UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
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(Commission File Number) |
(I.R.S. Employer Identification No.) |
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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:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
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| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
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Securities registered pursuant to Section 12(g) of the Act:
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| OTCQB |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
INFORMATION TO BE INCLUDED IN THE REPORT
Item 1.01 Entry into a Material Definitive Agreement.
In connection with a private placement conducted by Sow Good Inc., a Nevada corporation (the "Company") on April 25, 2023 (the "Offering"), on May 11, 2023, the Company entered into a Note and Warrant Purchase Agreement (the "Purchase Agreement") with an accredited investor (the "Purchaser") to sell and issue to the Purchaser in reliance on Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder, (i) up to $100,000 in the May 2023 Promissory Note (the "Note") and (ii) a ten-year warrant (the "Warrant") to purchase up to 25,000 shares (the "Warrant Shares" and together with the Note and Warrant, the "Securities") of the Company's common stock, par value $0.001 per share, representing 25,000 warrant shares per $100,000 of notes purchased. The Note Purchase Agreement, Note, and Warrant are based on substantially similar terms as the April 2023 Note Purchase Agreement, promissory notes, and warrants issued on April 25, 2023 as part of the Offering.
The Note is a (1) year note. Interest on the Note accrues at a rate of 8% per annum, payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period, and the outstanding principal amount of the Note matures and becomes due and payable on the Maturity Date (as defined in the Note to be May 11, 2024, unless accelerated by an Event of Default). Loans (as defined in the Note) may be advanced to the Company from time to time from May 11, 2023 to the Maturity Date, upon prior written notice from Company.
The Warrant is issued to the Purchaser as they advance Loans to the Company, in accordance with the terms of the Note. Upon issuance, the Warrant is exercisable immediately and for a period of 10 years at a price of $2.50 per share. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share, provided that the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of such redemption. Assuming full advance of the Loans and full exercise of the Warrant, further proceeds to the Company from the exercise of the Warrant Shares is calculated as $62,500.
The foregoing description of the Offering does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, the Note and the Warrant, a copy of each of which is attached hereto as Exhibit 10.1, Exhibit 10.2 and Exhibit 4.1, respectively, and which are incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information contained in Item 1.01 above with respect to the Offering of the Securities is incorporated by this reference into this Item 3.02. The Securities were offered and sold in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act and Rule 506 promulgated thereunder. The Purchase Agreement, Notes and Warrants executed in connection therewith contain representations to support the Company’s reasonable belief that, among other things, the Purchasers had access to information concerning its operations and financial condition, that the Purchasers acquired the Securities for their own account and not with a view to the distribution thereof, and that each Purchaser is an “accredited investor” as such term is defined in Regulation D promulgated under the Securities Act. The Securities described in Item 1.01 above are deemed to be restricted securities for purposes of the Securities Act and the certificates representing the Securities shall bear legends to that effect. Accordingly, the Securities sold in the Offering may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
Item 8.01 Other Events.
On May 11, 2023, the Company issued a press release regarding an update on its operations. A copy of the press release is being furnished to the Securities and Exchange Commission and is attached as Exhibit 99.1 to this Form 8-K.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |
| 4.1 | Form of May 2023 Common Stock Warrant | |
| 10.1 | Note and Warrant Purchase Agreement, dated May 11, 2023 | |
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10.2 |
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| 99.1 | Press Release date May 11, 2023 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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SIGNATURES
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 hereunto duly authorized.
| SOW GOOD INC. | ||
| By: | /s/ Claudia Goldfarb | |
| Claudia Goldfarb | ||
|
Chief Executive Officer
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| Date: May 15, 2023 | ||
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Exhibit 4.1
NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE HEREUNDER HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE. THEY HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. THEY MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING THESE SECURITIES UNDER THE SAID ACT OR LAWS, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT REGISTRATION IS NOT REQUIRED THEREUNDER.
SOW GOOD INC.
COMMON STOCK WARRANT
THIS CERTIFIES THAT, for value received, the Holder is entitled to purchase, and Sow Good Inc., a Nevada corporation (the “Company”), promises and agrees to sell and issue to the Holder, at any time, or from time to time, during the Exercise Period, up to 25,000[1] shares of Common Stock, par value $0.001 per share (the “Common Stock”), of the Company, at the Exercise Price, subject to the provisions and upon the terms and conditions hereinafter set forth.
1. Definitions of Certain Terms. In addition to the terms defined elsewhere in this Warrant, the following terms have the following meanings:
(a) “Business Day” means a day on which banks are open for business in the city of Dallas, Texas.
(b) “Commission” means the U.S. Securities and Exchange Commission.
(c) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(d) “Exercise Price” means the price at which the Holder may purchase one share of Common Stock upon exercise of this Warrant as determined from time to time pursuant to the provisions hereof. The initial Exercise Price is $2.50 per share, subject to adjustment as provided herein.
(e) “Expiration Date” means the 120-month anniversary of the Issue Date.
(f) “Holder” means a record holder of the Warrant or shares of Common Stock obtained or obtainable upon exercise of the Warrant, as applicable. The initial Holder is _______________.
(g) “Issue Date” means May 11, 2023.
(h) “Purchase Agreement” means that certain Note and Warrant Purchase Agreement, dated as of the Issue Date, between the Company and the purchasers of Notes and Warrants specified therein.
(i) “Securities Act” means the Securities Act of 1933, as amended.
(j) “Warrant” means this warrant and any warrant or warrants hereafter issued as a consequence of the exercise or transfer of this warrant in whole or in part.
