, products, books and records in respect of or arising from the foregoing.
" Proceeds " means all "proceeds" (as defined in Article 9 of the UCC), including any payment or property received on account of any claim secured by Collateral in any Insolvency or Liquidation Proceeding.
" Real Estate Asset " means, at any time of determination, any interest (fee, leasehold or otherwise) then owned by any Grantor in any real property.
" Release Event " means (i) prior to the occurrence of an Insolvency Proceeding by or against any Borrower or any Obligor, upon the occurrence and during the continuance of an Event of Default under the Senior Priority Loan Documents, the taking of any Lien Enforcement Action, provided that any Release Event occurring prior to an Insolvency Proceeding by or against any Borrower or any Obligor shall cease to constitute a Release Event under this clause (i) as of the occurrence of such Insolvency Proceeding if the Working Capital Lender continues making loans or other financial accommodations (whether pursuant to the Working Capital Loan Agreements or otherwise) or consents to the use of cash collateral after the occurrence of such
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Insolvency Proceeding or (ii) after the occurrence of an Insolvency Proceeding by or against any Borrower or any Obligor, the occurrence of any of the following: (A) the entry of an order of a Bankruptcy Court pursuant to Section 363 of the U.S. Bankruptcy Code authorizing the sale of all or substantially all of the Borrower's and Obligors' assets or (B) the taking of any Lien Enforcement Action described in clauses (i) and (ii) of the definition of such term by any Lender or the entry of an order of a Bankruptcy Court pursuant to Section 362 of the U.S. Bankruptcy Code vacating the automatic stay and authorizing any Lender to take any Lien Enforcement Action.
" Reorganization Securities " means any debt securities of any Obligor or any other Person that are distributed to any Lender in respect of such Lender's Obligations pursuant to a confirmed plan of reorganization or adjustment or a negotiated reorganization and that are subordinated in right of payment and lien priority to the other Obligations to the same extent that such debt or liens securing such debt are subordinated under this Agreement.
" Senior Priority Collateral " shall mean, (a) with respect to the Working Capital Lender, the Working Capital Lender Priority Collateral, (b) with respect to the Term Loan Lenders, the Term Loan Lender Priority Collateral and, after the payment in full of the Pioneer Lender Debt, the Pioneer Lender Priority Collateral, and (c) with respect to the Pioneer Lender, the Pioneer Lender Priority Collateral and, after the payment in full of the Term Loan Debt, the Term Loan Lender Priority Collateral.
" Senior Priority Lenders " shall mean,
(a) with respect to the Working Capital Lender Priority Collateral, (i) prior to the payment in full of the Working Capital Debt, the Working Capital Lender and (ii) after the payment in full of the Working Capital Debt, the Term Loan Lenders,
(b) with respect to the Term Loan Lender Priority Collateral, (i) prior to the payment in full of the Term Loan Debt, the Term Loan Lenders and (ii) after the payment in full of the Term Loan Debt, the Pioneer Lender,
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(c) with respect to the Pioneer Lender Priority Collateral, (i) prior to the payment in full of the Pioneer Lender Debt, the Pioneer Lender and (ii) after the payment in full of the Pioneer Lender Debt, the Term Loan Lenders.
" Senior Priority Loan Documents " shall mean,
(a) with respect to the Working Capital Lender Priority Collateral, (i) prior to the payment in full of the Working Capital Debt, the Working Capital Loan Agreements and (ii) after the payment in full of the Working Capital Debt, the Term Loan Agreements,
(b) with respect to the Term Loan Lender Priority Collateral, (i) prior to the payment in full of the Term Loan Debt, the Term Loan Agreements and (ii) after the payment in full of the Term Loan Debt, the Pioneer Loan Agreements,
(c) with respect to the Pioneer Lender Priority Collateral, (i) prior to the payment in full of the Pioneer Lender Debt, the Pioneer Loan Agreements and (ii) after the payment in full of the Pioneer Lender Debt, the Term Loan Agreements.
" Senior Priority Obligations " shall mean,
(a) with respect to the Working Capital Lender Priority Collateral, (i) prior to the payment in full of the Working Capital Debt, the Working Capital Debt and (ii) after the payment in full of the Working Capital Debt, the Term Loan Debt,
(b) with respect to the Term Loan Lender Priority Collateral, (i) prior to the payment in full of the Term Loan Debt, the Term Loan Debt and (ii) after the payment in full of the Term Loan Debt, the Pioneer Lender Debt,
(c) with respect to the Pioneer Lender Priority Collateral, (i) prior to the payment in full of the Pioneer Lender Debt, the Pioneer Lender Debt and (ii) after the payment in full of the Pioneer Lender Debt, the Term Loan Debt.
" Term Loan Agent " shall mean Hudson Bay Fund LP, and its successors and assigns in its capacity as agent for the Term Loan Lenders (including any other lender or group of lenders that at any time succeeds to or refinances, replaces or substitutes for all or any portion of the Term Loan Debt at any time and from time to time).
" Term Loan Agreements " shall mean the Securities Purchase Agreement, dated as of December [__], 2014, between Borrower and Term Loan Lenders, and all Debentures (as defined therein), Securities (as defined therein), security agreements, guarantees, pledge agreements, other and other agreements, documents and instruments at any time executed and/or delivered by Borrower or Obligor or any other person with, to or in favor of Term Loan Agent and/or Term Loan Lenders in connection therewith or related thereto, as all of the foregoing now exist or may hereafter be amended, modified, supplemented, extended, renewed or restated in accordance with the terms of this Agreement.
" Term Loan Collateral " shall mean all assets and properties of any kind whatsoever, real or personal, tangible or intangible and wherever located of Borrower or any Obligor, on which Term Loan Agent and/or Term Loan Lenders have a Lien under the Term Loan Agreements.
" Term Loan Debt " shall mean all obligations, liabilities and indebtedness of every kind, nature and description owing by Borrower or any Obligor to Term Loan Agent and Term Loan Lenders evidenced by or arising under the Term Loan Agreements, whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, including principal, interest, charges, fees, costs, indemnities and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Term Loan Agreements or after the commencement of any Insolvency Proceeding with respect to Borrower or any Obligor (and including, without limitation, the payment of interest which would accrue and become due but for the commencement of such Insolvency Proceeding, whether or not such interest is allowed or allowable in whole or in part in any such
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Insolvency Proceeding), provided that, for purposes of this Agreement, the term "Term Loan Debt" shall not include the principal amount of loans and other credit accommodations in excess of the Maximum Debt Amount with respect to the Term Loan Debt. The foregoing limitation shall not apply to, and the term "Term Loan Debt" shall include, obligations consisting of interest, fees, costs, indemnities or expenses.
" Term Loan Lender " shall mean, individually and collectively, Term Loan Agent and each Purchaser (as defined in the Term Loan Agreements), and their respective successors and assigns (including any other lender or group of lenders that at any time succeeds to or refinances, replaces or substitutes for all or any portion of the Term Loan Debt at any time and from time to time).
" Term Loan Lender Priority Collateral " means the Pioneer Intellectual Property Collateral, and all Proceeds, products, books and records in respect of or arising from the foregoing.
" UCC " means the Uniform Commercial Code (or any similar equivalent legislation) as in effect from time to time in the State of New York; provided , however , that, at any time, if by reason of mandatory provisions of law, any or all of the perfection or priority of the Lenders' security interest in any item or portion of the Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other that the State of New York, the term "UCC" shall mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.
" Working Capital Credit Agreements " shall mean, individually and collectively, (i) the Working Capital Domestic Credit Agreement, and (ii) the Working Capital Ex-Im Credit Agreement, in each case as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed or restated in accordance with the terms of this Agreement.
" Working Capital Collateral " shall mean all assets and properties of any kind whatsoever, real or personal, tangible or intangible and wherever located of Borrower or any Obligor, on which Working Capital Lender has a Lien under the Working Capital Loan Agreements.
" Working Capital Debt " shall mean any and all obligations, liabilities and indebtedness of every kind, nature and description owing by Borrower or any Obligor to Working Capital Lender evidenced by or arising under the Working Capital Loan Agreements, whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, including principal, interest, charges, fees, costs, indemnities and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Working Capital Credit Agreement or after the commencement of any Insolvency Proceeding with respect to Borrower or any Obligor (and including, without limitation, the payment of interest which would accrue and become due but for the commencement of such Insolvency Proceeding whether or not such interest is allowed or allowable in whole or in part in any such Insolvency Proceeding), provided that, for purposes of
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this Agreement, the term "Working Capital Debt" shall not include the principal amount of loans and other credit accommodations in excess of the Maximum Debt Amount with respect to Working Capital Debt, except to the extent provided in Section 3.3 hereof. The foregoing limitation shall not apply to, and the term "Working Capital Debt" shall include, obligations consisting of interest, fees, costs, indemnities or expenses, in each case whether or not charged by Working Capital Lender to the loan account of the Borrower or any other Obligor maintained by Working Capital Lender pursuant to the Working Capital Loan Agreements.
" Working Capital Domestic Credit Agreement " shall mean the Credit Agreement, dated as of February 1, 2014, between Working Capital Lender and Borrower, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed or restated in accordance with the terms of this Agreement.
" Working Capital Ex-Im Credit Agreement " shall mean the Ex-Im Working Capital Guarantee Credit Agreement, dated as of February 1, 2014, between Working Capital Lender and Borrower, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed or restated in accordance with the terms of this Agreement.
" Working Capital Lender " shall mean Wells Fargo Bank, National Association, and its successors and assigns (including any other lender or group of lenders that at any time succeeds to or refinances, replaces or substitutes for all or any portion of the Working Capital Debt at any time and from time to time).
" Working Capital Lender Priority Collateral " means the Working Capital Collateral other than the Term Loan Lender Priority Collateral and the Pioneer Lender Priority Collateral.
" Working Capital Loan Agreements " shall mean the Working Capital Credit Agreements and all guarantees, security agreements, pledge agreements, other agreements, documents and instruments at any time executed and/or delivered by Borrower or any Obligor or any other person with, to or in favor of Working Capital Lender in connection therewith or related thereto, as all of the foregoing now exist or may hereafter be amended, modified, supplemented, extended, renewed or restated in accordance with the terms of this Agreement.
All terms defined in the Uniform Commercial Code as in effect in the State of New York, unless otherwise defined herein shall have the meanings set forth therein. All references to any term in the plural shall include the singular and all references to any term in the singular shall include the plural.
2. SUBORDINATION; SECURITY INTERESTS; PRIORITIES; REMEDIES
2.1 Except as otherwise expressly set forth herein (including, without limitation, with respect to proceeds of any Term Loan Lender Priority Collateral and any Pioneer Lender Priority Collateral), all payments on account of the Term Loan Debt and the Pioneer Lender Debt shall be subject, subordinate and junior, in right of payment and exercise of remedies to the prior payment in full of the Working Capital Debt. Notwithstanding the terms of the Term Loan Debt or the Pioneer Lender Debt, until the payment in full of the Working Capital Debt, neither the Borrower nor any other Obligor shall make, directly or indirectly, and no Term
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Loan Lender or Pioneer Lender shall accept, any payments on the Term Loan Debt or the Pioneer Debt, other than (i) regularly scheduled cash payments of interest on the Term Loan Debt or the Pioneer Debt at the non-default rate set forth in the Term Loan Agreements and the Pioneer Agreements, (ii) regularly scheduled cash payments of principal of the Term Loan Debt and the Pioneer Debt (which shall not include mandatory or voluntary prepayments, redemptions or repurchases), (iii) reimbursement of fees, expenses and other indemnities pursuant to the Term Loan Agreements and the Pioneer Agreements, (iv) receipt of Reorganization Securities, (v) any conversion of any Term Loan Debt into common equity of the Borrower in accordance with Section 4 of the Debentures (as defined in the Term Loan Agreements), (vi) payments made in the form of common equity of the Borrower in accordance with Section 2 of the Debentures (as defined in the Term Loan Agreements), (vii) payment of any amounts due under the Term Loan Agreements as a result of the Borrower's inability to convert any Term Loan Debt into equity of the Borrower, in accordance with Sections 2(f) and 2(g) of the Warrants (as defined in the Term Loan Agreements) and Section 4(c)(vi) and 4(e) of the Debentures (as defined in the Term Loan Agreements), (viii) payments in respect of the Term Loan Debt from proceeds of the Term Loan Lender Priority Collateral, and (ix) payments or other distributions received by a Senior Priority Lender (including the Term Loan Lenders and/or the Pioneer Lender) from the proceeds or in respect of any Senior Priority Collateral, provided that in the case of clauses (i), (ii), (iii) and (vii) above, no Event of Default under the Working Capital Loan Documents shall have occurred and be continuing or would occur as a result of any such payment, provided , that notice thereof has been delivered by the Working Capital Lender in accordance with Section 2.15 hereof as of the date that such payment is made. If the Term Loan Lender or the Pioneer Lender receives a payment it should not have received pursuant to this Section, such amount shall forthwith be paid over, in the funds and currency received, to the Working Capital Lender. For the avoidance of doubt, nothing contained herein shall be deemed to prohibit the exercise by any Term Loan Lenders of their rights to exercise their Warrants (as defined in the Term Loan Agreements) into common equity of the Borrower, in each case in accordance with the terms set forth therein.
2.2 Each of the Working Capital Lender and the Pioneer Lender hereby acknowledges that Term Loan Lenders have been granted Liens upon Term Loan Collateral pursuant to the Term Loan Agreements to secure the Term Loan Debt. Each of the Term Loan Agent and the Pioneer Lender hereby acknowledges that Working Capital Lender has been granted Liens upon the Working Capital Collateral pursuant to the Working Capital Loan Agreements to secure the Working Capital Debt. Each of the Term Loan Agent and the Working Capital Agent hereby acknowledges that the Pioneer Lender has been granted Liens upon the Pioneer Collateral pursuant to the Pioneer Loan Agreements to secure the Pioneer Lender Debt.
