Exhibit 2.1

Execution Version

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Agreement and Plan of Merger

by and among

Antibodies Incorporated,

AB HoldCo, Inc.,

AB Merger Sub, Inc.,

Richard Krogsrud, as Representative of
the Stockholders

and

the Rollover Stockholders Signatory Hereto

May 8, 2018

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Agreement and Plan of Merger

This Agreement and Plan Of Merger (this "Agreement"), dated as of May 8, 2018, is by and among Antibodies Incorporated, a California corporation (the "Company"), AB HoldCo, Inc., a Nevada corporation ("Parent"), AB Merger Sub, Inc., a California corporation and wholly-owned subsidiary of Parent ("Acquisition Sub"), Richard Krogsrud, an individual, solely as the representative (the "Representative") of the Stockholders, and the Stockholders of the Company signatory hereto (the "Rollover Stockholders"); capitalized terms not otherwise defined herein have the meanings set forth in Article I of this Agreement.

Background

Whereas, Janel Corporation, a Nevada corporation ("Janel"), has formed Parent, and Parent has formed Acquisition Sub, in each case for the purpose of acquiring the Company as an indirect, wholly-owned subsidiary of Janel following the merger of Acquisition Sub with and into the Company;

Whereas, each of the respective boards of directors (or similar governing body) of the Company, Parent (on its own behalf and as the sole stockholder of Acquisition Sub) and Acquisition Sub has approved and declared the advisability of this Agreement, and deemed it advisable and in the best interests of their respective stockholders to consummate the Merger, in each case, upon the terms and subject to the conditions set forth in this Agreement and, in the case of the board of directors of the Company, recommended that this Agreement be adopted by the Stockholders;

Whereas, in order to induce Parent and Acquisition Sub to enter into this Agreement the Major Stockholders are expected to execute a written consent adopting this Agreement and approving the Merger promptly after the execution and delivery of this Agreement; and

Whereas, the Rollover Stockholders and Parent will, immediately prior to the Effective Time, consummate the Exchange and the transactions contemplated by the Note Purchase Agreements.

Terms

Now therefore, in consideration of the respective covenants and promises contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

ARTICLE I

Definitions

Section 1.1  Certain Definitions.  As used herein, the terms below shall have the following meanings:

"Acquisition Proposal" means, with respect to a party, any offer or proposal, relating to any transaction or a series of related transactions involving:  (i) any purchase or acquisition by any Person or "group" (as defined under Section 13(d) of the Securities Exchange Act of 1934,

 

 

as amended, and the rules and regulations promulgated thereunder) of any of the outstanding voting securities of such party or any tender offer or exchange offer or other proposed acquisition of voting securities of such party, (ii) any merger, consolidation, business combination or similar transaction, (iii) any sale, lease (other than in the Ordinary Course of Business), transfer, distribution, acquisition or disposition of $500,000 or more of the assets of such party (including its subsidiaries taken as whole), or (iv) liquidation or dissolution of such party; provided, however, that the transactions contemplated hereby shall not be deemed an Acquisition Proposal in any case.

"Action" means any action, claim, charge, cause of action, demand, suit, litigation, proceeding, audit, notice of violation, arbitration, criminal prosecution, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

"Adjustment Per Share Distribution Amount" means an amount equal to (a) the Adjustment Amount payable to the Stockholders pursuant to Section 2.13(e), if any, divided by (b) the aggregate number of Shares.

"Affiliate" means, with respect to any Person, any other Person which directly or indirectly Controls, is Controlled by or is under common Control with such Person.

"Aggregate Merger Consideration Template" means the exhibit, in form and substance attached hereto as Schedule 1.1(a), setting forth the payments to be made pursuant to this Agreement in connection with the Closing, including wire instructions in the case of payments to be made at Closing by wire transfer to a particular Stockholder and the Pro Rata Percentage for each of the Stockholders.