2. Exercise of Warrant; Redemption; Manner of Exercise.
______________
1 NTD: Proportional to the ratio of 25,000 warrant shares per $100,000 promissory note investment.
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(a) Cash Exercise. This Warrant may be exercised, in whole or in part, at any time or from time to time, during the period commencing as of 8:30:01 a.m., Dallas, Texas time, on the Issue Date and ending as of 4:30 p.m., Dallas, Texas time, on the Expiration Date (the “Exercise Period”), for 25,000 fully paid and non-assessable shares of Common Stock (the “Warrant Shares”), for an exercise price per share equal to the Exercise Price, by delivery to the Company at its headquarters, or at such other place as is designated in writing by the Company, of:
(i) a duly executed Notice of Exercise, substantially in the form of Attachment I attached hereto and incorporated by reference herein;
(ii) this Warrant; and
(iii) payment of an amount in cash equal to the product of the Exercise Price multiplied by the number of Warrant Shares being purchased upon such exercise, with such payment being in the form of a wire transfer of funds to an account designated in writing by the Company.
The date on which the Company receives the Notice of Exercise, this Warrant, and the Exercise Price payable with respect to the Warrant Shares being purchased shall be deemed to be the date of exercise (the “Date of Exercise”).
(b) Delivery of Certificates. Subject to the provisions below, upon receipt of the Notice of Exercise, the Company shall immediately instruct its transfer agent to prepare certificates for the Warrant Shares to be received by the Holder upon such exercise. The Company shall, at its own cost and expense, cause the transfer agent to deliver such certificates to the Holder (or to such other nominee as may be designated by the Holder) within five Business Days following the Date of Exercise (the “Delivery Period”). The Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised as of the Date of Exercise, irrespective of the date such certificates are actually delivered by the transfer agent to the Holder or are credited to the Holder’s Depository Trust Company (“DTC”) account, as the case may be. If fewer than all of the Warrant Shares purchasable under the Warrant are purchased, the Company will, upon such partial exercise, execute and deliver to the Holder a new Warrant (dated as of the Issue Date), in the same form and tenor as this Warrant, evidencing that portion of the Warrant not exercised.
(c) Delivery of Electronic Shares. In lieu of delivering physical certificates representing the Warrant Shares issuable upon exercise (provided that the transfer agent is participating in the DTC Fast Automated Securities Transfer program and provided further that the Holder provides the transfer agent with information required in order to issue such Warrant Shares to the Holder electronically), upon the request of the Holder as set forth in the Notice of Exercise, but only if the Warrant Shares may be issued without restrictive legends, the Company shall use its best efforts to cause its transfer agent to electronically transmit, within the Delivery Period, the Warrant Shares issuable upon exercise to the Holder by crediting Holder’s account with DTC through its Deposit Withdrawal Agent Commission system. Any delivery not effected by electronic transmission shall be effected by delivery of physical certificates.
(d) No Fractional Shares. If a fractional share of Warrant Shares would, but for the provisions of this Section 2(d), be issuable upon exercise of the rights represented by this Warrant, the Company shall (i) round a half share or greater to be delivered to Holder up to the next whole share and (ii) round a less-than-half share to be delivered to Holder down to the nearest whole share.
(e) Buy-In. Notwithstanding anything else to the contrary contained herein, in addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the applicable Warrant Shares purchased upon exercise hereof or credit the Holder’s balance account with DTC, as applicable, on or before the end of the Delivery Period (other than a failure caused by any incorrect or incomplete information provided by Holder to the Company hereunder), and if after such date the Holder purchases shares of Common Stock to deliver in satisfaction of a sale by the Holder of Warrant Shares that the Holder anticipated receiving from the Company upon exercise of this Warrant (a “Buy-In”), then the Company shall, within three Business Days after the Holder’s request, (1) pay cash to the Holder the amount by which (x) the Holder’s total purchase price (including commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue, by (B) the price at which the sell order giving rise to such purchase obligation was executed, or (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored, or deliver to the Holder the number of Warrant Shares that would have been issued had the Company timely complied with its exercise 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, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit the 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 certificates representing the net exercise number of Warrant Shares as required pursuant to the terms hereof.
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(f) No Charge to Holder Upon Issuance. The issuance of Warrant Shares upon exercise of this Warrant shall be made without charge to Holder for any issuance tax in respect thereof or other cost incurred by the Company in connection with such exercise and the related issuance of Warrant Shares (other than any transfer taxes resulting from the issuance of Warrant Shares to any person other than Holder).
(g) Reservation of Shares. During the Exercise Period, the Company shall reserve and keep available out of its authorized but unissued Common Stock such number of Warrant Shares issuable upon the full exercise of this Warrant. All Warrant Shares which are so issuable shall, when issued and upon the payment of the applicable Exercise Price, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges and not subject to the pre-emptive rights of any holder of Common Stock or any other class or series of stock of the Company. During the Exercise Period, the Company shall not take any action which would cause the number of authorized but unissued Common Stock to be less than the number of such shares required to be reserved hereunder for issuance upon exercise of this Warrant.
(h) Redemption.
(i) We may call this Warrant for redemption, in whole and not in part, at a price of $0.001 per share (the “Redemption Price”) (A) at any time after the Issue Date, and (B) upon not less than 30 days’ prior written notice of redemption to Holder specifying the time and place for redemption, and (C) only if, the volume weighted average sale price per share of Common Stock equals or exceeds $9.00 per share for thirty (30) consecutive trading days ending on the third business day prior to the mailing of notice of redemption to Holder. This Warrant may be exercised for cash at any time after the notice of redemption shall have been given and prior to the date fixed for redemption. On and after the redemption date, the Holder of this Warrant shall have no further rights except to receive, upon surrender of this Warrant, the Redemption Price.
(ii) A redemption may only occur if all of the warrants issued to the investors as of the date hereof are being redeemed at the same time.
3. Adjustments in Certain Events. The number, class, and price of Warrant Shares for which this Warrant may be exercised are subject to adjustment from time to time upon the happening of certain events as follows:
(a) Subdivisions, Combinations and Other Issuances. If the outstanding shares of the Company’s Common Stock are divided into a greater number of shares, by forward stock split or otherwise, or a dividend in stock is paid on the Common Stock, then the number of shares of Warrant Shares for which the Warrant is then exercisable will be proportionately increased and the Exercise Price will be proportionately reduced. Conversely, if the outstanding shares of Common Stock are combined into a smaller number of shares of Common Stock, by reverse stock split or otherwise, then the number of Warrant Shares for which the Warrant is then exercisable will be proportionately reduced and the Exercise Price will be proportionately increased. The increases and reductions provided for in this Section 3(a) will be made with the intent and, as nearly as practicable, the effect that neither the percentage of the total equity of the Company obtainable on exercise of the Warrants nor the price payable for such percentage upon such exercise will be affected by any event described in this Section 3(a).