2.3 Notwithstanding the order or time of attachment, or the order, time or manner of perfection, or the order or time of filing or recordation of any document or instrument, or other method of perfecting a Lien in favor of each Lender in any Collateral, and notwithstanding any conflicting terms or conditions which may be contained in any of the Agreements:
(a) the Liens of Working Capital Lender on the Working Capital Lender Priority Collateral to the extent that such Liens secure the Working Capital Debt have and shall have priority over (i) the Liens of Term Loan Lenders on the Working Capital Lender Priority Collateral and such Liens in favor of Term Loan Lenders on the Working Capital Lender Priority
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Collateral are and shall be junior and subordinate to the Liens of Working Capital Lender to the extent that such Liens secure the Working Capital Debt, and (ii) the Liens of Pioneer Lender on the Working Capital Lender Priority Collateral and such Liens in favor of Pioneer Lender on the Working Capital Lender Priority Collateral are and shall be junior and subordinate to the Liens of Working Capital Lender to the extent that such Liens secure the Working Capital Debt,
(b) the Liens of Term Loan Lenders on the Working Capital Lender Priority Collateral to the extent that such Liens secure the Term Loan Debt have and shall have priority over the Liens of the Pioneer Lender on the Working Capital Lender Priority Collateral and such Liens in favor of Pioneer Lender on such Working Capital Lender Priority Collateral are and shall be junior and subordinate to the Liens of Term Loan Lender to the extent that such Liens secure the Term Loan Debt,
(c) the Liens of the Term Loan Lenders on the Term Loan Lender Priority Collateral to the extent that such Liens secure the Term Loan Debt have and shall have priority over (i) the Liens of Working Capital Lender on the Term Loan Lender Priority Collateral and such Liens in favor of Working Capital Lenders on the Term Loan Lender Priority Collateral are and shall be junior and subordinate to the Liens of Term Loan Lenders to the extent that such Liens secure the Term Loan Debt, and (ii) the Liens of the Pioneer Lender on the Term Loan Lender Priority Collateral and such Liens in favor of the Pioneer Lender on the Term Loan Lender Priority Collateral are and shall be junior and subordinate to the Liens of Term Loan Lenders to the extent that such Liens secure the Term Loan Debt,
(d) the Liens of the Pioneer Lender on the Term Loan Lender Priority Collateral to the extent that such Liens secure the Pioneer Lender Debt have and shall have priority over the Liens of Working Capital Lender on the Term Loan Lender Priority Collateral and such Liens in favor of Working Capital Lender on the Term Loan Lender Priority Collateral are and shall be junior and subordinate to the Liens of Pioneer Lenders to the extent that such Liens secure the Pioneer Lender Debt,
(e) the Liens of the Pioneer Lender on the Pioneer Lender Priority Collateral to the extent that such Liens secure the Pioneer Lender Debt have and shall have priority over (i) the Liens of Working Capital Lender on the Pioneer Lender Priority Collateral and such Liens in favor of Working Capital Lender on the Pioneer Lender Priority Collateral are and shall be junior and subordinate to the Liens of Pioneer Lender to the extent that such Liens secure the Pioneer Lender Debt, and (ii) the Liens of Term Loan Lenders on the Pioneer Lender Priority Collateral and such Liens in favor of Term Loan Lenders on the Pioneer Lender Priority Collateral are and shall be junior and subordinate to the Liens of Pioneer Lender to the extent that such Liens secure the Pioneer Lender Debt, and
(f) the Liens of the Term Loan Lenders on the Pioneer Lender Priority Collateral to the extent that such Liens secure the Term Loan Debt have and shall have priority over the Liens of Working Capital Lender on the Pioneer Lender Priority Collateral and such Liens in favor of Working Capital Lender on the Pioneer Lender Priority Collateral are and shall be junior and subordinate to the Liens of Term Loan Lenders to the extent that such Liens secure the Term Loan Debt.
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2.4 The subordination of the Term Loan Debt and the Pioneer Lender Debt provided in Section 2.1 and the priorities of the Liens provided in Section 2.3 shall not be altered or otherwise affected by (i) any amendment, modification, supplement, extension, renewal, restatement, replacement or refinancing of the Working Capital Debt, the Term Loan Debt or the Pioneer Lender Debt, (ii) any action or inaction which any of the Lenders may take or fail to take in respect of the Collateral or (iii) the Pioneer Lender Debt, the Term Loan Debt or the Working Capital Debt, or the Liens securing any such debt, being held to be unperfected, deficient, invalid, void, voidable, voided, unenforceable, subordinated, reduced, discharges or are set aside by a court of competent jurisdiction, including pursuant to an Insolvency Proceeding. Each Lender agrees not to subordinate its Lien in any Collateral to the Lien, indebtedness or claim of any other creditor of Borrower or any Obligor without the prior written consent of other Lenders party hereto (other than in connection with a DIP Financing permitted by Section 4.5 hereof).
2.5 Notwithstanding Section 2.1, but subject to Section 2.3 and Section 2.10, all proceeds of dispositions of Senior Priority Collateral (including from any Lien Enforcement Action) and insurance proceeds in connection with a casualty event with respect to Senior Priority Collateral shall be applied first, to the Senior Priority Obligations up to the Maximum Debt Amount with respect thereto (with a corresponding permanent reduction of any revolving commitments with respect thereto), and second to any Junior Priority Obligations up to the Maximum Debt Amount with respect thereto; provided , that to the extent consent is required under any Junior Loan Documents, the applicable Junior Priority Lenders shall have consented to any such disposition (other than in connection with a Lien Enforcement Action). All proceeds of any Senior Priority Collateral received by a Senior Priority Lender after the Senior Priority Obligations have been paid in full shall be forthwith paid over, in the funds and currency received, to the Junior Priority Lender for application to the Junior Priority Obligations (unless otherwise required by law). For purposes of this Section 2.5, payments made by the Borrower to Term Loan Lenders in respect of the Term Loan Debt or to the Pioneer Lender in respect of the Pioneer Lender Debt with proceeds of loans by Working Capital Lender to Borrower shall not be construed to constitute proceeds of Collateral.
2.6 Each of the Lenders shall be solely responsible for perfecting and maintaining the perfection of their Liens in and to each item constituting the Collateral in which such Persons have been granted a Lien. Except as set forth in Section 2.1, the foregoing provisions of this Agreement are intended solely to govern the respective Lien priorities as among the Lenders and shall not impose on any Lender any obligations in respect of the disposition of proceeds of any Collateral which would conflict with prior perfected claims therein in favor of any other person or any order or decree of any court or governmental authority or any applicable law. Each Junior Priority Lender agrees that it will not contest (or join any other person contesting) the validity, perfection, priority or enforceability of the Liens or Obligations of another Lender on any Collateral, provided that nothing in this sentence shall be deemed to impair the rights of the Lenders to enforce this Agreement.
2.7 In the event that a Lender shall, in the exercise of its rights under its Agreements, receive possession or control of any books and records of any Borrower or Obligor which contain information identifying or pertaining to any Collateral in which the other Lenders have been granted a Lien, such Lender shall, upon request of any other Lender, make available to the requesting Lender such books and records for inspection and duplication.
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2.8 Subject to the terms and conditions set forth in this Agreement (including Sections 2.1 and 2.11), each Senior Priority Lender shall have the exclusive right to manage, perform and enforce the terms of the Senior Priority Loan Documents with respect to the Senior Priority Collateral and its Loan Agreements, to exercise and enforce all privileges and rights thereunder according to its discretion and the exercise of its business judgment, including, without limitation, the exclusive right to take or retake control or possession of such Senior Priority Collateral and to hold, prepare for sale, process, sell, lease, dispose of, or liquidate such Senior Priority Collateral.
2.9 Notwithstanding anything to the contrary contained in any of the Agreements but subject to Section 2.10 below and Section 2.11 below, prior to the time when a Senior Priority Lender shall have received payment in full of all its Senior Priority Obligations in cash, during the continuance of a Release Event, only the Senior Priority Lender shall have the right to restrict or permit, or approve or disapprove, the sale, transfer or other disposition of the Senior Priority Collateral or other Lien Enforcement Action with respect to the Senior Priority Collateral.
2.10 Junior Priority Lenders shall, at any time and during the continuance of a Release Event:
(a) upon the request of the Senior Priority Lender with respect to the Senior Priority Collateral identified in such request as set forth below (which request shall specify the proposed terms of the sale, transfer or other disposition and the type and amount of consideration to be received in connection therewith), release or otherwise terminate its Liens on such Senior Priority Collateral, to the extent such Senior Priority Collateral is to be sold, transferred or otherwise disposed of either by (i) the Senior Priority Lender or its agents, or (ii) the Borrower or any Obligor with the consent of the Senior Priority Lender;
(b) deliver such release documents as the Senior Priority Lenders may reasonably require in connection therewith; provided , that ,
(i) such release shall not extend to or otherwise affect any of the rights of the Junior Priority Lenders to the proceeds from any such sale or other disposition of Senior Priority Collateral except to the extent such proceeds are applied in accordance with Section 2.10(b)(ii) below,
(ii) the proceeds of any such sale, transfer or disposition shall be promptly applied in the priorities set forth in Section 2.5 hereof,
(iii) no such release documents shall be delivered (A) to the Borrower or any Obligor or (B) more than one Business Day prior to the date of the closing of the sale or disposition of such Senior Priority Collateral; provided , further , that if the closing of the sale or disposition of such Senior Priority Collateral is not consummated, the Senior Priority Lender shall promptly return all release documents to the Junior Priority Lenders who supplied such release documents; and
(c) be deemed to have consented under the applicable Agreements to which the Junior Priority Lender is a party to such sale or other disposition.
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The effectiveness of any such release or termination by the Junior Priority Lenders shall be subject to the sale or other disposition of the Senior Priority Collateral described in such request and on the terms described in such request or on substantially similar terms and shall lapse in the event such sale or other disposition does not occur within 3 business days of the anticipated closing date. During the time any Lender or its agent is conducting any Lien Enforcement Action, upon the request of any other Lender, such Lender conducting such Lien Enforcement Action will advise the other Lenders of any and all offers which may be made from time to time by prospective purchasers of the applicable Collateral or other information relating to such Lien Enforcement Action.
2.11 Except as specifically provided in Section 2.12 below, notwithstanding any rights or remedies available to the Junior Priority Lenders under any of the Junior Priority Loan Documents, applicable law or otherwise, prior to the time that the Senior Priority Lender shall have received the payment in full of all Senior Priority Obligations in cash, the Junior Priority Lenders shall not, directly or indirectly, seek to commence or maintain any Lien Enforcement Action on any Senior Priority Collateral or assert any claims or interests therein (including, without limitation, by setoff or notification of account debtors) and the Senior Priority Lender shall have the exclusive right to commence and maintain any Lien Enforcement Action on any Senior Priority Collateral; provided , that, notwithstanding the foregoing, (i) upon an Event of Default under the Term Loan Agreements, without the prior written consent of the Working Capital Lender, the Term Loan Lenders shall not commence or maintain any Lien Enforcement Action with respect to the Term Loan Lender Priority Collateral until the date which is one hundred twenty (120) days after the declaration of the Term Loan Lenders of such Event of Default under the applicable Term Loan Agreements and written demand by the Term Loan Lenders to the Borrower for the accelerated payment of all such Term Loan Debt (unless the Borrower or any Obligor is subject to an Insolvency Proceeding by reason of which such declaration and the making of such demand is stayed, in which case, such declaration shall be deemed to have occurred on the date of the commencement of such Insolvency Proceeding) and (ii) upon an Event of Default under the Pioneer Loan Agreements, without the prior written consent of the Working Capital Lender, the Pioneer Lender shall not commence or maintain any Lien Enforcement Action with respect to the Pioneer Lender Priority Collateral until the date which is one hundred twenty (120) days after the declaration of the Pioneer Lender of such Event of Default under the applicable Pioneer Loan Agreements and written demand by the Pioneer Lender to the Borrower for the accelerated payment of all such Pioneer Lender Debt (unless the Borrower or any Obligor is subject to an Insolvency Proceeding by reason of which such declaration and the making of such demand is stayed, in which case, such declaration shall be deemed to have occurred on the date of the commencement of such Insolvency Proceeding); provided , further , that upon the occurrence of any Event of Default under the Junior Priority Loan Documents and for so long as such Event of Default under the Junior Priority Loan Documents is continuing, subject at all times to the provisions of Sections 2.2, 2.4 and 2.5 of this Agreement, commencing one hundred twenty (120) days (or, in the case of any Lien Enforcement Action (x) by the Term Loan Lenders against the Pioneer Lender Priority Collateral or (y) by the Pioneer Lender against the Term Loan Lender Priority Collateral, one hundred eighty (180) days) after the receipt by Senior Priority Lender of the declaration of a Junior Priority Lender of such Event of Default under the applicable Junior Priority Loan Documents and written demand by such Junior Priority Lender to the Borrower for the accelerated payment of all such Junior Priority Obligations (unless the Borrower or any Obligor is subject to an
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Insolvency Proceeding by reason of which such declaration and the making of such demand is stayed, in which case, such declaration shall be deemed to have occurred on the date of the commencement of such Insolvency Proceeding), such Junior Priority Lenders may take action to enforce their Liens on the Senior Priority Collateral, but only so long as (i) no Senior Priority Lender is not diligently pursuing in good faith the exercise of its enforcement rights or remedies against, or diligently attempting to vacate any stay or enforcement of its Liens on, all or a material portion of the such Senior Priority Lender's Senior Priority Collateral (including, without limitation, commencement of any action to foreclose its Liens on all or any material portion of its Senior Priority Collateral, notification of account debtors to make payments to such Senior Priority Lender, any action to take possession of all or any material portion of such Senior Priority Collateral or commencement of any legal proceedings or actions against or with respect to all or any material portion of such Senior Priority Collateral), (ii) in the case of any Lien Enforcement Action by the Working Capital Lender on any Term Loan Lender Priority Collateral, the Working Capital Lender has received the prior written consent of the Term Loan Agent, or (iii) in the case of any Lien Enforcement Action by the Working Capital Lender on any Pioneer Lender Priority Collateral, the Working Capital Lender has received the prior written consent of the Pioneer Lender. In the event a Junior Priority Lender has commenced any actions to enforce their Liens on any Senior Priority Lender's Senior Priority Collateral to the extent permitted hereunder and are diligently pursuing such actions, such Senior Priority Lender shall not take any action of a similar nature with respect to such Collateral.
2.12 Section 2.11 shall not be construed to in any way limit or impair the right of: (i) any Lender to bid for or purchase Collateral at any private or judicial foreclosure upon such Collateral initiated by any Lender (provided that in the case of any such bid or purchase by a Junior Priority Lender with respect to any Senior Priority Collateral, such Junior Priority Lender may not "credit bid" unless the proceeds of such bid are otherwise sufficient to cause the payment in full of the Senior Priority Obligations), (ii) Junior Priority Lenders to join (but not control) any foreclosure or other judicial lien enforcement proceeding with respect to any Senior Priority Collateral initiated by the applicable Senior Priority Lender, so long as it does not delay or interfere in any material respect with the exercise by such Senior Priority Lender of its rights as provided in this Agreement, (iii) any Junior Priority Lender's right to receive any remaining proceeds of Senior Priority Collateral after satisfaction and payment in full of all Senior Priority Obligations, (iv) file a proof of claim or statement of interest, vote on a plan of reorganization (including a vote to accept or reject a plan of partial or complete liquidation, reorganization, arrangement, composition, or extension), and make other filings, arguments, and motions, with respect to the Junior Priority Obligations in any Insolvency Proceeding commenced by or against any Obligor, in each case in accordance with this Agreement, (v) take action to create, perfect, preserve, or protect its Lien on the Collateral, so long as such actions are not adverse to the priority status in accordance with this Agreement of Liens on the Seniority Priority Lenders in such Collateral or (vi) file necessary pleadings in opposition to a claim objecting to or otherwise seeking the disallowance of its Obligations.