"Articles of Incorporation" means the Amended and Restated Articles of Incorporation of the Company filed in the office of the Secretary of State of the State of California on November 22, 1994.

"Assets" means all of the Company's right, title and interest in and to the business, properties, assets and rights of any kind, whether tangible or intangible, real or personal or mixed, which are used in connection with the operation of the Business, as currently conducted.

"Audit" means an audit of the financial statements of either (a) the Company on a standalone basis or (b) Janel and its Subsidiaries on a consolidated basis.

"Base Purchase Price" means $5,000,000.

"Business" means the business of the Company, including manufacturing immuno-chemical reagents and diagnostics for supply to, and providing services to, varied customers in the immuno-diagnostic market.

"Business Day" means any day that is not a Saturday, Sunday or other day on which banks are required or authorized by law to be closed in the State of New York.

 

"Cash" means cash and Cash Equivalents determined in accordance with GAAP, using the policies, conventions, methodologies and procedures used by the Company in preparing the Year-End Financial Statements and for avoidance of doubt shall be calculated net of checks, drafts or other items issued, but shall include deposits made but that have not cleared the bank.

"Cash Equivalents" means investment securities with original maturities of 90 days or less and credit card receivables that are readily collectible into cash.

"Closing Cash" means the amount of the Cash held by the Company on the Closing Date.

"Closing Cash Target" means $50,000.

"Closing Indebtedness" means the amount of Indebtedness held by the Company on the Closing Date.

"Closing Merger Consideration" means an amount equal to (a) the Estimated Merger Consideration, minus (b) the Escrow Amount, minus (c) the Representative Expense Amount.

"Closing Transaction Fees" means the Transaction Fees as of the Closing Date.

"Closing Working Capital" means the Working Capital of the Company as of the close of business on the Business Day prior to the Closing Date.

"Code" means the Internal Revenue Code of 1986, as amended, and the Treasury Regulations.

"Company Material Adverse Effect" means, with respect to the Company, any event, change, development, occurrence, effect or condition which, individually or in the aggregate, has resulted in, results or would reasonably be expected to result in a material adverse change in the Business, financial condition, Assets, Liabilities or results of operations of the Company or to prevent or materially delay the ability of the Company to perform its obligations hereunder, including to consummate the transactions contemplated hereby.

"Company Methodology" means the same accounting methods, policies, practices and procedures, with consistent classifications, judgments and estimation methodology, as were used by the Company in preparation of the Interim Balance Sheet and which have been prepared consistent with the Company's historical practices.  For purposes of Working Capital calculations in this Agreement, work in progress will be included (to the extent provided in the definition of Working Capital), regardless of the Company's historical practices.

"Contract" means any agreement, arrangement, commitment, understanding, contract, lease, power of attorney, note, bond, mortgage, indenture, deed of trust, loan, evidence of Indebtedness, letter of credit, undertaking, employment agreement or license, whether oral or written.

"Control" means, as to any Person, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by Contract or otherwise (the terms "Controlled by" and "under common Control with" shall have correlative meanings).

 

 

"Court Order" means with respect to any Person any judgment, decision, consent decree, injunction, ruling or order of any Governmental Entity that is expressly by its terms binding on such Person or its property.

"Covered Taxes" means any (a) Tax of the Company with respect to a Pre-Closing Tax Period; (b) Tax of another Person for which the Company has Liability pursuant to Treasury Regulations Section 1.1502-6 (or similar provision of other Tax Laws); or (c) Tax of another Person for which the Company has Liability as transferee or successor, by Contract or otherwise.

"Default" means (a) any violation, breach or default, (b) the occurrence of an event that, with the passage of time, the giving of notice or both, would constitute a violation, breach or default, or (c) the occurrence of an event that, with or without the passage of time, the giving of notice or both, would give rise to a right of termination, renegotiation or acceleration.

"Employment Agreement" means the amended and restated employment agreement, to be dated the Closing Date, by and between the Company and Richard Krogsrud, in substantially the form of Exhibit A attached hereto.

