Item 1.01 Entry into a Material Definitive Agreement.
Amended and Restated CIBC Loan Agreement
On March 22, 2023, S&W Seed Company (the "Company"), as borrower, entered into
an Amended and Restated Loan and Security Agreement (the "Amended CIBC Loan
Agreement") with CIBC Bank USA ("CIBC"), as administrative agent and sole lead
arranger, and the other loan parties and lenders party thereto. The Amended CIBC
Loan Agreement replaces the Company's existing Loan and Security Agreement with
CIBC, dated December 26, 2019, as amended, by and among the Company, Seed
Holding, LLC, Stevia California, LLC and CIBC (the "Prior CIBC Loan Agreement").
The Amended CIBC Loan Agreement now matures on August 31, 2024.
The Amended CIBC Loan Agreement provides for a senior secured credit facility of
up to $25.0 million from February 1 to October 31 of each year, and up to $18.0
million from November 1 to January 31 of each year (the "CIBC Credit Facility").
The proceeds of advances under the CIBC Credit Facility may be used to finance
the Company's ongoing working capital requirements and other general corporate
purposes. Availability of funds under the CIBC Credit Facility is subject to a
borrowing base equal to (a) up to 85% of eligible domestic accounts receivable,
plus (b) up to 90% of eligible foreign accounts receivable, plus (c) up to the
lesser of (i) 65% of eligible inventory and (ii) 85% of the appraised net
orderly liquidation value of eligible inventory, in each case subject to an
eligible inventory sublimit, in each case ((a), (b) and (c)), as more fully set
forth in the Amended CIBC Loan Agreement and subject to lender reserves that
CIBC may establish from time to time in its sole discretion, determined in good
faith. Advances under the CIBC Credit Facility bear interest at a rate per annum
equal to a reference rate equal to CIBC's prime rate at any time (or, if
greater, the federal funds rate at such time plus 0.5%) plus an applicable
margin of 2.0%. The Company's obligations under the Amended CIBC Loan Agreement
are secured by a first priority security interest in substantially all of the
Company's assets (subject to certain exceptions), including intellectual
property.
The Amended CIBC Loan Agreement contains certain customary representations and
warranties, events of default, and affirmative and negative covenants, including
limitations with respect to debt, liens, fundamental changes, asset sales,
restricted payments, investments and transactions with affiliates, subject to
certain exceptions. Amounts due under the Amended CIBC Loan Agreement may be
accelerated upon an "event of default," as defined in the Amended CIBC Loan
Agreement, such as failure to pay amounts owed thereunder when due, breach of a
covenant, material inaccuracy of a representation, or occurrence of bankruptcy
or insolvency, subject in some cases to cure periods. Additionally, upon the
occurrence and during the continuance of an event of default, CIBC may elect to
increase the existing interest rate on all of the Company's outstanding
obligations by 2.0% per annum.
All amounts outstanding under the Amended CIBC Loan Agreement, including, but
not limited to, accrued and unpaid principal and interest due under the CIBC
Credit Facility, will be due and payable in full on August 31, 2024.
In connection with the Company's entry into the Amended CIBC Loan Agreement, MFP
Partners L.P. ("MFP") provided an amended letter of credit (the "Letter of
Credit"), issued by JPMorgan Chase Bank, N.A. for the account of MFP, in the
amount of $13,000,000 and with a maturity date of September 30, 2024, for the
benefit of CIBC, as additional collateral to support the Company's obligations
under the Amended CIBC Loan Agreement.
3rd Amendment to MFP Loan Agreement
Concurrently, on March 22, 2023, the Company entered into a Third Amendment to
Subordinate Loan and Security Agreement (the "MFP Amendment") with MFP, amending
the Company's Subordinate Loan and Security Agreement, dated September 22, 2022
(as amended, the "MFP Loan Agreement"), with MFP, to (i) increase the aggregate
amount of cash advances permitted from $12.0 million to $13.0 million; (ii)
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increase the cash fee payable to MFP on all amounts remaining undrawn under the
Letter of Credit from 3.50% to 4.25% per annum; (iii) provide for the issuance
of the MFP Warrant (as defined below) to MFP; and (iv) reflect the extension of
the maturity date of the Letter of Credit to September 30, 2024.
MFP Warrant
In connection with the MFP Amendment, on March 22, 2023, the Company issued to
MFP a warrant (the "MFP Warrant") to purchase 1,300,000 shares of the Company's
common stock (the "MFP Warrant Shares"), at an exercise price of $2.15 per MFP
Warrant Share (subject to adjustment in connection with any stock dividends and
splits, distributions with respect to common stock and certain fundamental
transactions as described in the MFP Warrant). The MFP Warrant will expire five
years from the date of issuance.
MFP is the Company's largest shareholder. One of the Company's directors,
Alexander C. Matina, is Vice President, Investments and Portfolio Manager of MFP
Investors LLC, the general partner of MFP.
Item 1.02 Termination of a Material Definitive Agreement.
The information included in Item 1.01 related to the Prior CIBC Loan Agreement
is incorporated by reference into this Item 1.02.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information included in Item 1.01 related to the Amended CIBC Loan Agreement
is incorporated by reference into this Item 2.03.
Item 3.02 Unregistered Sales of Equity Securities.
The information included in Item 1.01 related to the MFP Warrant is incorporated
by reference into this Item 3.02.
Neither the MFP Warrant nor the MFP Warrant Shares have been registered under
the Securities Act of 1933, as amended (the "Securities Act"), or any state
securities laws. The Company has relied on the exemption from the registration
requirements of the Securities Act by virtue of Section 4(a)(2) thereof and Rule
506 of Regulation D thereunder. In connection with the execution of the MFP
Amendment, MFP represented to the Company that it is an "accredited investor" as
defined in Regulation D of the Securities Act and that the securities purchased
by MFP were acquired solely for its own account and for investment purposes and
not with a view to the future sale or distribution.
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