2.13 If Working Capital Lender should honor a request by the Borrower for a loan, advance or other financial accommodation under the Working Capital Loan Agreements, whether or not Working Capital Lender has knowledge that the honoring of such request would result in an Event of Default, or act, condition or event which with notice or passage of time or both would constitute an Event of Default under the Term Loan Agreements or Pioneer Loan
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Agreements (or the Working Capital Lender waives any such Event of Default or breach), in no event shall Working Capital Lender have any liability to Term Loan Lenders or the Pioneer Lender as a result of such breach, and without limiting the generality of the foregoing, Term Loan Lenders and the Pioneer Lender agrees that Working Capital Lender shall not have any liability for tortious interference with contractual relations or for inducement by Working Capital Lender of the Borrower to breach of contract or otherwise, provided , that , Working Capital Lender agrees that the aggregate principal amount of loans extended under the Working Capital Debt outstanding at any one time (but not interest, costs, expenses, fees, indemnities or other charges payable by Borrower or any Obligor to Working Capital Lender or charged by Working Capital Lender to the loan account of Borrower or any Obligor maintained by Working Capital Lender pursuant to the terms of the Working Capital Credit Agreement) shall not exceed the Maximum Debt Amount with respect to the Working Capital Debt. Nothing contained in this Section 2.13, but subject to the other sections of this Agreement, shall limit or waive any right that any (i) Term Loan Lender has to enforce any of the provisions of the Term Loan Agreements against the Borrower or any Obligor or (ii) the Pioneer Lender has to enforce any of the provisions of the Pioneer Loan Agreements against the Borrower or any Obligor.
2.14 Notwithstanding anything to the contrary herein, no Lender shall agree to any amendment, modification, waiver or supplement of its Loan Agreements if the effect thereof is to: (i) increase the aggregate principal amount of loans or other extensions of credit under its Loan Agreements in excess of the applicable Maximum Debt Amount; (ii) increase the interest rate on its Obligations or change (to earlier dates) the dates upon which principal, interest and other sums are due under its Loan Agreements; (iii) alter the redemption, prepayment or subordination provisions thereof; (iv) impose on the Borrower or any other Obligor any new or additional prepayment charges, premiums, reimbursement obligations, reimbursable costs or expenses, fees or other payment obligations; (v) alter the representations, warranties, covenants, events of default, remedies and other provisions in a manner which would make such provisions materially more onerous, restrictive or burdensome to the Borrower or any other Obligor; (vi) grant any new Lien to secure its Obligations, unless such Lien is granted to the other Lenders in accordance with the priorities set forth in this Agreement; or (vii) receive a new guarantee, pledge or other credit support from any other Person, except to the extent such additional guarantee, pledge or credit support is required under the terms of such Lender's Loan Agreements (as in effect on the date hereof); provided that clause (vi) and (vii) shall not prohibit the Working Capital Lender receiving the guarantees, liens and security interests contemplated by Section 6.1(m) of the Working Capital Credit Agreements, and no consent of any other party hereto shall be required.
2.15 Each of the Lenders shall give to the other Lenders promptly after the giving thereof to the Borrower (i) a copy of any written notice by any Lender of an Event of Default under its Agreements with the Borrower, or written notice of demand of payment from the Borrower following an Event of Default under its Agreements, and (ii) a copy of any written notice sent by such Lender to the Borrower at any time an Event of Default under such Lender's Agreements with the Borrower exists stating such Lender's intention to exercise any of its enforcement rights or remedies, including written notice pertaining to any foreclosure on any of the Collateral or other judicial or non-judicial remedy in respect thereof to the extent permitted hereunder, and any legal process served or filed in connection therewith; provided , that , the failure of any party to give notice as required hereby shall not affect the relative priorities of
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Lender's respective Liens as provided herein or the validity or effectiveness of any such notice as against the Borrower or any other Obligor.
2.16 Notwithstanding anything to the contrary herein or in any of the Agreements, Working Capital Lender and Term Loan Lenders acknowledge and agree that (i) the purchase or acceptance by Pioneer or its affiliates of, and the sale or transfer by Borrower or any Obligor of, any products or goods pursuant to the terms of that certain Distribution Agreement by and among Pioneer and Borrower, dated as of December 31, 2014, or that certain Production Agreement by and among Pioneer and Borrower, dated as of December 31, 2014, shall not constitute a violation of this Agreement and upon the sale of such products or goods, Working Capital Lender and Term Loan Lender shall be deemed to have consented thereto and automatically released or terminated its Liens, if any, on such products or goods (provided that such release shall not extend to or otherwise affect any of the rights of such Lenders, if any, to the proceeds from such sale), and Lenders shall deliver any release documents as Pioneer may reasonably require in connection therewith, (ii) the transfer or assignment (in whole or in part) of any Intellectual Property pursuant to the terms of that certain Research Agreement by and among Pioneer and Borrower, dated as of December 31, 2014, and the Production Agreement by and among Pioneer and Borrower, dated as of December 31, 2014, shall not constitute a violation of this Agreement and upon the transfer or assignment (in whole or in part) of such Intellectual Property, Working Capital Lender and Term Loan Lender shall be deemed to have consented thereto and automatically released or terminated its Liens on such Intellectual Property, including with respect to any co-ownership interest of Pioneer in such Intellectual Property, and Lenders shall deliver any release documents as Pioneer may reasonably require in connection therewith, and (iii) the enforcement by Pioneer or its affiliates of any of its rights pursuant to the terms of that certain Asset Purchase and Sale Agreement by and among Pioneer and Borrower, dated as of December [__], 2014, or any Transaction Documents (as such term is defined therein, but excluding the Pioneer Loan Agreements, and the payments of any amounts payable to Pioneer or its affiliates by Borrower or any Obligor thereunder (exclusive of the amount payable pursuant to the Promissory Note), shall not constitute a violation of this Agreement.
3. TERM LOAN LENDER PURCHASE OPTION
3.1 Upon the occurrence and during the continuance of an Event of Default under the Working Capital Loan Agreements, Term Loan Lenders shall have the option at any time within sixty (60) days of the occurrence of such Event of Default and upon five (5) business days' prior written notice to Working Capital Lender to purchase all of the Working Capital Debt from Working Capital Lender. Such notice from Term Loan Lenders to Working Capital Lender shall be irrevocable.
3.2 On the date specified by Term Loan Lenders in such notice (which shall not be less than five (5) business days, nor more than twenty (20) days, after the receipt by Working Capital Lender of the notice from Term Loan Lenders of their election to exercise such option), Working Capital Lender shall sell to Term Loan Lenders, and Term Loan Lenders shall purchase from Working Capital Lender, all of the Working Capital Debt.
3.3 Upon the date of such purchase and sale, Term Loan Lenders shall pay to Working Capital Lender as the purchase price therefor the full amount of all the Working Capital
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Debt then outstanding and unpaid (including principal, interest, indemnities, fees and expenses, including attorneys' fees and legal expenses) and other amounts under the Working Capital Loan Agreements, and (ii) agree to reimburse Working Capital Lender for any loss, cost, damage or expense (including reasonable attorneys' fees and legal expenses) in connection with any commissions, fees, costs or expenses related to any checks or other payments provisionally credited to the Working Capital Debt, and/or as to which Working Capital Lender has not yet received final payment. Such purchase price and cash collateral shall be remitted by wire transfer in federal funds to such bank account of Working Capital Lender as Working Capital Lender may designate in writing to Term Loan Lenders for such purpose. Interest shall be calculated to but excluding the business day on which such purchase and sale shall occur if the amounts so paid by Term Loan Lenders to the bank account designated by Working Capital Lender are received in such bank account prior to 1:00 p.m., New York City time and interest shall be calculated to and including such business day if the amounts so paid by Term Loan Lenders to the bank account designated by Working Capital Lender are received in such bank account later than 1:00 p.m., New York City time.
3.4 Such purchase shall be expressly made without representation or warranty of any kind by Working Capital Lender as to the Working Capital Debt or otherwise and without recourse to Working Capital Lender, except that Working Capital Lender shall represent and warrant: (i) the amount of the Working Capital Debt being purchased, (ii) that Working Capital Lender owns the Working Capital Debt free and clear of any Liens or encumbrances and (iii) Working Capital Lender has the right to assign the Working Capital Debt and the assignment is duly authorized.
3.5 While the Term Loan Lenders have the right to purchase the Working Capital Debt pursuant to Section 3.1 hereof, Working Capital Lender agrees that it will give Term Loan Agent five (5) business days prior written notice of its intention to commence any Lien Enforcement Action. In the event that during such five (5) business day period, Term Loan Lenders shall send to Working Capital Lender the irrevocable notice of Term Loan Lenders' intention to exercise the purchase option given by Working Capital Lender to Term Loan Lenders under Section 3.1, Working Capital Lender shall not, absent exigent circumstances, commence any foreclosure or other action to sell or otherwise realize upon the Collateral, provided , that , the purchase and sale with respect to the Working Capital Debt provided for herein shall have closed within five (5) business days thereafter and Working Capital Lender shall have received payment in full of the Working Capital Debt as provided for herein within such five (5) business day period.
4. MISCELLANEOUS
4.1 Representations .
(a) Term Loan Agent represents and warrants to the other Lenders that:
(i) the execution, delivery and performance of this Agreement by Term Loan Agent is within the powers of Term Loan Agent, has been duly authorized by Term Loan Agent, and does not contravene any law, any provision of any of the Term
- 19 -
Loan Agreements or any agreement to which Term Loan Agent is a party or by which it is bound; and
(ii) this Agreement constitutes the legal, valid and binding obligations of Term Loan Agent, enforceable in accordance with its terms and shall be binding on it.
(b) Working Capital Lender hereby represents and warrants to the other Lenders that:
(i) the execution, delivery and performance of this Agreement by Working Capital Lender is within the powers of Working Capital Lender, has been duly authorized by Working Capital Lender and does not contravene any law, any provision of the Working Capital Loan Agreements or any agreement to which Working Capital Lender is a party or by which it is bound; and
(ii) this Agreement constitutes the legal, valid and binding obligations of Working Capital Lender, enforceable in accordance with its terms and shall be binding on it.
(c) the Pioneer Lender hereby represents and warrants to the other Lenders that:
(i) the execution, delivery and performance of this Agreement by the Pioneer Lender is within the powers of the Pioneer Lender, has been duly authorized by the Pioneer Lender and does not contravene any law, any provision of the Pioneer Loan Agreements or any agreement to which the Pioneer Lender is a party or by which it is bound; and
(ii) this Agreement constitutes the legal, valid and binding obligations of the Pioneer Lender, enforceable in accordance with its terms and shall be binding on it.
4.2 Amendments . Any waiver, permit, consent or approval by any Lender of or under any provision, condition or covenant to this Agreement must be in writing and shall be effective only to the extent it is set forth in writing and as to the specific facts or circumstances covered thereby. Any amendment of this Agreement must be in writing and signed by Working Capital Lender, the Pioneer Lender and Term Loan Agent.
4.3 Successors and Assigns .
(a) This Agreement shall be binding upon each of the Lenders and its respective successors and assigns and shall inure to the benefit of each of the Lenders and its respective successors, participants and assigns.
(b) To the extent provided in their respective Agreements, each of the Lenders reserves the right to grant participations in, or otherwise sell, assign, transfer or negotiate all or any part of, or any interest in, its respective Obligations, as the case may be;
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provided , that , no Lender shall be obligated to give any notices to or otherwise in any manner deal directly with any participant in the other Obligations, as the case may be, and no participant shall be entitled to any rights or benefits under this Agreement except through the Lender with which it is a participant and any sale of a participation in such Obligations shall be expressly made subject to the provisions of this Agreement (including, without limitation, Section 3).
(c) In connection with any participation or other transfer or assignment, a Lender (i) may, subject to its respective Agreement, disclose to such assignee, participant or other transferee or assignee all documents and information which such Lender now or hereafter may have relating to the Borrower or any Obligor or the Collateral and (ii) shall disclose to such participant or other transferee or assignee the existence and terms and conditions of this Agreement.
(d) In the case of an assignment or transfer, the assignee or transferee acquiring any interest in the Obligations, as the case may be, shall execute and deliver to the assigning Lender a written acknowledgment of receipt of a copy of this Agreement and the written agreement by such person to be bound by the terms of this Agreement. In addition, in the event of an assignment or transfer by any Lender of less than all of its Obligations, such Lender shall agree with the assignee to appoint one person as an agent to act on their behalf under this Agreement for purposes of receiving payments and notices hereunder and shall notify the other Lenders of the person who shall act in such capacity.
(e) In connection with any assignment or transfer of any or all of the indebtedness of any Senior Priority Lender or any or all rights of any Senior Priority Lender in the property of the Borrower or any Obligor (other than pursuant to a participation), Junior Priority Lenders agree to execute and deliver an agreement identical to this Agreement (subject to changing names of parties, documents and addresses, as appropriate) in favor of any such assignee or transferee and, in addition, will execute and deliver an agreement identical to this Agreement (subject to changing names of parties, documents and addresses, as appropriate) in favor of any third person who succeeds to or refinances, replaces or substitutes for any or all of such Senior Priority Lender's financing of the Borrower and of any of the Obligors, whether such successor or replacement financing occurs by transfer, assignment, "takeout" or any other means or vehicle.
4.4 Insolvency . This Agreement shall be applicable both before and after the filing of any petition by or against the Borrower or any Obligor under the U.S. Bankruptcy Code and all converted or succeeding cases in respect thereof, and all references herein to the Borrower or any Obligor shall be deemed to apply to the trustee for the Borrower or any Obligor and the Borrower or any Obligor as debtor-in-possession. The relative rights of Lenders in or to any distributions from or in respect of any Collateral or proceeds of Collateral, shall continue after the filing thereof on the same basis as prior to the date of the petition, subject to any court order approving the financing of, or use of cash collateral by, the Borrower or any Obligor as debtor-in-possession.
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4.5 Bankruptcy Financing .