"Encumbrance" means any lien, claim, equitable interest, encroachment, right of way, pledge, option, charge, easement, security interest, deed of trust, mortgage, conditional sales agreement, or encumbrance or restriction of any kind.

"Environmental Law" means any and all federal, state, local and foreign statutes, laws, common law, regulations, ordinances, rules, judicial and administrative orders, injunctions, decrees or other legal requirements, relating to protection of or restoration of the environment, including ambient air, surface water, groundwater or land, or the effect of Substances on human health, or emissions, discharges or releases of Substances into the environment, or otherwise relates to the handling of Substances or the investigation, clean-up or other remediation or analysis thereof.

"Escrow Account" means the account into which the Escrow Amount is deposited and held by the Escrow Agent, subject to disbursement as provided herein and in the Escrow Agreement.

"Escrow Agent" means Wilmington Trust, N.A.

"Escrow Agreement" means the Escrow Agreement, to be dated the Closing Date, among Parent, the Representative and the Escrow Agent, in substantially the form of Exhibit B attached hereto.

"Escrow Amount" means $500,000.

"Escrow Per Share Distribution Amount" means an amount determined by dividing (a) the aggregate of any amounts payable to Stockholders pursuant to Section 9.9 by (b) the aggregate number of Shares.

 

"Escrow Release Date" means the date that is 12 months following the Closing Date.

"Estimated Merger Consideration" means an amount equal to (i) the Base Purchase Price, minus (ii) the amount, if any, by which the Closing Cash Target exceeds Estimated Closing Cash, minus (iii) Estimated Closing Indebtedness, minus (iv) the amount, if any, by which the Working Capital Target exceeds Estimated Working Capital, minus (v) Estimated Closing Transaction Fees, minus (vi) the Exchange Amount.

"Environmental Claim" means any Action, Court Order, Encumbrance, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging Liability of whatever kind or nature (including Liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, release or management of, or exposure to, any Substances, or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Permit required under any Environmental Law.

"Environmental Permits" means all permits, approvals and authorizations required under Environmental Laws.  For the avoidance of doubt, Environmental Permits shall include any such permits, approvals and/or authorizations related to the existence, operation and maintenance of rabbitries.

"Exchange Agent" means such bank or other institution as selected by the Representative and reasonably acceptable to Parent.

"Exchange Agent Agreement" means the exchange agent agreement, to be entered into by and among the Parent, the Representative and the Exchange Agent.

"Exchange Amount" means an amount equal to the number of Exchange Shares multiplied by the Per Share Closing Merger Consideration (determined as though (x) the phrase "minus (y) the number of Exchange Shares" was deleted from the definition of Per Share Closing Merger Consideration, and (y) the phrase "minus (vi) the Exchange Amount" was deleted from the definition of Estimated Merger Consideration).

"Financial Statements" means, collectively, the Year-End Financial Statements and the Interim Financial Statements.

"GAAP" means accounting principles generally accepted in the United States consistently applied and maintained by the Company throughout the applicable periods.

"Governmental Entity" means any: (a) nation, state, commonwealth, province, territory, county, municipality, district, locality or other jurisdiction of any nature, foreign or domestic; (b) international, multinational, national, federal, state, provincial, territorial, county, local, municipal, or other government, foreign or domestic, or the government of any political subdivision of any of the foregoing; or (c) any entity, authority, agency, ministry, or other similar body exercising executive, legislative, judicial, regulatory or administrative authority or functions of or pertaining to government, including any authority or other quasi-governmental entity established to perform any of such functions, and including any court or other judicial or arbitral tribunal.