(b) Merger, Consolidation, Reclassification, Reorganization, Etc. In case of any change in the Common Stock through merger, consolidation, reclassification, reorganization, partial or complete liquidation, purchase of all or substantially all the assets of the Company, or other change in the capital structure of the Company, then, as a condition of such change, lawful and adequate provision will be made so that the Holder will have the right thereafter to receive upon the exercise of the Warrant the kind and amount of shares of stock or other securities or property to which he would have been entitled if, immediately prior to such event, Holder had held the number of Warrant Shares obtainable upon the exercise of the Warrant. In any such case, appropriate adjustment will be made in the application of the provisions set forth herein with respect to the rights and interest thereafter of the Holder, to the end that the provisions set forth herein will thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the exercise of the Warrant. The Company will not permit any change in its capital structure to occur unless the issuer of the shares of stock or other securities to be received by the Holder, if not the Company, agrees to be bound by and comply with the provisions of this Warrant.
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(c) Notice of Record Date, Etc. In the event the Company shall propose to take any action of the types requiring an adjustment pursuant to this Section 3 or a dissolution, liquidation or winding up of the Company shall be proposed, the Company shall give notice to Holder as provided in Section 6 below, which notice shall specify the record date, if any, with respect to any such action and the date on which such action is to take place. Such notice shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action (to the extent such effect may be known at the date of such notice) on the Exercise Price and the number, kind or class of shares or other securities or property which shall be deliverable or purchasable upon the occurrence of such action or deliverable upon the exercise of the Warrant. In the case of any action which will require the fixing of a record date, unless otherwise provided in this Warrant, such notice shall be given at least twenty (20) days prior to the date so fixed, and in case of all other action, such notice shall be given at least thirty (30) days prior to the taking of such proposed action.
(d) Stock Dividends. If securities of the Company or securities of any subsidiary of the Company are distributed pro rata to holders of Common Stock, such number of securities will be distributed to the Holder or its assignee upon exercise of its rights hereunder as such Holder or assignee would have been entitled to if this Warrant had been exercised prior to the record date for such distribution. The provisions with respect to adjustment of the Common Stock provided in this Section 3 will also apply to the securities to which the Holder or its assignee is entitled under this Section 3(d).
4. No Rights as a Stockholder. Except as otherwise provided herein, the Holder will not, by virtue of ownership of the Warrant, be entitled to any rights of a stockholder of the Company but will, upon written request to the Company, be entitled to receive such quarterly or annual reports as the Company distributes to its stockholders.
5. Restrictions on Transfer; Legends.
(a) Registration or Exemption Required. Assuming the accuracy of the representations and warranties of the Holder contained in the Purchase Agreement, this Warrant has been issued in a transaction exempt from the registration requirements of the Securities Act by virtue of Regulation D and exempt from state registration or qualification under applicable state laws. Neither this Warrant nor the Warrant Shares may be pledged, transferred, sold or assigned except pursuant to an effective registration statement or an exemption to the registration requirements of the Securities Act and applicable state laws. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, or upon surrender of the Warrant Shares for transfer, the transfer of this Warrant, or where applicable the Warrant Shares, shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant or the Warrant Shares, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the Securities Act or a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act in a transaction pursuant to Rule 144A.
(b) Restrictive Legend. The Holder understands that until such time as the Warrant Shares have been registered under the Securities Act, or otherwise may be sold pursuant to Rule 144 under the Securities Act or an exemption from registration under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, this Warrant and the Warrant Shares, as applicable, shall bear a restrictive legend in substantially the form set forth on the cover page of this Warrant (and a stop-transfer order may be placed against transfer of the certificates for such securities).
(c) Removal of Restrictive Legends. The certificates evidencing the Warrant Shares shall not contain any legend restricting the transfer thereof: (A) while a registration statement covering the sale or resale of the Warrant Shares is effective under the Securities Act, or (B) following any sale of such Warrant Shares pursuant to Rule 144, or (C) if such Warrant Shares are eligible for sale under Rule 144(b)(1), or (D) 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) and the Company shall have received an opinion of counsel to the Holder in form reasonably acceptable to the Company to such effect (collectively, the “Unrestricted Conditions”). The Company shall cause its counsel to issue a legal opinion to its transfer agent if required by the transfer agent to effect the issuance of the Warrant Shares, as applicable, without a restrictive legend or removal of the legend hereunder. The Company agrees that at such time as the Unrestricted Conditions are met, it will, no later than seven (7) trading days following the delivery by the Holder to the Company or the transfer agent of a certificate representing Warrant Shares, issued with a restrictive legend, deliver or cause to be delivered to such Holder a certificate (or electronic transfer) representing such Warrant Shares that is free from all restrictive and other legends.
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6. Notices; Adjustments.
(i) All notices required or permitted hereunder shall be in writing and shall be deemed effectively given and received for all purposes if in compliance with the notice provisions of the Note Purchase Agreement.
(ii) Upon the occurrence of any adjustments pursuant to Section 3 hereof, the Company at its expense shall, as promptly as reasonably practicable but in any event not later than 10 days thereafter, compute such adjustment in accordance with the terms hereof and furnish to Holder a certificate setting forth such adjustment and showing in detail the facts upon which such adjustment is based.
7. Non-Circumvention. The Company hereby covenants and agrees that the Company will not, by amendment of its articles of incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be reasonably required to protect the rights of the Holder.
8. Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of Nevada, without regard to conflict of law principles, and notwithstanding the fact that one or more counterparts hereof may be executed outside of the state, or one or more of the obligations of the parties hereunder are to be performed outside of the state.
9. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft, or destruction, of indemnity reasonably satisfactory to it, and, if mutilated, upon surrender and cancellation of this Warrant, the Company will execute and deliver a new Warrant, having terms and conditions identical to this Warrant, in lieu hereof.
10. Modification and Waiver. The Warrant and any provision hereof may be amended, waived, discharged or terminated only by an instrument in writing signed by the Company and the Holder of the Warrant.
11. Successors. This Warrant shall be binding and inure to the benefit of the parties and their respective successors and assigns hereunder; provided that this Warrant may be assigned by Holder only in compliance with the conditions specified in and in accordance with all of the terms of this Warrant. This Warrant does not create and shall not be construed as creating any rights enforceable by any other person or corporation.
12. Headings. The headings used in this Warrant are used for convenience only and are not to be considered in construing or interpreting this Warrant.
13. Saturdays, Sundays, Holidays. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday in the State of Texas, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.
14. Severability. If any provision of this Warrant shall be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions of this Warrant.
15. Execution and Counterparts. This Warrant may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and such counterparts together shall constitute only one instrument. Any one of such counterparts shall be sufficient for the purpose of proving the existence and terms of this Warrant, and no party shall be required to produce an original or all of such counterparts in making such proof.
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IN WITNESS WHEREOF, each of the Company and Holder have each caused this Warrant to be executed and delivered as of the Issue Date by an officer thereunto duly authorized.
SOW GOOD INC.
a Nevada corporation
By
Claudia Goldfarb
Chief Executive Officer
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ATTACHMENT I
NOTICE OF EXERCISE
SOW GOOD INC.
Attention: __________________
The undersigned hereby elects to purchase, pursuant to the provisions of the Common Stock Warrant issued by Sow Good Inc. dated as of May 11, 2023 and held by the undersigned, the original of which is attached hereto, and (check the applicable box):
| ¨ | Tenders herewith payment of the Exercise Price in the form of cash, via wire transfer of immediately available funds, in the amount of $____________ for _________ shares of Common Stock. |
| ¨ | If this box is checked, as long as the Company’s transfer agent participates in the DTC Fast Automated Securities Transfer program (“FAST”), and except as otherwise provided in the next following sentence, the Company shall effect delivery of the shares of Common Stock to the Holder by crediting to the account of the Holder or its nominee at DTC (as specified in this Exercise Notice) with the number of shares of Common Stock required to be delivered. In the event that the Company’s transfer agent is not a participant in FAST, or if the shares of Common Stock are not otherwise eligible for delivery through FAST, the Company shall effect delivery of the shares of Common Stock by delivering to Holder or its nominee physical certificates representing such shares. |
Information for Delivery of uncertificated Shares by DWAC:
| Account Number: | ||
| Account Name: | ||
| DTC Number: |
| HOLDER: | |||
| Name: | |||
| Title: | |||
| Date: | |||
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Exhibit 10.1
NOTE AND WARRANT PURCHASE AGREEMENT
This NOTE AND WARRANT PURCHASE AGREEMENT (this “Agreement”) dated May 11, 2023 (the “Closing Date”) is entered into by and among Sow Good Inc., a Nevada corporation (the “Company”) and the parties indicated as Purchasers on one or more counterpart signature pages hereof (each of which is a “Purchaser,” and collectively the “Purchasers”).
WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to an exemption from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, its unsecured May 2023 Promissory Notes (the “Notes”) and warrants to purchase its common stock, par value $.001 (the “Warrants”) as more fully described in this Agreement; and
WHEREAS, the Notes are part of an offering of notes by the Company in the aggregate original principal amount of up to $1,500,000 under the terms of this Agreement and the Note Purchase Agreement dated April 25, 2023.
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 hereby agree as follows:
Section 1. Closing; Closing and Post-Closing Deliveries.
(a) On the Closing Date, upon the terms and subject to the conditions set 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 the aggregate value of Notes (subject to advances upon Company request) as indicated on their counterpart signature page hereto (the “Subscription Amount”) in the form of unsecured promissory note attached as Exhibit A hereto, and the number of Warrants obtained by dividing such Subscription Amount by $100,000, multiplied by 25,000 and rounding down to the nearest share in the form attached as Exhibit B hereto, issued pro rata in connection with the funding (the consummation of such transaction, the “Closing”).
(b) At the Closing, each Purchaser shall deliver to the Company this Agreement duly executed by such Purchaser. Each Purchaser further commits to deliver such Purchaser’s Subscription Amount via wire transfer of immediately available funds upon request of the Company as set forth in the Note.
(c) (i) At the Closing, the Company shall deliver to each Purchaser this Agreement duly executed, and (ii) promptly following acceptance of the Subscription Amounts, the Company shall deliver to each Purchaser the Notes and Warrants (it being acknowledged the Company shall have a reasonable time for its counsel to prepare and distribute such Notes and Warrants).
Section 2. Closing Conditions.
(a) The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:
(i) all representations and warranties of the Purchasers contained herein shall have been accurate in all material respects when made and on the Closing Date;
(ii) the Company shall have obtained all necessary “blue sky” law permits and qualifications, or have the availability of exemptions therefrom, required by any state for the offer, sale and issuance of the Notes and Warrants, and any shares of common stock underlying the Warrants (such shares, the “Underlying Shares”); and
(iii) each Purchaser shall have delivered all of the items set forth in Section 1(b) of this Agreement.
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(b) The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:
(i) all representations and warranties of the Company contained herein shall have been accurate in all material respects when made and on the Closing Date; and
(ii) the Company shall have delivered the items set forth in Section 1(c)(i) of this Agreement.
Section 3. Representations and Warranties of the Company. The Company represents and warrants to the Purchasers as follows:
(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and has all requisite corporate power and authority to carry on its business as now conducted. The Company 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, would not reasonably be expected to result in a material adverse effect.
(b) This Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes a binding obligation of the Company enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).
(c) The Notes and the Warrants, when issued, will be duly authorized and validly issued. The Underlying Shares, when issued, will be duly authorized, validly issued, fully paid and nonassessable, and will have the rights, preferences, and privileges specified in the certificate of incorporation of the Company.