(a) If the Borrower or any Obligor shall become subject to a case under the U.S. Bankruptcy Code and, if as debtor(s)-in-possession such Borrower or Obligor moves for approval of financing, including on a priming basis with respect to Working Capital Lender Priority Collateral (the " DIP Financing ") to be provided in good faith by Working Capital Lender or any third party approved by the Working Capital Lender (the " DIP Lender ") under Section 364 of the U.S. Bankruptcy Code or the use of cash collateral of Working Capital Lender Priority Collateral under Section 363 of the U.S. Bankruptcy Code, the other Lenders agree that no objection, protest or contest (including joinder or support of any third party objecting, protesting or contesting) will be raised by such Lenders to any such financing so long as (A) the other Lenders retain a Lien on the Collateral (including proceeds thereof arising after the commencement of such proceeding) with the same priority as existed prior to the commencement of the case under the U.S. Bankruptcy Code (after giving effect to any priming Liens on the Working Capital Lender Priority Collateral in favor of the DIP Lender), (B) any Liens or superpriority claims pursuant to section 507 of the U.S. Bankruptcy Code the DIP Lender seeks on the Pioneer Lender Priority Collateral or the Term Loan Lender Priority Collateral shall be subordinate in all respects to any Liens or claims the Senior Priority Lenders shall have with respect to the Pioneer Lender Priority Collateral or the Term Loan Lender Priority Collateral, (C) the aggregate principal amount of loans outstanding under such DIP Financing shall not exceed $5,000,000, and (D) such DIP Financing is pari passu or superior in priority to the then outstanding Working Capital Debt and the Liens securing such Working Capital Lender Priority Collateral.
(b) No Lender shall raise an objection, protest or contest (including joinder or support of any third party objecting, protesting or contesting) (i) any request by the any other Lender for adequate protection in any Insolvency Proceeding (or any granting of such request), or (ii) any objection by the Working Capital Lender to any motion, relief, action or proceeding based on a Lender claiming a lack of adequate protection. Notwithstanding the foregoing, in any Insolvency Proceeding, if any Lender is granted adequate protection in the form of additional collateral in connection with any use of cash collateral or DIP Financing, then the other Lenders may seek or request adequate protection in the form of a Lien on such additional collateral, which Lien shall be subordinated to the Liens securing the Obligations of the other Lenders on the same basis as set forth in this Agreement.
(c) No Lender shall oppose or seek to challenge any claim by any other Lender for allowance in any Insolvency Proceeding consisting of post-petition interest, fees or expenses.
(d) The Lenders acknowledge and agree that (i) the grants of Liens pursuant to the Agreements constitute separate and distinct grants of Liens and (ii) because of, among other things, their differing rights in the Collateral, the Obligations of the Lenders are fundamentally different from each other and must be separately classified in any plan of reorganization proposed or adopted in an Insolvency Proceeding.
(e) No Junior Priority Lender shall raise any objection to, oppose or contest (or join with or support any third party opposing, objecting to or contesting), a sale or other disposition of any Senior Priority Collateral free and clear of its Liens or other claims
- 22 -
under Section 363 of the U.S. Bankruptcy Code if the Senior Priority Lender with respect to such Collateral has consented to such sale or disposition of such assets.
(f) No Junior Priority Lender or DIP Lender shall seek to purchase by a credit bid pursuant to section 363 of the U.S. Bankruptcy Code any Senior Priority Collateral unless such credit bid provides for the payment in full, in cash, of all Senior Priority Obligations, including any claims for attorneys' fees, costs or other expenses provided for in the Senior Priority Loan Documents or this Agreement.
(g) No Junior Priority Lender or DIP Lender shall seek relief, pursuant to Section 362(d) of the U.S. Bankruptcy Code or otherwise, from the automatic stay of Section 362(a) of the Bankruptcy Code or from any other stay in any Insolvency Proceeding in respect of any Senior Priority Collateral, without the prior written consent of the Senior Priority Lender with respect to such Senior Priority Collateral. Any order entered by the Bankruptcy Court granting authority for the use of cash collateral or authorizing DIP Financing which order also prospectively grants a Lender relief from the automatic stay shall be subject to the provisions of this subsection (g).
(h) Without the prior written consent of the applicable Senior Priority Lender, no Junior Priority Lender shall assert any marshaling, appraisal, valuation, or other similar right with respect to any Senior Priority Collateral that may otherwise be available to a junior secured creditor.
4.6 Bailee for Perfection . Each Lender hereby appoints each other Lender as agent for the purposes of perfecting the other Lenders' Liens in and on any of the Collateral in the possession of such Lender; provided , that, the Lender in the possession of any Collateral shall not have any duty or liability to protect or preserve any rights pertaining to any of the Collateral and, except for gross negligence or willful misconduct as determined pursuant to a final non-appealable order of a court of competent jurisdiction, the non- possessing Lenders hereby waives and releases the other Lenders from, all claims and liabilities arising pursuant to the possessing Lender's role as bailee with respect to the Collateral. To the extent any Lender receives Collateral which is not such Lender's Senior Priority Collateral, such Lender shall promptly deliver to the Lender for whom such Collateral is Senior Priority Collateral. After any Senior Priority Lender has received final payment in full of all of such Lender's Senior Priority Obligations and such Lender's Agreements have been terminated, such Lender shall deliver the remainder of the Collateral, if any, in its possession to the applicable Junior Priority Lender, except as may otherwise be required by applicable law or court order.
4.7 Notices . All notices, requests and demands to or upon the respective parties hereto shall be in writing and shall be deemed duly given, made or received: if delivered in person, immediately upon delivery; if by telex, telegram or facsimile transmission, immediately upon sending and upon confirmation of receipt; if by nationally recognized overnight courier service with instructions to deliver the next business day, one (1) business day after sending; and if mailed by certified mail, return receipt requested five (5) days after mailing to the parties at their addresses set forth below (or to such other addresses as the parties may designate in accordance with the provisions of this Section):
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To Working
Hudson Bay Fund LP
To Term Loan Agent (on behalf of itself and the other Term Loan Lenders):
Wells Fargo Bank, National Association
1 Front Street, 21st Floor
To Pioneer Lender:
Pioneer Hi-Bred International, Inc.
With a copy to
Pioneer Hi-Bred International, Inc.
Capital Lender:
777 Third Avenue, 30
th
Floor
New York, NY 10017
Attention: George Antonopoulos
Telecopier No.: 646-214-7946
Telephone No.: 212-571-1244
San Francisco, CA 94111
MAC A0195-213
Attn: Gavin Smith
Phone: 415-396-7080
Fax: 415-974-3695
Attention: Chief Financial Officer
DuPont Pioneer
7100 N.W. 62nd Avenue
P.O. Box 1014
Johnston, IA 50131-1014
Fax: (515) 535-7066
Attention: General Counsel
DuPont Pioneer
7250 N.W. 62nd Avenue
P.O. Box 1014
Johnston, IA 50131-1014
Fax: (515) 535-4844
Either of the above Lenders may change the address(es) to which all notices, requests and other communications are to be sent by giving written notice of such address change to the other Lenders in conformity with this Section 4.7, but such change shall not be effective until notice of such change has been received by the other Lenders.
4.8 Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be an original with the same force and effect as if the signatures thereto and hereto were upon the same instrument.
4.9 Governing Law . The validity, construction and effect of this Agreement shall be governed by the internal laws of the State of New York (without giving effect to principles of conflicts of law).
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4.10 Consent to Jurisdiction; Waiver of Jury Trial . EACH PARTY HERETO HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY (INCLUDING ITS APPELLATE DIVISION), AND OF ANY OTHER APPELLATE COURT IN THE STATE OF NEW YORK, FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH LENDER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
4.11 Complete Agreement . This written Agreement is intended by the parties as a final expression of their agreement and is intended as a complete statement of the terms and conditions of their agreement with respect to the subject matter hereof.
4.12 No Third Parties Benefited . Except as expressly provided in Section 4.3 and consents which are deemed to have been given under Section 2.10 hereof, this Agreement is solely for the benefit of the Lenders and their respective successors, participants and assigns, and no other person shall have any right, benefit, priority or interest under, or because of the existence of, this Agreement.
4.13 Disclosures; Non-Reliance . Each Lender has the means to, and shall in the future remain, fully informed as to the financial condition and other affairs of Borrower and no Lender shall have any obligation or duty to disclose any such information to the other Lenders. Except as expressly set forth in this Agreement, the parties hereto have not otherwise made to each other nor do they hereby make to each other any warranties, express or implied, nor do they assume any liability to each other with respect to: (a) the enforceability, validity, value or collectability of any of the Obligations or any guarantee or security which may have been granted to any of them in connection therewith, (b) the Borrower's or any Obligors' title to or right to transfer any of the Collateral, or (c) any other matter except as expressly set forth in this Agreement.
4.14 Terms . This Agreement is a continuing agreement and shall remain in full force and effect until the indefeasible satisfaction in full of all Obligations and the termination of the Agreements. This Agreement shall be reinstated if, for any reason, any payment of the Working Capital Debt by or on behalf of the Borrower or any other Obligor shall be rescinded or must otherwise be restored by the Working Capital Lender, whether as a result of an Insolvency Proceeding or otherwise.
- 25 -
4.15 Subrogation . Until the payment in full of the Working Capital Debt, the other Lenders shall not have, and shall not directly or indirectly exercise, any rights that it may acquire by way of subrogation under this Agreement, by any payment or distribution to the Working Capital Lender hereunder or otherwise. The Working Capital Lender shall have no obligation or duty to protect the other Lenders' rights of subrogation arising pursuant to this Agreement or under any applicable law, nor shall the Working Capital Lender be liable for any loss to, or impairment of, any subrogation rights held by the other Lenders.
4.16 Other Wells Fargo Transactions . The parties hereto acknowledge and agree that (i) Wells Fargo Bank, National Association and its affiliates (collectively, " Wells Fargo ") may now or hereafter provide debt financing, equity capital, financial advisory or other services to the Borrower and the other Obligors (excluding the transactions contemplated by the Working Capital Loan Agreement, the " Other Wells Fargo Transactions ") and (ii) the Other Wells Fargo Transactions, and Wells Fargo in its capacity as a party to the Other Wells Fargo Transactions, are not subject to this Agreement, including any Liens that may be granted to Wells Fargo pursuant to such Other Wells Fargo Transactions.
4.17 Updated Pioneer PP&E Schedules . Within 60 days after the date of this Agreement, the Borrower and the Pioneer Lender shall deliver to the Working Capital Lender and the Term Loan Agent an updated draft of Annex IV to this Agreement, setting forth in reasonable detail (including a serial number, where applicable) a list of all such equipment and other assets comprising the Pioneer PP&E Assets, whereupon such updated Annex IV shall replace Annex IV attached hereto in its entirety; provided, however, that if the Working Capital Lender or the Term Loan Agent shall deliver written notice to the Borrower and the Term Loan Agent of any objection to the updated Annex IV within thirty (30) days following receipt thereof (which written notice shall include a description of the basis for such objection), the parties shall discuss in good faith any further updates to Annex IV.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the day and year first above written.
WORKING CAPITAL LENDER
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: __________________________________
Name:
Title:
TERM LOAN AGENT
HUDSON BAY FUND LP
By: __________________________________
Name:
Title:
PIONEER LENDER
Pioneer Hi-Bred International, Inc.
By: __________________________________
Name:
Title:
- 27 -
ANNEX I
Pioneer Purchased Assets
The Arlington Plant Site, the Nampa Plant Site and the Transferred Equipment (all as described on Annex IV)
The Pioneer Intellectual Property Collateral (as described on Annex II)
ANNEX II
Pioneer Intellectual Property
Transferred Know-How:
Unpatented inventions, trade secrets, technical information or formulae (hereinafter, "Know-How") relating to the operation of the Transferred Equipment at the Arlington Plant Site and the Nampa Plant Site, to the extent existing and reduced to writing, in all events, as located at the Arlington Plant Site or the Nampa Plant Site.
Standard Operating Procedures (SOPs) for the operation of the Transferred Equipment at the Arlington Plant Site and the Nampa Plant Site, including operating and maintenance procedures, to the extent existing and reduced to writing, in all events, as located at the Arlington Plant Site or the Nampa Plant Site.
Engineering Drawings with respect to the Arlington Plant Site and the Nampa Plant Site, to the extent existing and reduced to writing, in all events, as located at the Arlington Plant Site or the Nampa Plant Site.
Blue Print Files, P&IDs and assemblies relating to the Transferred Equipment at the Arlington Plant Site and the Nampa Plant Site, to the extent existing and reduced to writing, in all events, as located at the Arlington Plant Site or the Nampa Plant Site.
Excluding from the foregoing, any Know-How excluded pursuant to Exhibit 2.1(a)(vi) of the Asset Purchase and Sale Agreement by and between Pioneer Lender and Borrower dated December 19, 2014.
Internal Title |
Ctry |
Current Status |
Filing |
Filing Number |
Grant Number |
Alfalfa Variety 53V52 |
US |
Grant |
20 Sep 2006 |
11/533383 |
7652195 |
Alfalfa Variety 05N16PY |
US |
Grant |
04 Oct 2011 |
13/252674 |
8461420 |
Alfalfa Variety 06N02PX |
US |
Grant |
04 Oct 2011 |
13/252692 |
8471103 |
Alfalfa Variety 07W01CZ |
US |
Grant |
04 Oct 2011 |
13/252706 |
8466343 |
Alfalfa Variety 09W08PY |
US |
In prosecution |
30 Jul 2013 |
13/953807 |
|
Alfalfa Variety 55Q27 |
US |
Grant |
06 Mar 2012 |
13/413254 |
8802930 |
Alfalfa Variety 09N12CY |
US |
Allowed |
06 Mar 2012 |
13/413267 |
8822760 |
Title |
Application No. |
Filing Date |
Alfalfa Variety 10XXP11 |
62095258 |
12/22/2014 |
Alfalfa Variety 54Q14 |
62095279 |
12/22/2014 |
Alfalfa Variety 12XXP13 |
62095286 |
12/22/2014 |
Transferred Germplasm:
Genetic material contained in the parent and research Product seed and the Inventory Seed (other than, in any events, any of the Excluded Seed) at the Arlington Plant Site, Nampa Plant Site or the Leased Premises. All capitalized terms shall have the meanings ascribed thereto in the Asset Purchase and Sale Agreement by and between Pioneer Lender and Borrower dated December 19, 2014.
Excluding from the foregoing, any genetic material, germplasm or seed excluded pursuant to Exhibit 2.1(a)(viii) of the Asset Purchase and Sale Agreement by and between Pioneer Lender and Borrower dated December 19, 2014.