 

 

"Indebtedness" means, without duplication, (a) any obligations of the Company for borrowed money (including all obligations for principal, interest, premiums, penalties, fees, expenses and breakage costs), (b) any obligations of the Company evidenced by any note, bond, debenture or other debt security, (c) any obligations of the Company for or on account of the deferred purchase price of property (excluding trade payables incurred in the Ordinary Course of Business), including leases required by GAAP to be capitalized, (d) any obligations of a Person, other than the Company, secured by an Encumbrance against any of the Company's Assets, (e) all obligations of the Company for the reimbursement of letters of credit, bankers' acceptance or similar credit transactions, (f) any obligations of the Company under any currency or interest rate swap, hedge or similar protection device or any other derivative instruments, (g) all obligations of the types described in clauses (a) through (f) above of any Person other than the Company, the payment of which is guaranteed, directly or indirectly, by the Company including both the current and long-term portions of such obligations (including unpaid interest thereon and all penalties, fees or expenses associated with the prepayment of any such obligations), (h) Covered Taxes, and (i) unrecorded accrued vacation liability.  For the avoidance of doubt, in no event shall "Indebtedness" hereunder include or be deemed to include any specific amount included in the calculation of Estimated Working Capital or Closing Working Capital.

"Interim Balance Sheet" means the balance sheet of the Company as of the Interim Balance Sheet Date.

"Interim Balance Sheet Date" means March 31, 2018.

"Interim Financial Statements" means, collectively, the Interim Balance Sheet and the income statement and statement of cash flows of the Company for the three-month period ended on the Interim Balance Sheet Date.

"IRS" means the Internal Revenue Service.

"Knowledge" or any similar phrase, when used with respect to the Company, means the knowledge of any member of the Senior Management Team, in each case assuming due inquiry.

"Laws" means, with respect to a particular Person, any laws (including provisions of common law), statutes, ordinances, regulations, rules, codes, agency guidelines of any Governmental Entity judgments, decrees administrative pronouncements or other requirements or rules of law binding on or applicable to such Person, but, for the avoidance of doubt, excludes Court Orders.

"Liability" means any direct or indirect liability, Indebtedness, obligation, commitment, expense, deficiency, guaranty or endorsement of or by any Person, whether known or unknown, and whether accrued, absolute, contingent, matured or unmatured.

"Loss" means any loss, damage, liability, obligation, judgment, cost, interest, penalty, deficiency or expense of any nature, including reasonable attorneys' and experts' fees and disbursements.

 

 

 

"Major Stockholders" means, collectively, Michael Smith, AIESST, Richard Krogsrud, Don Thamer, Shona Hillman Anne Swift, The David and Elizabeth Hillman Trust, The Heidi Noel Hillman Cowen Special Needs Trust, and John Hillman.

"Ordinary Course of Business," "Ordinary Course" or any similar phrase means the ordinary course of the Business, consistent with the past customs and practice of the Company.

"Owned Real Property" means all Real Property owned in fee by the Company.

"Parent Material Adverse Effect" means, with respect to Parent or Acquisition Sub, any event, change, development, occurrence, effect or financial condition that would reasonably be expected to prevent or materially delay the ability of Parent and Acquisition Sub to perform their respective obligations hereunder, including to consummate the transactions contemplated hereby.

"Per Share Closing Merger Consideration" means an amount equal to (a) the Closing Merger Consideration, divided by (b) the amount equal to (x) the number of Shares minus (y) the number of Exchange Shares.

"Permit" means each license, permit, franchise, approval, registration, certificate, authorization, consent or order of, or filing with, any Governmental Entity necessary for the conduct of, or relating to the operation of, the Business as currently conducted.

"Permitted Encumbrances" means (a) Encumbrances for Taxes not yet due and payable and (b) statutory, mechanics', laborers' and materialmen's liens arising in the Ordinary Course of Business for sums not yet due.

"Permitted Share Encumbrances" means Encumbrances imposed on the Shares under applicable federal or state securities laws.

"Person" means any individual, trustee, corporation, partnership, limited liability company, trust, joint-stock company, unincorporated organization, business association, firm, joint venture, any other business entity or any Governmental Entity.