(d) The Company’s Board of Directors has approved this Agreement and the transactions contemplated by this Agreement to the extent required by the laws, regulations and policies of the State of Nevada, and such laws, regulations and policies do not require that the Company’s stockholders approve the Agreement and the transactions contemplated by the Agreement.
Section 4. Representations and Warranties of the Purchasers. Each of the Purchasers, severally and not jointly, represents and warrants to the Company as follows:
(a) The Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement and performance by such Purchaser of the transactions contemplated hereby have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser.
(b) The Purchaser is an “Accredited Investor” within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act.
(c) The Purchaser is purchasing the Notes and Warrants for the Purchaser’s own account, for investment purposes only and not with a present intention of entering into or making any subsequent sale, assignment, conveyance, pledge, hypothecation or other transfer thereof.
(d) The Purchaser has no need for liquidity in the Purchaser’s investment in the Notes and Warrants and understands that there are restrictions on the subsequent resale or other transfer of the Notes or Warrants.
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(e) The Purchaser is familiar with the business in which the Company is engaged, and based upon their knowledge and experience in financial and business matters, they are is familiar with the investments of the type that they are undertaking to purchase; they are fully aware of the problems and risks involved in making an investment of this type; and they are capable of evaluating the merits and risks of this investment.
(f) The Purchaser acknowledges that, prior to executing this Agreement, he or she has had the opportunity to ask questions of, and receive satisfactory answers from, representatives of the Company, about the Company and the Notes and Warrants and Underlying Shares and any additional information deemed necessary by the Purchaser to verify the accuracy and adequacy of any written information provided to the Purchaser by the Company. Such Purchaser further acknowledges the availability of the Company’s SEC reports, specifically include the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
(g) The Purchaser understands that the Notes and Warrants, and when issued the Underlying Shares, purchased by the Purchaser are deemed “restricted securities” as such term is defined in Rule 144 promulgated under the Securities Act (“Rule 144”), and they may not be sold, assigned, conveyed, pledged, hypothecated or otherwise transferred by a holder thereof except pursuant to Rule 144, pursuant to an effective Registration Statement registering the Notes, Warrants and/or Underlying Shares under the Securities Act or pursuant to any other available exemption from the registration requirements of the Securities Act then in effect. Further, the following legends (or similar language) shall be placed on such certificate(s) representing the Notes, Warrants and/or Underlying Shares:
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE. THEY HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. THEY MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING THESE SECURITIES UNDER THE SAID ACT OR LAWS, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT REGISTRATION IS NOT REQUIRED THEREUNDER.
(h) This Agreement constitutes a binding obligation of the Purchaser enforceable against it, him or her in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).
(i) No state, federal or foreign regulatory approvals, permits, licenses or consents or other contractual or legal obligations are required with respect to the Purchaser in order for the Purchaser to enter into this Agreement or purchase the Notes, Warrants and/or Underlying Shares.
(j) Such Purchaser is not purchasing the Notes and Warrants as a result of any advertisement, article, notice or other communication regarding the Notes, Warrants, Underlying Shares or any other securities of the Company published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement. Such Purchaser has a pre-existing relationship with the Company.
(k) Each Purchaser understands that nothing in the Company’s SEC filings, this Agreement, or any other materials presented to the Purchaser in connection with the purchase and sale of the Notes and Warrants constitutes legal, tax or investment advice. Each Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of Notes and Warrants.
(l) Other than consummating the transactions contemplated hereunder, each Purchaser has not, nor has any person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any purchases or sales of the securities of the Company during the period commencing as of the time that such Purchaser first received information regarding the transaction contemplated in this Agreement (written or oral) from the Company or any other person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Other than to other persons party to this Agreement, each Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).
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(m) Each Purchaser acknowledges that certain statements included in this investor presentation provided in connection with this Agreement are “forward-looking statements” as defined in the U.S. Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties. Each Purchaser acknowledges that the Company has based these statements on its expectations about future events, but such statements and projections are subject to numerous known and unknown risks and uncertainties. Each Purchaser acknowledges that the Company cannot assure the Purchasers that these expectations will be achieved and that the Company's actual results may differ materially from what it currently expects. Each Purchaser further acknowledges that the comparisons provided of market capitalization value and other sector information is provided for reference only and the Company cannot assure the Purchasers that similar results will be obtained by the Company.
Section 5. Covenants.
(a) If the Company or the Purchasers determines a filing is or may be required under applicable law in connection with the transactions contemplated hereunder, the Company and the Purchasers shall use reasonable best efforts to promptly prepare and file all necessary documentation and to effect all applications that are necessary or advisable under applicable law with respect to the transactions contemplated hereunder so that any applicable waiting period shall have expired or been terminated as soon as practicable after the date hereof.
(b) The Purchasers shall not issue any public announcement, statement or other disclosure with respect to this Agreement or the transactions contemplated hereby without the prior consent of the Company, which consent shall not be unreasonably withheld, conditioned or delayed, except with respect to the filing by the Purchasers of any Schedule 13D or Schedule 13G, or any amendments thereto, to which a copy of this Agreement may be attached as an exhibit thereto.
(c) With a view to making available to the Purchasers the benefits of certain rules and regulations of the Securities and Exchange Commission (“SEC”) which may permit the sale of the Notes, Warrants and/or Underlying Shares to the public without registration, the Company agrees to use its reasonable efforts to file with the SEC, in a timely manner, all reports and other documents required of the Company under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. The Company will otherwise take such further action as a Purchaser may reasonably request, all to the extent required from time to time to enable such Purchaser to sell the Notes, Warrants and Underlying Shares without registration under the Securities Act or any successor rule or regulation adopted by the SEC.
(d) So long as a Purchaser owns any of the Warrants or Underlying Shares, the Company will use its reasonable efforts to maintain the quotation of its common stock on the OTCQB or OTCQX, each as administered by OTC Markets Group or, in lieu thereof, on a national securities exchange and will comply in all material respects with the Company’s reporting, filing and other obligations under the rules of any such market or exchange, as applicable.