- 30 -
Country |
App_num |
App_date |
Grant # |
Grant start |
endtype |
den_final |
title holder |
|
|
|
|
|
|
|
|
AR |
003195 |
9/22/1993 |
000677 |
11/3/1994 |
Granted |
5472 |
PHI |
AR |
003795 |
3/31/1995 |
000771 |
10/24/1995 |
Granted |
5939 |
POC |
AR |
004433 |
4/9/1996 |
000872 |
2/28/1997 |
Granted |
5681 |
PHI |
AR |
005649 |
2/6/1998 |
001087 |
5/26/1998 |
Granted |
58N58 |
PHI |
AR |
007689 |
10/25/2001 |
001612 |
10/24/2002 |
Granted |
59N49 |
PHI |
AR |
008687 |
|
001982 |
3/15/2005 |
Granted |
56S82 |
PHI |
AU |
2003333 |
11/26/2003 |
4652 |
9/18/2013 |
Granted |
57Q75 |
PHI |
AU |
2005001 |
1/6/2005 |
Not yet granted |
Applied |
56S82 |
PHI |
|
QZ (EP) |
20112119 |
9/5/2011 |
Not yet granted |
Applied |
PR55V48 |
PHI |
|
QZ (EP) |
20082160 |
10/2/2008 |
33444 |
9/24/2012 |
Granted |
PR59N59 |
PHI |
US |
9100158 |
3/28/1991 |
9100158 |
8/31/1995 |
Granted |
5888 |
PHI |
US |
9200218 |
6/22/1992 |
9200218 |
8/31/1995 |
Granted |
5454 |
PHI |
US |
9200220 |
6/22/1992 |
9200220 |
8/31/1995 |
Granted |
5246 |
PHI |
US |
9500089 |
2/10/1995 |
9500089 |
3/31/1997 |
Granted |
5312 |
PHI |
US |
9600331 |
8/13/1996 |
9600331 |
6/30/1999 |
Granted |
Superba |
PHI |
US |
9600332 |
8/13/1996 |
9600332 |
7/30/1999 |
Granted |
5681 |
PHI |
US |
9600333 |
8/13/1996 |
9600333 |
6/30/1999 |
Granted |
5939 |
PHI |
US |
9800114 |
2/18/1998 |
9800114 |
4/24/2001 |
Granted |
5347LH |
PHI |
US |
9800143 |
3/3/1998 |
9800143 |
4/24/2001 |
Granted |
53Q60 |
PHI |
US |
9800341 |
7/13/1998 |
9800341 |
4/24/2001 |
Granted |
53V08 |
PHI |
US |
9900064 |
11/23/1998 |
9900064 |
4/24/2001 |
Granted |
54H55 |
PHI |
US |
9900126 |
1/7/1999 |
9900126 |
4/24/2001 |
Granted |
54H69 |
PHI |
US |
9900127 |
1/7/1999 |
9900127 |
4/24/2001 |
Granted |
53V63 |
PHI |
US |
9900410 |
9/13/1999 |
9900410 |
4/24/2001 |
Granted |
54V54 |
PHI |
US |
9900411 |
9/13/1999 |
9900411 |
4/24/2001 |
Granted |
53H81 |
PHI |
US |
200000193 |
4/4/2000 |
200000193 |
4/24/2001 |
Granted |
57N02 |
PHI |
- 31 -
ANNEX III
Pioneer Transaction Documents
ANNEX IV
Pioneer PP&E Assets
Arlington Plant Site :
Lands described in Columbia County Certified Survey Map No. 884, as recorded in Volume 4 of Surveys, on page 104, as Document No. 441386, being located in the North East 1/4 of the North East 1/4 of Section 22, Township 10 North, Range 9 East, Town of Arlington, Columbia County, Wisconsin,
Tax Key No. 11002 392.01
Lot 1 of Certified Survey Map No. 3122, as recorded in Volume 20 of Certified Survey Maps, page 118, Document No. 593525, being a Survey in the North East 1/4 of the North East 1/4 of Section 22, Township 10 North, Range 9 East, Town of Arlington, Columbia County, Wisconsin.
Tax Key No. 11002 392.A
Together with all buildings, fixtures, improvements and appurtenances thereon.
Nampa Plant Site:
Parcel I
The West 220 feet of the East 1022 feet of the Southeast quarter of the Northeast quarter of Section 16, Township 2 North, Range 2 West, Boise Meridian, Canyon County, Idaho; and
A portion of the Southeast quarter of the Northeast quarter of Section 16, Township 2 North, Range 2 West of the Boise Meridian, Canyon County, Idaho, being more particularly described as follows:
Commencing at the Southeast corner of said Southeast quarter of the Northeast quarter of Section 16; thence
South 89°55'04" West along the South line of said Southeast quarter of the Northeast quarter a distance of 1022.00 feet to the True Point of Beginning; thence continuing
South 89°55'04" West along said South line, a distance of 30.00 feet to a point; thence
North on a line parallel to the East line of said Southeast quarter of the Northeast quarter of Section 16, a distance of 190.00 feet to a point; thence
North 89°55'04" East, along a line parallel with the South line of said Southeast quarter of the Northeast quarter, a distance of 30.00 feet; thence
South along a line parallel to the East line of said Southeast quarter of the Northeast quarter, a distance of 190.00 feet to the True Point of Beginning.
Parcel II
A parcel of land located in the Southeast quarter of the Northeast quarter of Section 16, Township 2 North, Range 2 West of the Boise Meridian, Canyon County, Idaho, and is more particularly described as follows:
Commencing at the East quarter corner of said Section 16, being a P.K. Nail and the centerline intersection of Lake Shore Drive and 12th Avenue South; thence
South 89°55'04" West along the South line of said Southeast quarter of the Northeast quarter, and the centerline of Lake Shore Drive, a distance of 1022.00 feet to a P.K. Nail, being the True Point of Beginning; thence continuing
South 89°55'04" West along said South line of the Southeast quarter of the Northeast quarter and the centerline of Lake Shore Drive, a distance of 300.20 feet to the Southwest corner of said parcel, being a 5/8 inch steel pin, from whence a 1/2 inch steel pin bears North 0°06'20" West, a distance or 33.00 feet; thence leaving said South line of the Southeast quarter of the Northeast quarter and the centerline of Lake Shore Drive
North 0°06'20" West, along the West line of said Southeast quarter of the Northeast quarter, a distance of 1324.04 feet to the Northwest corner of said parcel being a 5/8 inch steel pin, and the Northeast 1/16 corner of said Section 16; thence
North 89°55'27" East along the North line of said Southeast quarter of the Northeast quarter, a distance of 302.64 feet to the Northeast corner of said parcel, being a 1/2 inch steel pin; thence
South and parallel with the East line of said Southeast quarter of the Northeast quarter, a distance of 1324.01 feet to the True Point of Beginning.
Excepting Therefrom
A portion of the Southeast quarter of the Northeast quarter of Section 16, Township 2 North, Range 2 West of the Boise Meridian, Canyon County, Idaho, being more particularly described as follows:
Commencing at the Southeast corner of said Southeast quarter of the Northeast quarter of Section 16; thence
South 89°55'04" West along the South line of said Southeast quarter of the Northeast quarter a distance of 1022.00 feet to the True Point of Beginning; thence continuing
South 89°55'04" West along said South line, a distance of 30.00 feet to a point; thence
North on a line parallel to the East line of said Southeast quarter of the Northeast quarter of Section 16, a distance of 190.00 feet to a point; thence
North 89°55'04" East, along a line parallel with the South line of said Southeast quarter of the Northeast quarter, a distance of 30.00 feet; thence
South along a line parallel to the East line of said Southeast quarter of the Northeast quarter, a distance of 190.00 feet to the True Point of Beginning.
Together with all buildings, fixtures, improvements and appurtenances thereon.
- 34 -
Transferred Equipment:
Name - Nampa Plant Site |
|
Trimble GPS |
CLIPPER CLEANER (LAB MODEL) |
INDICATOR FOR CONDITIONING SCALE (#3) |
GRAVITY, FORSBERG #50VM, #7 |
FORSBERG GRAVITY #50V C1703 |
FORSBERG GRAVITY #50V C1703 |
BIN FOR WESTRUP #1 |
#17 C-3 ELEVATOR, 28' |
BEE TRAILER |
KUBOTA TRACTOR |
PORTABLE PLATFORM SCALE (#4) |
Elev, E-16 D-3 |
#25, D-3 ELEVATOR, 16' |
METAL SEED BOXES |
WINDOW AWNING |
TRUCK SCALE (#5) |
INSTALL WELL FOR PLANT |
OUTDOOR PLATFORM SCALE (#8) |
DUST CONTROL SYSTEM INSTALLATION EXPENSE |
ELECTRICAL, CONDITIONING |
#21 C-3 28' Elevator |
SEWING PEDESTAL, PACKAGING |
BAG TOP TRIMMER, PACKAGING |
MICROSCOPE WITH ILLUMINATOR |
MAGNETIC SEPERATOR #2 |
MAGNETIC SEPERATOR #3 |
MIXING CHAMBER, MAG |
6' VELVET ROLL, LAB |
SG30 SEED GERMINATOR |
MAGNETIC SEPARATOR #4 |
W-2 Baghouse Airlock |
W-2 Bag filter, Conditioning |
LAND ACQUISITION-TIEGS LAND CO |
DEMOLITION-NEW PROPERTY |
WAREHOUSE E |
WAREHOUSE D |
REFRIGERATION UNIT COLD STORAGE #1 |
- 35 -
MAIN ELECTRICAL |
WESTRUP SCREEN CLEANER #1 |
WESTRUP SCREEN CLEANER#2 |
VELVET ROLL #1 |
VELVETROLL #2 |
VELVET ROLL #3 |
VELVET ROLL #4 |
ELECTRICAL-CONDITIONING |
#18, B-3 ELEVATOR, 14' |
#8 C-3 ELEVATOR, 24' |
#3 C-3 7' Elevator |
#20 C-3 ELEVATOR, 28' |
#5 C-3 ELEVATOR, 14' |
#29 C-3 26' Elevator |
VELVET ROLL TAILS VIBRATING CONVEYOR #1 |
VIBRATING CONVEYOR CLIPPER 6' |
PORTABLE PLATFORM SCALE (#2) |
ASPHALT PATCHING AND OVERLAY |
HART UNIFLOW |
HART UNIFLOW |
PLATFORM SCALE CONDITIONING (#3) |
#19, C-3 ELEVATOR, 28' |
#27 C-3 17' Elevator |
#2 D-3 ELEVATOR, 16' |
#24 D-3 ELEVATOR, 24' |
#4 C-3 ELEVATOR, 24' |
#6 C-3 ELEVATOR, 33' |
#1 3-D elevator, 24' |
#15 C-3 28' Elevator |
METAL SEED BOXES |
METAL SEED BOXES |
BIN FOR WESTRUP #2 |
CLIPPER CLEANER-CONV |
CLIPPER CLEANER X298 |
GRAVITY SEPARATOR #8 |
SEWING MACHINE, PACKAGING |
OFFICE/WAREHOUSE (RAR ADJUST) |
OFFICE ADD 30X12 |
OFFICE BLDG ADDTN P2740 |
OFFICE BLDG-ELECTRICAL P2740 |
COLD STORAGE #2 |
COLD STORAGE #3 |
REFRIGERATION UNIT COLD STORAGE #2 & #3 |
- 36 -
6 DISTRIBUTORS |
VELVET ROLL #5 |
VELVET ROLL #6 |
VELVET ROLL #7 |
VELVET ROLL #8 |
VELVET ROLL #9 |
VELVET ROLL #10 |
VELVET ROLL #11 |
VELVET ROLL #12 |
LAND 6.5A |
ASPALT PAVING |
ASPHALT PAVING-PJP6529 |
ASPHALT PAVING |
AIR SYSTEM |
AIR SCREEN CLEANER |
ASPHALT PAVING |
GRISIEZ MAG CLEANER-RICE/DODDER MILL |
MAC DUST COLLECTOR INSTALLATION EXPENSE |
W.A. RICE ROLL MACHINE (2) |
ASPHALT OVERLAY, WAREHOUSE E |
4380 POWER INFEED |
FIRE SECURITY SYSTEM |
GAS AND DISTRIBUTION SYSTEM |
CMS Retrofit |
Treat/Pkg Tower Structural Steel |
BLENDING BIN-95,000 LBS. |
SCARIFIER BIN-95,000 LBS. |
CMS BIN-95,000 LBS. |
BEFORE BAGGER BIN-95,000 LBS. |
BEFORE BAGGER BIN-95,000 LBS. |
BIN SPIRAL LETDOWNS (5) |
DUMP HOPPER AND UNLOAD CONVEYOR |
DUMP HOPPER AND SUPPORT FRAME |
UNLOAD CONVEYOR - BIN - 10'0" |
UNLOAD CONVEYOR - BIN TRANSFER - 40'0" |
ROTARY VALVE AND LIN ACT. BEFORE SCARFIER #1 |
ROTARY VALVE AND LIN ACT. BEFORE SCARFIER #2 |
COLLECTING CONVEYOR - SCARFIER - 10'0" |
TRANS CONVEYOR TO BM&M CLEANER |
BM&M CLEANER |
#1 Treating D-Leg Elevator 55' Main Dump |
#2 Treating D-Leg Elevator 55' After Scarifier |
#3 Treating D-Leg Elevator 55' After CMS |
- 37 -
#4 Treating D-Leg Elevator 12' between CMS |
REBUILD SCARFIER #1 |
REINSTALL SCARFIER |
REBUILD SCARFIER #2 |
REINSTALL SCARFIER #2 |
BUILDING DUST SYSTEM |
NEW BAG INCLINE CONVEYOR |
NEW BAG CONVEYOR THRU WALL |
REINSTALL PACING CONVEYOR |
NEW POWER TURN CONVEYOR |
REINSTALL STRETCH WRAPPER |
WEIGHT BELT FEEDER |
CMS TREAT SYSTEM - DRUM #1 & #2 |
CMS TREAT SYSTEM - STAND #1 & #2 |
CMS TREAT SYSTEM - DRUM #3 |
CMS TREAT SYSTEM - STAND #3 |
CMS ALLAN BRADLEY PLC PROGRAMMING |
CMS RAYTEX TEMPERATURE SENSOR |
INLET FAN - DRUM #1 & #2 |
INLET FAN - DRUM #3 |
SYSTEM DUCTWORK |
PROCESS HEATER - DRUM #1 & #2 |
PROCESS HEATER - DRUM #3 |
CMS NITROGEN GOLD PROD FEEDER |
CMS PUMP-MIX TRANSFER |
CMS - FILTERS |
CMS POLYMER PUMP - TRANSFER MIX |
CMS APRON PUMP - MIX TRANSFER |
CMS APRON - FILTERS |
CMS MICRO-MOTION FLOWMETER |
CMS MICRO-MOTION FLOWMETER |
CMS MICROMOTION FLOWMETER |
POLYMER MIX/STAND - NURSE |
APRON MIX TANK/STAND - MIX |
MIXING TANK/STAND - MIX |
MIXING TANK/STAND - MIX |
MIXING TANK/STAND - NURSE |
APRON-CHEMICAL MIXER - NURSE |
POLYMER-CHEMICAL MIXER - NURSE |
CHEMICAL MIXER - #1 |
100 HP Air Compressor for CMS |
AIR DRYER FOR 100 HP Compressor |
FLUID PIPING-FACILITY |
- 38 -
BULK STORAGE - TANK 110,000 LBS. |
BULK BLOWER PACKAGE |
Bulk - Rotary Feeder |
BULK - TRANSFER PIPING |
BULK POLY - POLYMER ROTARY FEEDER |
BULK POLY - ROTARY FEEDER W/AUGER |
BULK POLY - POLYMER SCALE HOPPER |
BULK POLY - POLY DIGITAL CONTROL SYSTEM |
BULK SCALE HOPPER - Polymer |
BULK - FILL/PASS VALVE |
BULK - ROTARY VALVE |
Wall & Overhead Door-Warehouse E |
PARTNER PLUS PHONE SYSTEM |
FIRE AND SECURITY |
SPEEDFLO PT4500 AIRLESS PAINT SPRAYER |
PLASMA CUTTER |
MILLER SHOPMASTER COMBO |
PACKING CHECK WEIGHT SCALE (#1) |
NATIONAL 48" BOX AND PAN BREAK |
LAN WIRING |
Cond Equip Installation - Small Line |
WATER SYSTEM-POTABLE |
SEPTIC SYSTEM |
GAS SYSTEM-NATURAL |
PKG OFFICE |
PKG OFFICE |
PLUMBING FIXTURES, PKG OFFICE |
ELECTRICAL FIXTURES, WAREHOUSE C |
ELECTRICAL, TREATING TOWER |
FIRE AND SECURITY ALARMS |
ELECTRICAL, CONDITIONING LINE #2 |