"Post-Closing Tax Period" means any tax period beginning after the Closing Date and that portion of a Straddle Period beginning after the Closing Date.

"Pre-Closing Period" means the period commencing with the execution and delivery of this Agreement and terminating upon the earlier to occur of the Effective Time and the termination of this Agreement pursuant to and in accordance with Section 8.1

"Pre-Closing Tax Period" means any tax period ending on or before the Closing Date and that portion of any Straddle Period ending on the Closing Date.

"Pro Rata Percentage" means, with respect to a particular Stockholder, that percentage equal to a fraction: (a) the numerator of which is the portion of the Final Merger Consideration such Stockholder is entitled to receive pursuant to this Agreement (without regard to any amounts withheld pursuant to Section 2.14); and (b) the denominator of which is Final Merger Consideration.

 

 

"Real Property" means all real property owned, leased or occupied by an applicable Person, together with all buildings, improvements, fixtures and easements.

"Related Party" means (i) each Person who owns beneficially or of record at least 10% of the outstanding Shares, (ii) each individual who is an officer, director or employee of the Company, and (iii) each family member or Affiliate of any of the Persons referred to in clauses (i) or (ii) above.

"Representative Expense Account" means the account maintained by the Representative into which the payment required by Section 2.11(a)(iii) shall be made and any successor account in which the Representative Expense Amount shall be held by the Representative.

"Representative Expense Amount" means $500,000.

"Securities Act" means the Securities Act of 1933, as amended.

"Senior Management Team" means, collectively, Richard Krogsrud, Michael Smith, Janice Stafford, Ricardo Rodarte, Will Fry and Melissa Zeltner.

"Shares" means shares of stock of the Company.

"Stock Plan" means the Antibodies Incorporated Equal Stewardship of Time Trust (or any successor plan program or arrangement to such agreement of Trust).

"Stockholders" means, collectively, the holders of the Shares.

"Straddle Period" means any tax period beginning on or prior to the Closing Date and ending after the Closing Date.

"Subsidiary" means a corporation or other entity of which 50% or more of the voting power or value of the equity securities is owned, directly or indirectly, by the Company or Parent, as the context requires.

"Substance" means any "hazardous substance," "hazardous waste," "pollutant," "contaminant" or "toxic substance" (as defined or regulated by any Environmental Law, including the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., the Resources Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq., or the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., and regulations promulgated thereunder, or any analogous state and local laws and regulations), petroleum and petroleum products, polychlorinated biphenyls, asbestos or mold.

"Tax" or "Taxes" means any federal, state, local or foreign net income, gross income, gross receipts, sales, use, ad valorem, transfer, capital stock, franchise, profits, license, lease, service, service use, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profits, alternative or add-on minimum, environmental, escheat, unclaimed property, unemployment, social security, customs, duties, estimated or other taxes, assessments, fees, levies or governmental charges, together with any interest and any penalties, additions to Tax or additional amounts with respect thereto, whether disputed or not.

 

 

"Tax Return" means any return, declaration, report, statement, information return, or other document relating to Taxes, including any schedule or attachment thereto and any amendment thereof (including FinCEN 114).

"Transaction Fees" means (without duplication of any other amount payable in connection with this Agreement or the transactions contemplated hereby) the following unpaid fees, expenses and other similar amounts that have been or are expected to be incurred on or prior to the Closing Date (or by the Representative after the Closing Date) on behalf of the Company, the Representative, or the Stockholders in connection with the consideration by or the preparation of the Company for a transaction process, the preparation, negotiation and execution of any agreements, documents or instruments relating thereto, including this Agreement, and the consummation of the transactions contemplated hereby, including the Merger:  (a) the reasonable fees and disbursements of, or other similar amounts charged by, counsel to the Company, the Representative and the Stockholders; (b) the reasonable fees and expenses of, or other similar amounts charged by, any accountants, agents, financial advisors, consultants and experts engaged by the Company, the Representative and/or the Stockholders; (c) any amounts or payments paid or payable by the Company in connection with any change in control provisions of any Contract of the Company triggered by the transactions contemplated by this Agreement, including bonus, severance or other payments to any Stockholder, director, officer or employee of the Company, and any Taxes incurred by the Company in connection therewith; (d) the out-of-pocket expenses, if any, of the Representative; (e) 50% of the fees and expenses of the Escrow Agent; (f) any costs, fees or expenses in connection with obtaining any consent required as a result of the transactions contemplated by this Agreement; (g) the cost of the Tail Policies; and (h) 50% of the fees and expenses of the Exchange Agent.