(e) The Company shall use the net proceeds from the sale of the Notes and Warrants hereunder primarily for working capital purposes and to fund the general corporate purposes of the Company.
(f) 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 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 by the Company. 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, such Purchaser will maintain the confidentiality of the existence and terms of this transaction.
Section 6. Survival. The representations and warranties of the Company and the Purchasers contained in this Agreement or in any certificate delivered hereunder shall survive the Closing hereunder.
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Section 7. Notices. All notices, communications and deliveries required or permitted by this Agreement shall be made in writing signed by the party making the same, shall specify the Section of this Agreement pursuant to which it is given or being made and shall be deemed given or made (a) on the date delivered if delivered in person, (b) on the date of delivery if delivered by facsimile or email during business hours, or on the next business day if delivered by facsimile or email outside of business hours, in each case upon confirmation of receipt, (c) on the third (3rd) business day after it is mailed if mailed by registered or certified mail (return receipt requested) (with postage and other fees prepaid) or (d) on the day after it is delivered, prepaid, to an overnight express delivery service that confirms to the sender delivery on such day, as follows:
If to the Company:
Sow Good Inc.
1440 North Union Bower Rd.
Irving, TX 75061
Attention: Claudia Goldfarb
Email: claudia@sowginc.com
With a copy to:
Stinson LLP
50 South Sixth Street Suite 2600
Minneapolis, MN 55402
Attention: Jill R. Radloff
Email: jill.radloff@stinson.com
If to the Purchasers, as provided on the applicable signature pages hereto.
Or to such other representative or at such other address of a party as such party hereto may furnish to the other parties in writing in accordance with this Section 7.
Section 8. Entire Agreement. This Agreement embodies the entire agreement and understanding, and supersedes all prior agreements and understandings, between the parties hereto with respect to in respect of the subject matter contained herein. No party to this Agreement shall have any legal obligation to enter into the transactions contemplated hereby unless and until this Agreement shall have been executed and delivered by each of the parties.
Section 9. Indemnification. To the fullest extent permitted by law, each party hereto hereby agrees to indemnify and hold harmless the other party, its affiliates, and their respective directors, officers and authorized agents from and against any and all losses, claims, damages, expenses and liabilities relating to or arising out of any breach of any representation, warranty, covenant or undertaking made by or on behalf of such party in this Agreement.
Section 10. Governing Law. This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby shall be governed by and construed in accordance with the internal laws of the State of Nevada (other than its rules of conflict of laws to the extent the application of the laws of another jurisdiction would be required thereby).
Section 11. WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, 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 12. Modification. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each party.
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Section 13. Severability. If any provision of this Agreement shall be held to be invalid, illegal or unenforceable in any respect under the applicable law of any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof.
Section 14. Miscellaneous.
(a) Notwithstanding any term to the contrary herein, no person other than the Company or the Purchasers, or their respective successors, shall be entitled to rely on and/or have the benefit of, as a third party beneficiary or under any other theory, any of the representations, warranties, agreements, covenants or other provisions of this Agreement.
(b) The headings in this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning of this Agreement.
(c) This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which, when taken together, shall constitute one and the same instrument. This Agreement may be executed by facsimile, .pdf or electronic signature and a facsimile, .pdf or electronic signature shall constitute an original for all purposes.
(d) The obligations of each Purchaser under this Agreement 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 this Agreement. Nothing contained herein, and no action taken by any Purchaser pursuant hereto, 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 this Agreement. Each Purchaser shall be entitled to independently protect and enforce its rights including, without limitation, the rights arising out of this Agreement, 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 this Agreement. The Company has elected to provide all Purchasers with the same terms and this Agreement for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers. It is expressly understood and agreed that each provision contained in this Agreement is between the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between and among the Purchasers.
[Signature page follows]
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[SIGNATURE PAGES FOR PURCHASERS ON FILE WITH COMPANY AND WILL BE PROVIDED TO THE COMMISSION UPON REQUEST]
LIST OF PURCHASERS
| PURCHASER | PRINCIPAL NOTES AMOUNT |
| Bradley Berman Irrevocable Trust | $ 100,000 |
Purchaser Signature Page – Note Purchase Agreement (May 2023) (Sow Good Inc.)
ACCEPTED:
Sow Good Inc.
| By: | ||
| Name: | Claudia Goldfarb | |
| Title: | Chief Executive Officer |
Company Signature Page – Note Purchase Agreement (May 2023) (Sow
Good Inc.
EXHIBIT A
FORM OF PROMISSORY NOTE
EXHIBIT B
FORM OF WARRANT
Exhibit 10.2
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE. THEY HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. THEY MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING THESE SECURITIES UNDER THE SAID ACT OR LAWS, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT REGISTRATION IS NOT REQUIRED THEREUNDER.
SOW GOOD INC.
MAY 2023 PROMISSORY NOTE
May 11, 2023
| Up to $100,000.00 | Irving, TX |
For Value Received, Sow Good Inc., a Nevada corporation (“Debtor” or the “Company”), hereby promises to pay to the purchaser identified on the counterpart signature page hereto ("Investor” or “Holder” and together along with the other Holders of Notes issued under the Note and Warrant Purchase Agreement, dated May 11, 2023, between the Company and the Investors thereto (the “Note Purchase Agreement”), the “Note Holders”), in lawful money of the United States of America and in immediately available funds up to principal sum set forth above, to the extent advanced by Investor pursuant to Section 1.1 below, together with interest from the date of this Note on the unpaid principal balance at a rate equal to eight percent (8.00%) per annum, compounded semi-annually, at the time and in the manner hereinafter provided.