PKG TOWER CONSTRUCTION |
PKG TOWER ROOF |
FIXTURES, PACKAGING TOWER |
ELECTRICAL, PACKAGING TOWER |
50HP QUINCY AIR COMPRESSOR |
SECONDARY ELEC-QUINCY AIR COMPRESSOR |
LASERJET 400N PRINTER/ETHERNET |
Treater PLC Programming |
Lan Wiring |
CMS Retro-fit |
Flexicon Conveyor-Polymer Bulk Bag System |
Install Cond Equip-Small Line |
- 39 -
Mica/Polymer Delivery Sys Modification |
Steel Seed Bins |
Box Washer |
Reinstall Dust Baghouse-Treating Area |
Bulk Bin |
D3 Elevator |
Car Unloader Conveyor |
Electrical-Bulk Receiving |
Tag-It-System |
Wire Feed Welder |
Iron Worker |
Bulk Bag Hanger |
Mica Transfer Sys-Bulk Bags to Stg Tank |
GPS Recording Equipment |
Re-Install Cleaner/Scalper |
Typewriter |
CMS Programming |
Primary Elec-Office Construction |
Irrigation-New Office |
Parking-New Office |
Landscaping-New Office |
Office Bldg-General Construction |
Office-Interior Finishes |
Office-Mechanical Construction |
Office-Electrical Construction |
Telephone/Data-Office Construction |
Security-Office Construction |
Interior Doors/Hardware-Office Construction |
Carpet/Tile-Office Construction |
Furniture-Office Construction |
Lab Remodel-Gen Construction |
Elec-Lab/Breakroom Remodel |
Furnace/Air Conditioner-Lab/Breakroom Remodel |
Carpet/Tile-Lab/Breakroom Remodel |
Eriez Magnetic Separator and Mixer |
Pioneer Signage |
Confined Space Air Monitor |
Chain Hoist |
Vertical Mill |
Band Saw |
Weather Loggers |
Binocular Microscopes |
Sample Divider |
- 40 -
Elec Monitors/Controllers in Treating |
Elevator-Treating |
Heater-Treater |
Elec Monitors & Controls-Treating |
Control Bridge Installation |
Miller Retrieval Units |
Inspection Vibrator |
Portable Scales |
Warehouse, Security and Emergency Lighting |
Warehouse, Security and Emergency Lighting Install |
Phone System |
Water Activity Meter |
75 HP Quincy Air Compressor |
Automatic External Defibrillator |
Westrup Upgrades for Frequency Drives |
4x4 Utility Vehicle - Kawasaki Mule |
Upgrade to Dust Collection System |
Proximity Sensors for Conditioning |
Lawn Mower |
Water and Oil Separator for Compressors |
60 HP Quincy Air Compressor |
Padmount Transformer and Switchgear |
Gravity Valve Sample System |
Velvet Roll Feed Automation |
Gravity Feed Automation |
Scissor Lift |
Tag Burster |
Panel View for Treating System |
HP Bag Lip Code Printer |
Conditioning Airlift Conveyor |
Mac Dust System and Ducting (32 cartridge) |
Colorant Scale |
Relocate clipper for Small Line Automation |
Electrical and Proximity Sensors-Small Line Automa |
Programming for Small Line Automation |
FANUC Palletizer - FANUC 410iB Robot & equip |
FANUC Palletizer - Programming |
FANUC Palletizer - Conveying equipment |
FANUC Palletizer - Secondary electrical |
FANUC Palletizer - Refurbish equipment |
FANUC Palletizer - Safety fencing & systems |
Monosem Planter (alfalfa) |
Metal Shear Hydraulic 52" |
- 41 -
Germinator / Growth chamber |
Treat batch mixing upgrades |
Conditioning vacuum |
FORMAX CUTTER FD572 (print-on-demand) |
HP LaserJet 9050dn - Printer (print-on-demand) |
FORMAX CUTTER FD572 (print-on-demand) |
FORMAX CUTTER FD572 (print-on-demand) |
Lanier LD550 C Copier / Printer |
Bag lip printer |
Bulk Unloading Conveyors |
Gravity 1 Serial # 8455 |
Gravity 2 Serial # 8456 |
Gravity 3 Serial # 8457 |
Gravity 4 Serial # 13716 |
Donaldson/Torit Serial # 3194794-2 |
Donaldson/Torit Serial # Reinbeck 1 |
Donaldson/Torit Serial # 3194794-1 |
Donaldson/Torit Serial # Reinbeck 2 |
Main Water Vault & well house |
Well house backup generator |
Thiele Bag Hanger |
16' Flat Belt Bagging Conveyor |
36" Flat Belt Bagging Conveyor |
72" Flat Belt Bagging Conveyor |
Bag Kicker w/ 48" conveyor |
Fischbein 400T-NS Sewing Machine |
Fischbein-Inglett 3920 Tag Hanger |
Wulftech SMH-200 Stretch Wrapper |
Control Logix Processor Pallet conveyors |
Apron Micro Motion flow meter |
Reyco Airlift Receiver for mainline |
Control logix module in treating |
Waste water recovery - treating |
Clean Seed Airlift Small line |
Color Sorter |
Sharp MX5111N copier/printer |
Concrete pad of air systems |
Steel Boxes(280) |
Donaldson/Torit Air System |
Box Dump |
Donaldson/Torit dust collector |
Air ducting |
Donaldson Torit dust collector |
- 42 -
Reyco airlift |
Reyco receiver |
Air ducting |
DRO for mill |
Case loader for tractor |
Air ducting to dust collector (gravities) |
Labor and materials to install Forsberg Gravity |
Air Screen Crippen gx360 |
Box dump |
Torit Dust Collector |
Fluke Thermal Imager |
Treater Micro Motion |
Treater Micro Motion |
WELDER/COMPRESSOR/GENERATOR COMBO UNIT |
329 Steel Boxes |
Bagging Scales - Mainline |
SMALL LINE BOX DUMP AND DUST COLLECTOR |
Parent alfalfa seed room |
UPGRADE PROCESSORS TO ETHERNET CAPABILITY |
ELEC TRICAL INSTALL FOR PARENT ALFALFA CONDITIIONI |
PARENT SEED CONDITIONING EQUIPMENT |
phone upgrade-training area |
chairs-training area |
training area remodel |
waste water treatment - Moved to asset @ 12/31 |
SAFETY EXIT DOOR - Asset @ 12/31 |
WASTE WATER RECLAIM SYSTEM - Asset @ 12/31 |
BAG SPLITTER |
ELECTRICAL-BAG SPLITTER |
PAINT BLDG ADDITION |
COLD STORAGE #1 |
ELECTRICAL, COLD STORAGE #1 |
STEEL BLDG W/ CANOPY |
PARENT SEED ROOM |
WAREHOUSE/ADD 25X160-PJP6529 |
REMODEL WAREHOUSE P8622 |
WAREHOUSE EXPANSION |
NORTH CONDITIONING DOOR |
WAREHOUSE EXPANSION-FOUNDATION |
SHOP CONCRETE FLOOR |
- 43 -
SHOP |
WAREHOUSE A OVERHEAD DOOR |
SHOP |
SHOP CONCRETE FLOOR |
ELECTRICAL FIXTURES, WAREHOUSE A |
ELECTRICAL FIXTURES, WAREHOUSE B |
WAREHOUSE B |
COVERED LOADING DOCK/CONCRETE APPROACH |
DOCK LEVELERS |
ELECTRICAL, BREAK ROOM |
DOOR ON WAREHOUSE |
SAFETY EMERGENCY LIGHTING |
ELECTRICAL, WAREHOUSE D & E |
ELECTRICAL, TREATING ROOM |
TREATING TOWER |
WAREHOUSE C |
TREATING TOWER |
WAREHOUSE C ROOF |
18X38 TREATMENT SOLUTION RETENTION BLDG |
MECHANICAL PLUMBING-RETENETION BLDG |
SECONDARY ELEC-RETENTION BLDG |
CONCRETE PAD W/RETAINING WALL-RETENTION BLDG |
Warehouse Roof Replacement |
New Warehouse Roof |
2 RF Antennas in Warehouse |
Emergency Exit Doors |
Refrigeration Unit - Cold Storage #3 |
Roof on CS3 |
HVAC for CS2 |
03 HYSTER S50XM FORKLIFT |
HYSTER FORKLIFT S60XM |
WMS Forklift Mounts |
WMS fork truck mount units |
Overhead door |
Concrete floor for Parent alfalfa seed equipment |
WMS units for new forktrucks |
DOCK LOCKS FOR RECEIVING/SHIPPIING TRUCK SAFETY |
6 ROW PRECISION PLANTER |
6 ROLL-RICE VELVET R |
6 ROLL-RICE VELVET ROLLS |
#27 CLIPPER CLEANER |
#27 CLIPPER CLEANER |
BAGGING & HANDLING E |
BAGGING & HANDLING EQUIP |
VICTOR 4-DRAWER FILE |
- 44 -
SEED BAG & WEIGH SYS |
52-S 8 ROLL DODDER VELVET MILL |
GRAVITY SEPARATOR #7 |
BAGGING SCALE |
Name - Arlington Plant Site |
|
ELECTRONIC BALANCE |
FIMCO SPRAYERW/65 GAL TANK |
LAND-15 ACRES-CURRIE |
FORD 1510 DIESEL 4WD TRACTOR |
HEGE 80 PLOT PLANTER |
HEGE 80 PLANTER MODIFICATION |
SHAKER & PLATFORM |
AUTOCLAVE |
STEREOMICROSCOPE SYSTEM W/ LIGHT SOURCE |
LAMINAR FLOW HOOD |
COMPOUND MICROSCOPE |
SEED CLEANER |
GREENHOUSES (2) |
BLDG. SITE PREP. |
BLDG SITE PREPARATION |
OFFICE/LAB BLDG. |
OFFICE/LAB BUILDING |
SHOP DECK |
ELECTRICAL IMPROVEMENT |
SEEDER/PLOT DRILL |
INCUBATOR |
ELECTRONIC SCALE |
PERISTALTIC PUMP |
GREENHOUSE ROOF REPAIR |
DRYING OVEN |
GROWTH CHAMBER |
IRRIGATION WELL |
IRRIGATION PUMP |
MODIFICATION-HEGE 80 PLANTER |
FORD 1520 TRACTOR W/4WD |
GROWTH ROOM Modification |
BUILDING MAINTENANCE |
FORAGE HARVESTER |
- 45 -
MODINE HEATER UNIT |
VICON FERTILIZER SPREADER |
PLOT HARVESTER |
SEED THRESHER |
SEED THRESHER |
GROWTH ROOM HVAC |
GREENHOUSE ROOF REPLACEMENT |
GREENHOUSE HEATER |
CHEMICAL STORAGE CABINET |
DUST COLLECTION SYSTEM |
DRYER REPLACMEMENT INSTALLATION |
WILEY MILL |
GREENHOUSE INSULATION |
GREENHOUSE HEATER |
HARVESTER UPGRADE |
GROWTH ROOM HVAC UPGRADE |
ALFALFA HARVESTER |
LAB HOMOGENIZER |
GREENHOUSE SHADE CLOTH |
PORTABLE DUST COLLECTION SYSTEM |
FLAIL MOWER |
High Power Washer |
Flail Mower |
Kuhn Rototiller |
LAND - 5 ACRES ARLINGTON, WI |
AED Unit |
Irrigation System Upgrade |
Allegro Field PC |
Backup Generator |
Alfalfa GH Exp - Site Utils |
Alfalfa GH Exp - Gen Constr |
Alfalfa GH Exp - Mechanical |
Alfalfa GH Exp - Electrical |
Alfalfa GH Exp - Safety/Security |
Alfalfa GH Exp - Lauer Rolling Benches |
Greenhouse Benches |
Gooseneck trailer, 83"x32'x4' |
Parking lot concrete work |
Lab remodel |
Growth room lighting |
Snow Slide Prefention Roof main building |
Chem Store Bldg/Arlington |
Card Access Sys/Arlington |
- 46 -
LD180 seed thresher |
ASC-3 seed cleaner, stand & side funnel |
Falc Rotary Tiller Model CS4-1800 (72") |
Ferris Lawn Mower |
Landpride FM1488 flail mower |
Phone System |
Electrical for office addition |
Office addition and remodel |
Elec/Security for Machine Storage Shed |
Strip topsoil for Machine Storage Shed |
Concrete for Machine Storage Shed |
Construct Machine Storage Shed |
Homogenizer |
Centrifuge |
Freeze Dryer |
Harvest Weigh System |
Harvest Weigh System |
Irrigation Safety/Pump upgrade |
 :
Name - Connell, WA (Leased Premises) |
|
SCREEN CAGES |
BIG OX 8' TERRACER BLADE |
VOGEL M-2 THRESHER |
AOC STATIONARY BELT THRESHER |
SG 30 SEED GERMINATOR |
ELECTRONIC SCALE |
SEED GERMINATOR |
DISSECTING MICROSCOPE |
SCREEN LIMITE CAGES |
PLOT DRILL "HEGE 80" W/EXTRA WEIGHTS |
SOUTH DAKOTA SEED BLOWER |
BALANCE |
BEE INCUBATOR |
FORD 1520 TRACTOR W/LOADER& BUCKET |
HEDGE 80 PLOT PLANTER |
BELT THRESHER |
MICROSCOPE |
(6) MESH CAGES |
DRYER BOX |
BUSH HOG 60" TILLER |
- 47 -
ZEBRA PRINTER |
FORAGE CHOPPER |
PLANTER MODIFICATIONS FOR ASSET #2216 |
ALMACO PLOT THRESHER |
POLLINATING CAGES |
DISSECTING SCOPE |
TRACTOR ENGINE REPLACEMENT FOR ASSET #2762 |
ALFALFA HARVESTER |
LINEAR IRRIGATION SYSTEM |
LINEAR IRRIGATION SYSTEM-Modifications |
LINEAR IRRIGATION SYSTEM-Ramp System |
5500 TRACTOR |
Used Forklift |
Safety upgrade for harvester for asset #6388 |
Tiller/Sickle Bar with trade |
Flail Mower |
Equipment Trailer |
4 - Wheeler |
Air Compressor/Installation |
Polaris Ranger 2 x 4 |
WinterSteiger Thresher |
Harvest Weigh System & Handheld Device w/ Loadbars |
TXS65 Thermal Tag Printer-rewinder |
2011 Frontier Rototiller 1307R |
72 inch flail mower |
LD180 seed thresher |
Agriculex ASC-3 seed cleaner
|
UPGRADE OF LINEAR SYSTEM TO INCLUDE GPS NOZZLE OFF/ON |
HARVEST MASTER MIRUS WEIGHT SYSTEMS ) |
PANASONIC TOUGHPAD |
JOHN DEER 8300 GRAIN DRILL |
DOMRIES 8 FT DISC |
8.5 FT RING PACKER |
7 FT RING PACKER |
7 FT SPRING SHANK CHISEL |
JOHN DEER 50 BOX SCRAPER |
HAY FORKS LOADER ATTACHMENT |
PALLETT FORK LOADER ATTACHMENT |
FIELD TRANSPLANTER HOME MADE |
LAND PRIDE 7 FT TINE HARROW |
CATLIN MFG GOPHER POISON MACHINE |
10 FT LAND PLANE |
- 48 -
8 FT ROD WEEDER |
RANKIN 3 TOOTH 7 FT RIPPER |
2 MISC TOOL BARS W ITH SHOVELS |
JOHN DEER 3 BOTTOM ROLL OVER PLOW |
PIPE TRAILER |
JOHN DEER ROW MARKER |
HOME MADE ROW MARKER |
FUEL TANK GAS/DIESEL ON TRAILER |
NEW HOLLAND 520 MANURE SPREADER |
OLDER MANURE SPREADER MAKE UNKNOWN |
3" X 40' ALUMINUM HANDLINE APPROX 150 EA |
3 PT SPRAYER WITH POLY TANK HERBICIDE |
3 PT SPRAYER WITH POLY TANK PESTICIDE |
30 FT SPRAY BOOM |
BRABER DRY FERTILIZER SPREADER 3 PT |
MT MECHANICAL TRANS PLANTER |
EMGLOW 5HP AIR COMPRESSOR |
LD 350 SEED THRASHER |
1987 JACOBSEN BUMPER PULL EQUIP TRAILER |
2002 WALTON GOOSNECK EQUIP TRAILER |
SCREENED CAGE TOPS WITH FRAME WORK
|
- 49 -
VIN |
Year |
Manufacturer |
Make |
Model |
1FTFW1ET5DKE25192 |
2013 |
Ford |
Ford |
F150 XLT |
1FT7W2BT4DEA70383 |
2013 |
Ford |
Ford |
F250 XLT |
1FTFW1EF0EKD28249 |
2014 |
Ford |
Ford |
F150 XLT |
056655 |
2012 |
Other |
TRLR |
UT TL |
1J9DE2H24NF015282 |
1992 |
Other |
|
7'x18' Flatbed Tilt Deck |
1FTFX1EV8AKA32734 |
2010 |
Ford |
Ford |
F150 XLT |
1FDAF57Y78ED02598 |
2008 |
Ford |
Ford |
F550 XLT |
1FTPW14V68KE07653 |
2008 |
Ford |
Ford |
F150 XLT |
1FTFW1ET6DKD66430 |
2013 |
Ford |
Ford |
F150 XLT |
1FTFW1ET4DKE19187 |
2013 |
Ford |
Ford |
F150 XLT |
1FDAW5GR6AEB43085 |
2010 |
Ford |
Ford |
F550 XLT |
1FDXF46P86EC68617 |
2006 |
Ford |
Ford |
F450 XLT |
1FTPX14V28KC96595 |
2008 |
Ford |
Ford |
F150 XLT |
- 50 -
- 51 -