"Treasury Regulations" means the regulations promulgated under the Code, as such regulations may be amended from time to time (including temporary regulations and corresponding provisions of succeeding regulations).

"Working Capital" means the difference between (a) those current assets of the Company identified on the Working Capital Statement minus (b) those current liabilities of the Company identified on the Working Capital Statement.  For purposes of this Agreement, the components of such current assets and current liabilities shall be calculated in accordance with the Company's historical practices using the Company Methodology.  The calculation of Working Capital shall be as set forth on the Working Capital Statement.

"Working Capital Statement" means the Statement of Working Capital attached hereto as Exhibit C.

"Working Capital Target" means $400,000.

"Year-End Balance Sheet Date" means September 30, 2017.

 

 

"Year-End Financial Statements" means the Company's compiled balance sheet as of September 30, 2017, and the related compiled income statement and statement of cash flows for the fiscal year then ended.

Section 1.2  Terms Defined Elsewhere.  The following is a list of additional terms used in this Agreement and a reference to the Section hereof in which such term is defined:

 

 

Term

Section

 

 

 

 

Section 1.3  Interpretation.  In this Agreement, unless otherwise specified or where the context otherwise requires:

 

ARTICLE II

The Merger

Section 2.1  The Exchange.  Immediately prior to the Effective Time, the Rollover Stockholders listed on Schedule 2.1 shall contribute to Parent (the "Exchange") that number of Shares held by them set forth opposite their respective names on Schedule 2.1 under the heading "Exchange Shares" (the "Exchange Shares"), free and clear of any Encumbrance (other than Permitted Share Encumbrances), in exchange for a promissory note issued by Parent (each, a "Note") in a principal equal to such Rollover Stockholder's Exchange Shares multiplied by the Per Share Closing Merger Consideration (determined as though (x) the phrase "minus (y) the number of Exchange Shares" was deleted from the definition of Per Share Closing Merger Consideration, and (y) the phrase "minus (vi) the Exchange Amount" was deleted from the definition of Estimated Merger Consideration).  Parent shall enter into with each Rollover Stockholder who is contributing Exchange Shares one or more agreements (each, a "Note Purchase Agreement"), in the form attached hereto as Exhibit D, to cause the Exchange Shares held by such Rollover Stockholder to be assumed by Parent, and each Rollover Stockholder to be issued a Note.  Each Note will be in the form attached to the Note Purchase Agreement.

Section 2.2  The Merger.  At the Effective Time and upon the terms and subject to the conditions of this Agreement and in accordance with the California Corporations Code, Acquisition Sub shall be merged with and into the Company (the "Merger").  Following the Merger, the Company shall continue as the surviving corporation (the "Surviving Corporation") and the separate existence of Acquisition Sub shall cease.

Section 2.3  Effective Time.  Subject to the terms and conditions set forth in this Agreement, an Agreement of Merger in customary form reasonably acceptable to Parent and the Company (the "Agreement of Merger") shall be duly executed and acknowledged by the Company and Acquisition Sub and thereafter delivered to the Secretary of State of the State of California for filing pursuant to the California Corporations Code on the Closing Date.  The Merger shall become effective at such time as a properly executed and certified copy of the Agreement of Merger is duly filed with the Secretary of State of the State of California in accordance with the California Corporations Code or such later time as Parent and the Company may agree upon and set forth in the Agreement of Merger (such time as the Merger becomes effective, the "Effective Time").