1. Principal and Interest.
1.1 Advances. Note Holders agree, on the terms and subject to the conditions herein, to make loans (each a "Loan," and collectively, the "Loans") to Company from time to time during the period from the date hereof to the Maturity Date or the earlier date of an Event of Default (as defined herein) in an amount not to exceed at any time the principal amount of this Note. Each Loan will be made on five (5) business days prior written notice from Company to Note Holders, which shall state the date on which the Company requires the Loan and shall be in increments of one-half of the total principal amount of this Note. Loans will be made pro rata by the Note Holders, based on the committed principal amounts made by each Investor under the Note Purchase Agreement. The Loans shall be evidenced by, and subject to, the terms and conditions of the Note.
1.2 Maturity Date. No payment of principal or other fee under this Note shall be due until May 11, 2024 unless there is an Event of Default as defined below, in which case such payment shall be accelerated (the “Maturity Date”).
1.3 Interest. Interest on this Note shall accrue on the principal amount of each Loan from the date of disbursement and shall be payable in cash semi-annually on June 30 and December 31, with appropriate pro rata adjustments made for any partial interest accrual period and provided that the first payment shall not be earlier than June 30, 2023. Interest shall be accrued on the Loans as they are made, rather than the full of the principal.
1.4 Payment. The principal and interest of this Note shall be payable at the principal office of the Company and shall be forwarded to the address of the holder hereof as such holder shall from time to time designate. Upon payment in full of the outstanding principal and interest hereof, this Note shall be surrendered to the Company for cancellation.
1.5 Prepayment. The Company may prepay this Note in whole, but not in part, at any time after the first anniversary of the date hereof. The Company shall give the Holder of this Note no less than five (5) business days’ prior written notice of any prepayment.
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1.6 Other Notes. This Note is one of the Notes issued by the Company as part of an offering of notes by the Company in the aggregate original principal amount of up to $1,500,000.00 under the Note Purchase Agreement and the substantially similar Note Purchase Agreement dated April 25, 2023. The other Notes are being issued on substantially the same terms as this Note pursuant to the Note Purchase Agreement, and all rights and obligations of the Holder of this Note shall be pari passu to the rights and obligations of the Holders of the other Notes in all respects including payment, regardless of the order of filing of any financing statements or other recordable documents. The Company shall not make any payment of principal or interest on any of the other Notes without making a like payment (in the same proportionate amount, determined based on the total amounts then due under such other Notes and this Note) on this Note. These Notes shall be senior in right of payment over other unsecured notes of the Company issued in prior note purchase agreements.
2. Event of Default. The occurrence of any one or more of the events (regardless of the reason therefore) set forth below shall constitute an “Event of Default” hereunder.
2.1 The Company’s failure to pay or discharge the obligations hereunder in full in accordance with the terms of this Note, including without limitation failure to pay amounts that are due at the Maturity Date.
2.2 Any breach of any representation or warranty made by the Company herein or under the Note Purchase Agreement which remains uncured for more than 30 days after written notice of such breach has been delivered to the Company by the Investors.
2.3 The Company’s failure to observe or perform any other covenant, obligation, condition or agreement contained in this Note or the Note Purchase Agreement which failure remains unremedied for more than thirty (30) days after written notice of such failure has been delivered to the Company.
2.4 The commission of any act of bankruptcy by the Company, the execution by the Company of a general assignment for the benefit of creditors, the filing by or against the Company of a petition in bankruptcy or any petition for relief under the federal bankruptcy act and the continuation of such petition without dismissal for a period of ninety (90) days or more, or the appointment of a receiver or trustee to take possession of the property or assets of the Company.
2.5 The liquidation, dissolution or winding up of the Company, whether voluntary or involuntary.
2.6 The occurrence and continuation of an Event of Default under any other Notes issued under the Note Purchase Agreement.
If any Event of Default shall have occurred and be continuing, the Holder may pursue any and all remedies set forth or referred to herein. Upon the occurrence or existence of any Event of Default, and following written notice by the Holder to the Company (except with respect to a default under Section 2.4 which shall be automatic and for which no written notice shall be required), all outstanding obligations payable by Company hereunder shall be immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived. Notwithstanding anything to the contrary set forth herein, the Required Note Holders may waive an Event of Default on behalf of all holders of Notes.
3. Attorney’s Fees. If the indebtedness represented by this Note or any part thereof is collected in bankruptcy, receivership or other judicial proceedings or if this Note is placed in the hands of attorneys for collection after default, the Company agrees to pay, in addition to the principal and interest payable hereunder, all costs of collection, including reasonable attorneys’ fees and costs incurred by the Holder.
4. Assignment. Subject to the restrictions on transfer described in Section 6 below, the rights and obligations of the Company and the Holder of this Note shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.
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5. Waiver, Amendment and Action. Any provision of this Note may be amended, waived or modified only upon the written consent of the Company and the Required Note Holders. “Required Note Holders” means the holders of more than sixty-six percent (66%) of the aggregate principal amount of all Notes then outstanding from time to time.
6. Transfer of Note. With respect to any offer, sale or other disposition of this Note, the Holder will give written notice to the Company prior thereto, describing briefly the manner thereof. This Note may not be transferred or assigned in whole or in part without (a) the consent of the Company, which shall not be unreasonably withheld, and (b) compliance with all applicable federal and state securities laws by the transferor and transferee (including the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, if such are requested by the Company). Each Note thus transferred shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with the Securities Act of 1933, as amended (the “Securities Act”), unless in the opinion of counsel for the Company such legend is not required in order to ensure compliance with the Securities Act. The Company may issue stop transfer instructions to its transfer agent in connection with such restrictions.
7. Notices. Any notice or demand which is required or provided to be given under this Note shall be deemed to have been sufficiently given and received for all purposes if in compliance with the notice provisions of the Note Purchase Agreement.
8. Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Nevada, excluding any rule of law that would cause the application of the laws of any jurisdiction other than the laws of the State of Nevada. Each of the parties hereto irrevocably and unconditionally submits to the exclusive jurisdiction of any state or federal court of competent jurisdiction in NEVADA.
9. Heading; References. All headings used herein are used for convenience only and shall not be used to construe or interpret this Note. Except as otherwise indicated, all references herein to Sections refer to Sections hereof.