Each of the undersigned hereby acknowledges and agrees to the foregoing terms and provisions. By its signature below, each of the undersigned agrees that it will, together with its successors and assigns, be bound by the provisions hereof.
Each of the undersigned agrees that any Lender holding Collateral does so as bailee (under the UCC) for the other Lender which has a Lien on such Collateral and is hereby authorized to and may turn over to such other Lender upon request therefor any such Collateral, after all obligations and indebtedness of the undersigned to the bailee Lender have been fully paid and performed.
Each of the undersigned acknowledges and agrees that: (i) although it may sign this Agreement it is not a party hereto and does not and will not receive any right, benefit, priority or interest under or because of the existence of the foregoing Agreement (except for Section 2.1 thereof and a consent which is deemed to have been given by a Junior Priority Lender under Section 2.10), and (ii) it will execute and deliver such additional documents and take such additional action as may be necessary or desirable in the reasonable opinion of any of the Lenders to effectuate the provisions and purposes of the foregoing Agreement.
S&W SEED COMPANY
By: _____________________________________
Name:
Title:
[OBLIGOR]
By: _____________________________________
Name:
Title:
- 52 -
EXHIBIT 10.8
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made and entered into as of the 29 th day of December, 2014, by and among S&W SEED COMPANY., a Nevada corporation (the "Company"), CRAIG-HALLUM CAPITAL GROUP LLC, a Minnesota limited liability company ("CRAIG-HALLUM") and ALERUS FINANCIAL, a national association (the "Escrow Agent").
WHEREAS, the Company intends to privately offer (the "Placement") 8% Senior Secured Convertible Debentures of the Company (such debentures being referred to herein as the "Securities"); and
WHEREAS , it has been determined that the proceeds to be received from the Placement should be placed in escrow until such time as there is a closing with respect to the sale of the Securities; and
WHEREAS , the Escrow Agent is willing to accept appointment as escrow agent for only the expressed duties, terms and conditions outlined herein.
NOW, THEREFORE , in consideration of the premises and agreements set forth herein, the parties hereto agree as follows:
1. Proceeds to be Escrowed. All funds received from investors prior to the closing of the Placement in payment for the Securities will be deposited with or wired to the Escrow Agent and shall be retained in an escrow account by the Escrow Agent (the "Escrow Funds"). The Escrow Agent agrees to hold, safeguard, and disburse the Escrow Funds pursuant to the terms and conditions hereof, free and clear of all liens, encumbrances, charges, or security interests whatsoever created by the Escrow Agent. In the event any checks or wire transfers are inadvertently sent to the Company or Craig-Hallum, the Company or Craig-Hallum shall promptly transmit such funds to the Escrow Agent.
2. Identity of Investors. The Company, or Craig-Hallum on behalf of the Company, shall furnish to the Escrow Agent a list of the persons who have indicated an interest for the purchase of the Securities, showing the name, address, amount of the Securities subscribed for and the amount of money to be paid. All proceeds so deposited shall remain the property of the respective investors and shall not be subject to any liens or charges by the Company, the Escrow Agent, or judgments or creditors' claims against the Company, until released to the Company as hereinafter provided. The Escrow Agent will not use or disclose the information provided to it by the Company for any purpose other than to fulfill its obligations as Escrow Agent as set forth in this Agreement. Regardless, the Escrow Agent will treat this information as confidential.
3. Disbursement of Funds. From time to time, upon the Company's request, and at the end of the third business day following the Termination Date (as defined in Section 4 hereof), the Escrow Agent shall notify the Company of the amount of investors' funds received
hereunder. When the Company and Craig-Hallum jointly deliver a prior written notice, signed by their respective duly authorized officers or signatories, stating that the Company is prepared for a closing of the Placement, then the Escrow Agent shall pay out the Escrow Funds when and as unanimously directed by the Company and Craig-Hallum. If the Placement has not closed prior to the Termination Date, the Escrow Agent shall, within a reasonable time following the Termination Date, but in no event more than 2 business days thereafter, refund to each of the investors by wire of immediately available funds pursuant to wire instructions appearing on the list of investors, or pursuant to such other wire instructions as shall be furnished to the Escrow Agent by an investor in writing, all sums paid by such investor for the Securities and shall then notify the Company and Craig-Hallum in writing of such refunds.
4. Term of Escrow. The "Termination Date" shall be the earlier of (i) the termination of that certain Securities Purchase Agreement entered into by and among the Company and the Purchasers signatory thereto in connection with the Placement (the "SPA"), (ii) the failure of the consummation of the transactions contemplated by the Pioneer Documents (as defined in the SPA) within five (5) business days after the date of the SPA and (iii) the date the Escrow Agent receives written notice from the Company and Craig- Hallum that they are abandoning the Placement, subject to Section 3.
5. Duty and Liability of the Escrow Agent. The sole duty of the Escrow Agent, other than as herein specified, shall be to receive escrowed funds and hold them subject to release, in accordance herewith, and the Escrow Agent shall be under no duty to determine whether the Company is complying with requirements of this Agreement in tendering to the Escrow Agent said proceeds of the sale of the Securities. The Escrow Agent may conclusively rely upon and shall be protected in acting upon any statement, certificate, notice, request, consent, order or other document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Escrow Agent shall have no duty or liability to verify any such statement, certificate, notice, request, consent, order or other document, and its sole responsibility shall be to act only as expressly set forth in this Agreement. The Escrow Agent shall be under no obligation to institute or defend any action, suit or proceeding in connection with this Agreement unless first indemnified by the Company to its satisfaction. The Escrow Agent may consult counsel in respect of any question arising under this Agreement and the Escrow Agent shall not be liable for any action taken or omitted in good faith upon advice of such counsel.
6. Escrow Agent's Fee. The Escrow Agent shall be entitled to Two Thousand and Five Hundred Dollars ($2,500.00) as total compensation for its services rendered pursuant to the terms hereof, which compensation shall be paid by the Company. The fee agreed upon for the services rendered hereunder is intended as full compensation for the Escrow Agent's services as contemplated by this Agreement; provided, however, that in the event that (i) the Escrow Agent renders at the Company's written request any material service not contemplated in this Agreement, (ii) there is any assignment of interest in the subject matter of this Agreement, (iii) the parties agree to any material modification hereof pursuant to Section 14, below, or (iv) any material controversy arises hereunder, or the Escrow Agent is made a party to any litigation pertaining to this Agreement, or the subject matter hereof (collectively, a "Material Change"), then the Escrow Agent shall be reasonably compensated and/or reimbursed for any and all costs
2
and expenses, including reasonable attorneys' fees, incurred by the Escrow Agent as a direct result of any such Material Change, which shall be paid by the Company upon receipt of an invoice from the Escrow Agent with reasonable supporting documentation therefor.
7. Investment of Proceeds. All funds held by the Escrow Agent pursuant to this Agreement shall constitute trust property for the purposes for which they are held. The Escrow Agent shall invest all Escrow Funds in a money market account. The earnings on the Escrow Funds shall (i) be the property of the investors (pro rata to each investor based on the Escrow Funds wired by such investor to the Escrow Agent) until the Escrow Funds are released to the Company in accordance with the terms hereof and (ii) become the property of the Company when the Escrow Funds are released to the Company in accordance with the terms hereof, and reported in accordance with this Section 7. The Escrow Agent shall have no liability or responsibility whatsoever for any loss resulting from any investment made in compliance with the terms and provisions of this Agreement. The Escrow Agent shall, without further direction from any person, liquidate such deposit as and when required pursuant to Section 3 of this Agreement. The Company understands and acknowledges that FDIC insurance coverage will not be available for the entire amount of the Escrow Funds deposited in the Escrow Agent's demand deposits or money market deposit accounts and that such funds not covered by FDIC insurance will not otherwise be collateralized. Earnings on the Escrow Funds will be reported to the appropriate tax authorities for the account of the investors or the Company, as the case may be (Company's Federal Tax I.D. No. 27-1275784) on IRS Form 1099 or such other substitute form as applicable. The investors or Company, as applicable, shall provide the appropriate tax form W9 to the Escrow Agent or such other substitute tax form as applicable.
8. Issuance of Certificates. Until the terms of this Agreement with respect to the Securities have been met and the funds hereunder received from subscriptions for the Securities have been released to the Company, the Company will not deliver any certificates or other evidence of the purchase of the Securities.
9. Notices. All notices, requests, demands, and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of service if served personally on the party to whom notice is to be given, (b) on the day of transmission if sent by facsimile transmission to the facsimile number given below, and telephonic confirmation of receipt is obtained promptly after completion of transmission or if sent by electronic mail to the email address given below, (c) on the day after delivery to Federal Express or similar overnight courier or the express mail service maintained by the United States Postal Service, or (d) on the fifth day after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, and properly addressed, return receipt requested, to the party as follows:
If to the Company:
S&W Seed Company
Attn: Matt Szot
Chief Financial Officer
25552 South Butte Avenue
Five Points, CA 93624
Phone: (559) 884-2535
Facsimile: [ ]
Email: [ ]
3
If to Craig-Hallum:
Patricia Bartholomew
Managing Partner
222 South Ninth Street, Suite 350
Minneapolis, MN 55402
Phone: (612) 334-6370
Facsimile: [ ]
Email: [ ]
If to the Escrow Agent:
Alerus Financial
Attn: Joan Warnke, Trust and Investment Officer
401 Demers Avenue
Grand Forks, ND 58201
Phone: (701) 795-3240
Facsimile: [ ]
Email: [ ]
Wires to the Escrow Agent should be directed to the following:
WIRE INSTRUCTIONS:
ABA Number: 091300159
Bank name: ALERUS FIN GR FKS
City, State: Grand Forks, ND
FBO Acct no.: 1029-2991
ATTN: Trust Dept
FFC: S&W Seed Company Escrow Account #1080000024
Alerus Financial
ATTN: Joan Warnke, Trust and Investment Officer
401 Demers Avenue
Grand Forks, ND 58201
Phone: 701-795-3240
Attn: Joan Warnke
(701) 795-3240
Any party may change its address for purposes of this Section by giving the other party written notice of the new address in the manner set forth above.
