FOR VALUE RECEIVED, S&W SEED COMPANY, a Nevada corporation (the "Maker"), promises to pay to Imperial Valley Seeds, Inc., 250 E. 5th Street, Holtville, CA 92250 (the "Holder") or its registered assigns or successors in interest, the sum of FIVE HUNDRED THOUSAND Dollars ($500,000), together with any accrued and unpaid interest hereon, on October 1, 2017 (the "Maturity Date"), if not sooner paid.

Capitalized terms used herein without definition shall have the meanings ascribed to such terms in that certain Acquisition Agreement dated as of the date hereof by and among the Maker, the Holder and the other parties named therein (as amended, modified and/or supplemented from time to time, the "Acquisition Agreement").

The following terms shall apply to this Subordinated Promissory Note (this "Note"):

1.1   Interest Rate. Interest payable on the outstanding principal amount of this Note (the "Principal Amount") shall accrue at a rate per annum equal to one-month LIBOR at Closing plus 2%. Interest shall be (i) calculated on the basis of a 360 day year, and (ii) payable in five annual installments, in arrears, commencing on October 1, 2013, and on each succeeding anniversary thereof (i.e., October 1, 2014, October 1, 2015, and October 1, 2016) through and including the Maturity Date (each, a "Payment Date"), and on the Maturity Date, whether by acceleration or otherwise.

1.2   Principal Payments. Amortizing payments of the Principal Amount (together with accrued and unpaid interest) shall be made in cash by the Maker on each Payment Date in the amount of $100,000. Any remaining outstanding Principal Amount together with any accrued and unpaid interest under this Note shall be due and payable on the Maturity Date.

1.3   Optional Prepayment. The Maker may prepay this Note, in whole or in part, at any time.

1.4 Cancellation In Event of Fred Fabre Ceases to be Employed by Maker. This Note shall be cancelled and Maker released from any and all liabilities hereunder if, at any time prior to the Maturity Date, either (a) Fred Fabre terminates his employment with Maker or an affiliate thereof (excluding (i) a termination that Maker and Mr. Fabre agree is due to a physical or mental disability that would prevent the performance of Mr. Fabre's duties and (ii) termination upon Mr. Fabre's death) or (b) Maker or an affiliate thereof terminates the employment of Mr. Fabre pursuant to Section 3(a) of the Employment Agreement, of even date herewith, between Mr. Fabre and Maker, as the same may be amended by the parties.

2.1 Subordination. All payments due under this Note shall be subordinated and made junior, in all respects to the payment in full of all principal, all interest accrued on and all other amounts due on any and all Senior Indebtedness (as defined in the next sentence) of the Maker. "Senior Indebtedness" means all indebtedness owed by or incurred by the Maker, from time to time, under any credit or similar facility with any financial institution, bank or other lender.

3.1   Events of Default. The occurrence of any of the following events set forth in this Section 3.1 shall constitute an event of default ("Event of Default") hereunder:

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3.2   Default Payment. Following the occurrence and during the continuance of an Event of Default, the Holder, at its option, may demand repayment in full of all obligations and liabilities owing by Maker to the Holder under this Note.

3.3   Costs of Collection. Maker agrees to pay all reasonable attorneys' fees and expenses in connection with any legal proceedings brought by Holder to collect any unpaid Principal Amount or interest which is not paid in full when due.

4.1   Amendment Provision. The term "Note" and all references thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented, and any successor instrument as such successor instrument may be amended or supplemented.

4.2   Right to Withhold and Offset. The Holder acknowledges and agrees that the Maker shall have the right (a) to withhold from payments due hereunder the aggregate amounts of any indemnification claims then pending or unresolved against the Holder under the Acquisition Agreement and (b) to off-set against payments due hereunder the aggregate amounts of any such indemnification claims resolved in favor of the Maker.

4.3   Governing Law.

4.4   Construction. Each party acknowledges that its legal counsel participated in the preparation of this Note and, therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Note to favor any party against the other.

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IN WITNESS WHEREOF, the Maker has caused this Note to be signed in its name effective as of this 1st day of October, 2012.

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