Section 2.4  Closing of the Merger.  The closing of the Merger (the "Closing") will take place at a time and on a date (the "Closing Date") to be specified by the Company, which shall be no later than the third Business Day after satisfaction or waiver of the last to occur of the conditions set forth in ARTICLE VII (other than those conditions which may only be satisfied at the Closing by the delivery of documents, the payment of monies or the taking of such other action), at the offices of Pepper Hamilton LLP, 400 Berwyn Park, 899 Cassatt Road, Berwyn, Pennsylvania 19312, unless another time, date or place is agreed to in writing by the parties hereto.

Section 2.5  Effects of the Merger.  The Merger shall have the effects set forth in the California Corporations Code.  Without limiting the generality of the foregoing and subject thereto, at the Effective Time, all the properties, rights, privileges, powers and franchises of the Company and Acquisition Sub shall vest in the Surviving Corporation and all Liabilities and duties of the Company and Acquisition Sub shall become the Liabilities and duties of the Surviving Corporation.

 

 

Section 2.6  Articles of Incorporation and Bylaws.  The articles of incorporation of Acquisition Sub shall be the articles of incorporation of the Surviving Corporation at and immediately after the Effective Time, until thereafter amended in accordance with applicable Law.  The bylaws of Acquisition Sub in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation at and immediately after the Effective Time, until thereafter amended in accordance with applicable Law as provided therein and under the California Corporations Code.

Section 2.7  Board of Directors.  The directors of Acquisition Sub at the Effective Time shall be the directors of the Surviving Corporation, each to hold office in accordance with the articles of incorporation and bylaws of the Surviving Corporation until such director's successor is duly elected or appointed and qualified.

Section 2.8  Officers.  The officers of the Company at the Effective Time shall be the officers of the Surviving Corporation, each to hold office in accordance with the articles of incorporation and bylaws of the Surviving Corporation until such officer's successor is duly elected or appointed and qualified.

Section 2.9  Conversion of Shares.

 

 

Section 2.10  Closing Estimates.  No later than three Business Days prior to the anticipated Closing, the Company shall prepare and deliver, or cause to be prepared and delivered, to Parent a certificate executed by an officer of the Company (the "Closing Certificate") attaching (a) the Company's good faith estimate of the Estimated Merger Consideration, including a good faith estimate of (i) Closing Cash ("Estimated Closing Cash"), together with the supporting detail therefor; (ii) Closing Indebtedness ("Estimated Closing Indebtedness"), together with the supporting detail therefor; (iii) the amount of the Transaction Fees determined as of the Closing Date ("Estimated Closing Transaction Fees"), together with any payment instructions related thereto; and (iv) Closing Working Capital ("Estimated Working Capital"), together with such schedules and data with respect to the determination of the Estimated Working Capital as may be appropriate to support such calculation of Estimated Working Capital, and (b) the completed Aggregate Merger Consideration Template; provided, however, that Parent shall have the right to review and comment on the Closing Certificate upon its delivery by the Company, and the Company shall thereafter consider in good faith any of Parent's comments on the Closing Certificate.  The Closing Certificate shall be prepared in accordance with the definitions as provided in this Agreement and the Company Methodology; provided that the determination of Covered Taxes for purposes of determining Estimated Closing Indebtedness (and Closing Indebtedness for purposes of Section 2.13) shall be made using applicable Tax principles and not the Company Methodology.

Section 2.11  Payment of Merger Consideration.