4
10. Indemnification of Escrow Agent: The Company agrees to indemnify and hold harmless the Escrow Agent from and against, any and all loss, liability, cost, damage, and expense, including, without limitation, reasonable counsel fees, which the Escrow Agent may suffer or incur by reason of any action, claim, or proceeding brought against the Escrow Agent arising out of or relating in any way to this Agreement or any transaction to which this Agreement relates unless such action, claim, or proceeding is the result of the gross negligence or willful misconduct of the Escrow Agent. The Escrow Agent may consult counsel in respect of any question arising under this Agreement and Escrow Agent shall not be liable for any action taken or omitted in good faith upon advice of such counsel.
11. Successors and Assigns. Except as otherwise provided in this Agreement, no party hereto shall assign this Agreement or any rights or obligations hereunder without the prior written consent to the other parties hereto and any such attempted assignment without such prior written consent shall be void and of no force and effect. This Agreement shall inure to the benefit of, and be binding upon, the assigns, successors in interest, personal representatives, estates, heirs, and legatees of each of the parties hereto.
12. Governing Law; Jurisdiction. This Agreement shall be construed, performed, and enforced in accordance with, and governed by, the internal laws of the State of New York, without giving effect to the principles of conflicts of laws thereof. Each party hereby consents to the personal jurisdiction and venue of any United States District Court for the District of Minnesota located in Hennepin County, Minnesota.
13. Severability. In the event that any part of this Agreement is declared by any court or other judicial or administrative body to be null, void, or unenforceable, said provision shall survive to the extent it is not so declared, and all of the other provisions of this Agreement shall remain in full force and effect.
14. Amendments; Waivers. This Agreement may be amended or modified, and any of the terms, covenants, representations, warranties, or conditions hereof may be waived, only by a written instrument executed by the parties hereto, or in the case of a waiver, by the party waiving compliance. Any waiver by any party of any condition, or of the breach of any provision, term, covenant, representation, or warranty contained in this Agreement, in any one or more instances, shall not be deemed to be nor construed as further or continuing waiver of any such condition, or of the breach of any other provision, term, covenant, representation, or warranty of this Agreement.
15. Entire Agreement. This Agreement contains the entire understanding among the parties hereto with respect to the escrow contemplated hereby and supersedes and replaces all prior and contemporaneous agreements and understandings, oral or written, with regard to such escrow.
16. Section Headings. The Section headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.
5
17. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute the same instrument.
18. Time of Essence. Time is of the essence of this Agreement.
19. Resignation. The Escrow Agent may resign upon thirty (30) days' advance written notice to the Company and Craig-Hallum. The Escrow Agent may be removed upon thirty (30) days' advance written notice from the Company to the Escrow Agent. Upon either such notice, a successor escrow agent shall be appointed by the Company which successor shall be reasonably acceptable to the Company shall provide written notice of such appointment to the resigning Escrow Agent. Such successor escrow agent shall become the escrow agent hereunder upon the resignation or removal date specified in such notice. If a successor escrow agent is not appointed within the 30-day period following such notice, the Escrow Agent may petition any court of competent jurisdiction to name a successor escrow agent.
[Signature Page Follows]
6
IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be executed the day and year first set forth above.
S&W SEED COMPANY
By: __________________________________
Its: ___________________________________
CRAIG-HALLUM CAPITAL GROUP LLC
By: ___________________________________
Its: __
Managing Partner
___________________
ALERUS FINANCIAL
By: ___________________________________
Its: __________________________________________
EXHIBIT 10.9
AMENDMENT AND WAIVER AGREEMENT
This AMENDMENT AND WAIVER AGREEMENT is dated as of December 31, 2014 (this " Agreement ") and is between S&W Seed Company (the " Borrower ") and Wells Fargo Bank, National Association (the " Bank ").
Reference is made to (1) the Credit Agreement dated as of February 1, 2014 (as amended, modified, supplemented or restated from time to time, the " Revolving Credit Agreement ") between the Borrower and the Bank and (2) the EX-IM Working Capital Guarantee Credit Agreement dated as of February 1, 2014 (as amended, modified, supplemented or restated from time to time, the " EX-IM Credit Agreement ") between the Borrower and the Bank. The Revolving Credit Agreement and the EX-IM Credit Agreement are collectively referred to herein as the " Credit Agreements ".
Reference is also made to the (1) Continuing Security Agreement: Rights to Payment and Inventory dated February 1, 2014 (as amended, modified, supplemented or restated from time to time, the " Rights to Payment and Inventory Security Agreement ") between the Borrower and the Bank; (2) Security Agreement: Equipment dated February 1, 2014 (as amended, modified, supplemented or restated from time to time, the " Equipment Security Agreement ") between the Borrower and the Bank; (3) General Pledge Agreement dated July 2, 2014 (as amended, modified, supplemented or restated from time to time, the " General Pledge ") between the Borrower and the Bank; (4) EX-IM Working Capital Guarantee Security Agreement: Rights to Payment and Inventory dated February 1, 2014 (as amended, modified, supplemented or restated from time to time, the " EX-IM Rights to Payment and Inventory Security Agreement ") between the Borrower and the Bank; (5) EX-IM Working Capital Guarantee Security Agreement: Equipment dated February 1, 2014 (as amended, modified, supplemented or restated from time to time, the " EX-IM Equipment Security Agreement ") between the Borrower and the Bank; and (6) EX-IM Working Capital Guarantee General Pledge Agreement dated July 2, 2014 (as amended, modified, supplemented or restated from time to time, the " EX-IM General Pledge " and, together with the other agreements described in this recital, the " Security Agreements ") between the Borrower and the Bank.
Reference is made to Borrower Agreement in favor of the Export-Import Bank of the United States and the Bank dated February 1, 2014 (as amended, modified, supplemented or restated from time to time, the " Borrower Agreement " and, together with the Credit Agreements and the Security Agreements, the " Wells Fargo Loan Documents ").
The Borrower has notified the Bank that, pursuant to the Asset Purchase and Sale Agreement dated as of December 19, 2014 (the " Asset Purchase Agreement ") between the Borrower and Pioneer Hi-Bred International, Inc. (the " Seller "), it intends to acquire (the " Acquisition ") the assets of the Seller specified therein (the " Pioneer Assets ") for an aggregate purchase price of $37,000,000 (the " Purchase Price ").
To pay a portion of the Purchase Price, the Borrower has notified the Bank that, pursuant to the Securities Purchase Agreement dated as of December 31, 2014 (the " Securities Purchase Agreement "), it intends to issue and sell up to $27,000,000 of its 8% Senior Secured Convertible Debentures due [__] (the " Convertible Notes ").
The Borrower has notified the Bank that the obligations of the Borrower to repay the Convertible Notes (i) will be guaranteed by Seed Holding, LLC and Stevia California, LLC, each a wholly-owned subsidiary of the Borrower (the " Guarantors "), pursuant to the Guaranty dated as of December 31, 2014 (the " Convertible Notes Guaranty ") and (ii) will be secured by certain assets of the Borrower and the Guarantors (the " Convertible Notes Collateral ") described in the Security Agreement dated as of December 31, 2014 (the " Convertible Notes Security Agreement ").
To pay a further portion of the purchase price for the Acquisition, the Borrower has notified the Bank that, pursuant to the Promissory Note dated as of December 31, 2014 (the " Seller Note "), it intends to issue a promissory note to the Seller in the principal amount of $15,000,000, which Seller Note is due December 31, 2017.
The Borrower has notified the Bank that the obligations of the Borrower to repay the Seller Note will be secured by certain assets of the Borrower (the " Seller Note Collateral ") described in (i) the Security Agreement dated as of December 31, 2014 between the Borrower and the Seller, (ii) the Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated as of December 31, 2014 among the Borrower, the Seller and TitleOne Corporation, as trustee, with respect to the real property commonly known as 9224 Lake Shore Drive Nampa, Idaho (the " Nampa Property "), and (iii) the Mortgage dated as of December 31, 2014 between the Borrower and the Seller with respect to the real property described in Columbia County Certified Survey Map No. 884, as recorded in Volume 4 of Surveys, on page 104, as Document No. 441386, being located in the North East 1/4 of the North East l/4 of Section 22, Township 10 North, Range 9 East, Town of Arlington, Columbia County, Wisconsin and Lot 1 of Certified Survey Map No. 3122, as recorded in Volume 20 of Certified Survey Maps, page 1 18, Document No. S93S25,being a Survey in the North East 1/4 of the North East 1/4 of Section 22, Township 10 North, Range 9 East, Town of Arlington, Columbia County, Wisconsin (the " Columbia County Property ") (collectively, the " Seller Note Security Agreements ").
The Borrower has requested that the Bank waive compliance by the Borrower with certain sections of the Well Fargo Loan Documents so that the Borrower may consummate the Acquisition, issue the Convertible Notes and the Seller Note, and grant the liens over the Convertible Notes Collateral and the Seller Note Collateral.
In connection with the requested waivers, the Borrower has also requested that the Bank agree to amendments to certain terms of the Wells Fargo Loan Documents.
For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the premises contained herein, the parties hereto agree as follows:
Section 1. Definitions . Unless otherwise defined herein, terms defined in the Credit Agreements shall have their defined meanings when used herein.
Section 2. Waivers . Subject to satisfaction of the Conditions Precedent (as defined below), and effective on the first date on which the Conditions Precedent are satisfied, the Bank
2
hereby waives compliance by the Borrower with the following sections of the Wells Fargo Loan Documents:
Section 3. Amendments to Credit Agreement . Subject to satisfaction of the Conditions Precedent, and effective on the first date on which the Conditions Precedent are satisfied, each Credit Agreement is hereby amended as follows:
SECTION 4.12. DEFAULT NOTICES. Borrower shall immediately notify Bank of any default or event of default under any of the Asset Purchase Agreement or any of the other agreements, documents and instruments executed and delivered in connection therewith, any Pioneer Loan Agreement (as defined in the Intercreditor and Subordination Agreement dated as of December 31, 2014 (the " Intercreditor Agreement ") among the Bank, Hudson Bay Master Fund, Ltd., as agent, and Pioneer Hi-Bred International, Inc.) or any Term Loan Agreement (as defined in the Intercreditor Agreement).
SECTION 4.13. SHAREHOLDER APPROVAL. Borrower shall comply with its obligations in the Term Loan Agreements (as defined in the Intercreditor Agreement), each as in effect on the date hereof, requiring it to reserve and keep available its authorized and unissued shares of its common stock in sufficient amounts, together with
3
all necessary shareholder approvals, in order to convert Convertible Notes to its common stock pursuant thereto.
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 of any other entity; nor sell, lease, transfer or otherwise dispose of (a) all or a substantial or material portion of Borrower's assets except in the ordinary course of its business or (b) any Pioneer Lender Priority Collateral or Term Loan Lender Priority Collateral (as such terms are defined in the Intercreditor Agreement); provided, however that acquisitions or investments in other entities up to a maximum of $1,000,000.00 in each calendar year are permitted hereunder.
SECTION 5.9. NO AMENDMENTS. Amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to any of the terms of the following documents: (a) the Intercreditor Agreement; (b) the Asset Purchase Agreement and the other agreements, documents and instruments executed and delivered in connection therewith; (c) the Pioneer Loan Agreements (as defined in the Intercreditor Agreement); and (d) the Term Loan Agreements (as defined in the Intercreditor Agreement).
SECTION 5.10. NO PREPAYMENTS, ETC. Make or offer to make any optional or voluntary payment or prepayment on or redemption, defeasance or purchase of any amounts (whether principal or interest) payable under the Pioneer Lender Debt or the Term Loan Debt (as such terms as defined in the Intercreditor Agreement), provided that so long as no Event of Default shall exist or result therefrom (including without limitation under Section 6.1(i) hereof), the Borrower shall be permitted to convert the Term Loan Debt to common equity of the Borrower pursuant to Section 4 of the Convertible Notes as in effect on the date hereof.
SECTION 5.11. USE OF PROCEEDS. Use proceeds of the Line of Credit to make payment of amounts due under any of the Pioneer Loan Agreements or the Term Loan Agreements (as such terms are defined in the Intercreditor Agreement) or to pay the purchase price for the acquisition of the Pioneer Assets (as defined in the Intercreditor Agreement).
(k) The Intercreditor Agreement shall for any reason be revoked or invalidated, or otherwise cease to be in full force and effect, or any person shall contest in
4
any manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder or purport to revoke, terminate or rescind any provision thereof.
(l) Any Loan Document ceases for any reason to be valid, binding and in full force and effect or any lien or security interest created by any Loan Document ceases to be enforceable and of the same effect and priority purported to be created thereby, other than as expressly permitted hereunder or thereunder.
(m) Borrower fails to deliver by March 1, 2015 each of the following, in each case in form and substance satisfactory to Bank: (i) guarantees of Borrower's indebtedness under the Loan Documents from Seed Holding, LLC and Stevia California, LLC (collectively, the " Guarantors "); (ii) security agreements from the Guarantors pursuant to which they grant a security interest and lien to Bank over substantially all of their assets; (iii) a pledge agreement by Borrower pursuant to which Borrower pledges all of the equity interests issued by the Guarantors to Bank; (iv) to the extent certificated, original equity certificates issued by the Guarantors, together with blank instruments of transfer; (v) a deed of trust or mortgage in respect to the Nampa Property and the Columbia County Property (as such terms are defined in the Amendment and Waiver Agreement dated as of December 31, 2014 relating to this Agreement) and all other real property of Borrower and any Third Party Obligor required by Bank; and (vi) such title insurance policies, evidence of insurance, insurance certificates and endorsements, surveys, appraisals, consents, estoppels, subordination agreements, recordations, collateral filings, opinions, resolutions, documents and other instruments as Bank shall require in connection with the foregoing.
Section 4. Conditions to Effectiveness . The waivers and amendments set forth in Sections 2 and 3 of this Agreement shall become effective upon satisfaction of the following conditions (the " Conditions Precedent "), as determined by the Bank:
5
Section 5. Representations And Warranties . In order to induce the Bank to enter into this Agreement, the Borrower hereby represents and warrants to the Bank that:
Section 6. Miscellaneous .
6
7
and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, either Credit Agreement, the Borrower Agreement, this Agreement, the Intercreditor Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the transactions contemplated hereby or thereby, any loan or letter of credit made or issued under a Credit Agreement, or the use of the proceeds thereof.
[signatures on next page]
8
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their respective duly authorized officers as of the day and year first above written.
S&W SEED COMPANY
By: _____________________________
Name:
Title:
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: _____________________________
Name:
Title:
9