10. Delays. No delay by the Holder in exercising any power or right hereunder shall operate as a waiver of any power or right.
11. Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, such provision shall be excluded from this Note and the balance of the Note shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.
12. Usury. In the event that any interest paid on this Note is deemed to be in excess of the then legal maximum rate, then that portion of the interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the principal of this Note.
13. Further Assurances. At the reasonable request of the Required Note Holders at any time and from time to time, Debtor shall, at its expense, duly execute and deliver, or cause to be duly executed and delivered, such further agreements, documents and instruments, and do or cause to be done such further acts as may be reasonably necessary or proper to effectuate the provisions or purposes of this Note or the Note Purchase Agreement or any of the other documents contemplated by the Note Purchase Agreement. Holder may at any time and from time to time request a certificate from an officer of Debtor representing that all conditions precedent to the making of loan represented by this Note are satisfied.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned parties have caused this May 2023 Promissory Note to be executed and to be dated, issued and delivered, all on the date first above written.
| SOW GOOD INC. | ||
| a Nevada corporation | ||
| By: | ||
| Name: | Claudia Goldfarb | |
| Title: | Chief Executive Officer | |
Company Signature Page – May 2023 Promissory Note – Sow Good Inc.
[Counterpart Signature Page to May 2023 Promissory Note]
IN WITNESS WHEREOF, each of the parties has caused this May 2023 Promissory Note to be executed and to be dated, issued and delivered, all on the date first above written.
| INVESTOR: |
| By: | ||
| Name: | ||
| Title: |
| Address: | ||
| E-mail: |
| 5 |
Exhibit 99.1
Sow Good, Inc. Announces Freeze Dried Candy Launch & Increased Production Capacity
May 11, 2023
Irving, Texas, May 11, 2023 — Sow Good, Inc. (OTCQB:SOWG) announced its entry into the freeze dried candy space and the addition of two additional freeze driers. We believe these additions increase annual production capacity to approximately $35 million. Sow Good’s increased capacity allows them to meet the projected retail demand after Sow Good’s launch of its freeze dried candy line, which has been met with intense excitement from retailers.
The decision to enter this category comes as a result of freeze dried candy’s sensationalization across all social media platforms, particularly TikTok. The hashtag “freezedriedcandy” has amassed over 2 billion views and continues to be a viral topic on the video platform. The consistent and growing interest in freeze dried candy supports Sow Good’s belief that freeze dried candy is developing into an everyday, must-have category for retailers.
In 2022, the National Confectioners Association reported that the growth of non-chocolate candy is outpacing all other confectionary segments and is expected to reach $20B by 2027[1]. The report further details that the demographics fueling this growth is Gen Z and Millennials, inspiring innovation beyond the traditional big name candy brands. With its expertise in innovation and manufacturing, Sow Good’s management team believes it is perfectly positioned to be the industry leader in the freeze dried candy space.
Sow Good is an established, legitimate, food safety-certified brand with the capacity to meet industry demand. Sow Good enters the candy space with a bold line of 16 SKUs—and counting.
Claudia Goldfarb, co-founder and CEO of Sow Good, said, “We are excited to hit the ground running and become the frontrunner brand that retailers and customers can trust to consistently provide delicious and high-quality candy.” Regarding expanding from natural fruit and veggie snacks into the candy space, Claudia added, “We are dedicated to serving our consumers through all aspects of life, not just one. The breadth of our freeze dried products allows us to support our customers wherever they are, whether they are focused on health or sustainability, or seek the wonder of turning a nostalgic, familiar candy into a fun, tasty, innovative sweet treat that satisfies their sweet tooth in fewer bites. The candy category is past due for disruption. Retailers are embracing innovation and innovation is what we do best.”
Sow Good is excited to launch its freeze dried candy line into Five Below, IT’SUGAR, Showcase, TJX Canada, Redstone Distributors, and Imperfect Foods.
About Sow Good
Sow Good Inc. (OTCQB:SOWG) is a freeze dried candy and snack company based in Irving, TX with an SQF-2 certified facility that holds three freeze driers built using proprietary technology. Sow Good is dedicated to becoming a household brand the revolutionizes the snacking industry with products that are convenient, shelf-stable, and delicious. To purchase Sow Good online or learn more, visit www.thisissowgood.com and follow @thisissowgood on TikTok, Instagram, Youtube, and Facebook.
Forward Looking Statements
Certain statements contained herein, which are not historical, are forward-looking statements that are subject to risks and uncertainties not known or disclosed herein that could cause actual results to differ materially from those expressed herein. These statements may include projections and other "forward-looking statements" within the meaning of the federal securities laws. Any such projections or statements reflect management's current views about future events and financial performance. No assurances can be given that such events or performance will occur as projected and actual results may differ materially from those projected. Important factors that could cause the actual results to differ materially from those projected include, without limitation, general economic or industry conditions nationally and/or in the communities in which our Company conducts business, conditions of the securities markets, our ability to raise capital or have access to debt financing, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our Company's operations, products, services and prices and other risks inherent in the Company's businesses that are detailed in the Company's Securities and Exchange Commission ("SEC") filings. Readers are encouraged to review these risks in the Company's SEC filings.
_______________
[1] 2022. NCA: “Get to Know Candy Consumers In New NCA Report.” https://candyusa.com/news/get-to-know-candy-consumers-in-new-nca-report/.
Cover |
May 11, 2023 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | May 11, 2023 |
| Entity File Number | 000-53952 |
| Entity Registrant Name | SOW GOOD INC. |
| Entity Central Index Key | 0001490161 |
| Entity Tax Identification Number | 27-2345075 |
| Entity Incorporation, State or Country Code | NV |
| Entity Address, Address Line One | 1440 N Union Bower Rd |
| Entity Address, City or Town | Irving |
| Entity Address, State or Province | TX |
| Entity Address, Postal Zip Code | 75061 |
| City Area Code | (214) |
| Local Phone Number | 623-6055 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Stock |
| Trading Symbol | SOWG |
| Entity Emerging Growth Company | false |