 

 

 

 

Section 2.12  Appraisal Rights.  Notwithstanding anything in this Agreement to the contrary, each Share that is issued and outstanding immediately prior to the Effective Time and that is held by a Stockholder who has neither voted in favor of the Merger nor consented thereto in writing and who has properly demanded in writing appraisal for such shares in accordance with Section 1301 of the California Corporations Code (the "Dissenting Shares") shall not be converted into or represent the right to receive the applicable Total Per Share Merger Consideration, but shall be entitled to receive payment of the appraised value of Dissenting Shares held by them in accordance with the provisions of Section 1300 et seq. of the California Corporations Code; provided, however, that if such Stockholder fails to perfect or effectively withdraws or loses the right to appraisal and payment under the California Corporations Code, each Share of such Stockholder shall thereupon be deemed to have been converted into and to have become exchangeable for, as of the Effective Time, the right to receive the Total Per Share Merger Consideration, without interest, and such Share shall no longer be a Dissenting Share.  The Company shall provide notice in accordance with Section 1301 of the California Corporations Code to each Stockholder entitled to appraisal rights.  The Company shall give prompt notice to Parent of any demands received by the Company for appraisals of Shares, Parent shall have the right to direct all negotiations and proceedings with respect to such demands, Parent shall have the right to approve any payment made in respect of Dissenting Shares and the Company shall cooperate with Parent in connection therewith and take all actions reasonably requested by Parent.

Section 2.13  Merger Consideration Adjustment.

 

 

(b) Within 30 days after receipt by the Representative of the Initial Calculation by Parent, the Representative may deliver to Parent a written notice (the "Calculation Notice") either (i) advising Parent that the Representative agrees with and accepts the Initial Calculation or (ii) setting forth an explanation in reasonable detail of those items in the Initial Calculation that the Representative disputes and of what the Representative believes is the correct calculation of Closing Working Capital, Closing Cash, Closing Indebtedness and/or Closing Transaction Fees, as applicable.  The Representative and the accountants engaged by the Representative shall be entitled to review the Surviving Corporation's working papers, trial balances and similar materials for purposes of reviewing the Initial Calculation.  Without limiting the generality of the foregoing, the Surviving Corporation shall provide the Representative and the accountants engaged by the Representative with (i) the reasonable assistance of the personnel of the Surviving Corporation and (ii) timely and reasonable access, during the Surviving Corporation's normal business hours, to the Surviving Corporation's personnel, properties, books and records, in each case at the Surviving Corporation's expense.  If the Representative does not submit a Calculation Notice within the 30-day period provided herein, then the Initial Calculations shall become final and shall not be subject to further review, challenge or adjustment.  Parent and its accountants shall be entitled to review the working papers, trial balances and similar materials relating to the Representative's preparation of its Calculation Notice.  If Parent shall concur with the Calculation Notice, or if Parent shall not object to the Calculation Notice in a writing received by the Representative within 30 days after Parent's receipt of the Calculation Notice, the calculation of each of the Closing Working Capital, Closing Cash, Closing Indebtedness and Closing Transaction Fees set forth in the Calculation Notice shall become final and shall not be subject to further review, challenge or adjustment.

 

 

(d) The "Final Merger Consideration" shall mean an amount equal to: (i) the Base Purchase Price; minus (ii) the amount, if any, by which the Closing Cash Target exceeds Closing Cash, as finally determined in accordance with this Section 2.13, minus (iii) Closing Indebtedness, as finally determined in accordance with this Section 2.13, minus (iv) the amount, if any, by which the Working Capital Target exceeds Closing Working Capital, as finally determined in accordance with this Section 2.13, minus (v) Closing Transaction Fees, as finally determined in accordance with this Section 2.13, minus (vi) the Exchange Amount.  The "Adjustment Amount," which may be positive or negative, shall mean (i) the Final Merger Consideration minus (ii) the Estimated Merger Consideration.

Section 2.14  Withholding Rights.  Each of the Company, Surviving Corporation, Parent and the Exchange Agent shall be entitled to deduct and withhold from the consideration otherwise payable to any Person pursuant to this Agreement such amounts as it reasonably determines it is required to deduct and withhold with respect to the making of such payment under any provision of applicable Law.  If the Company, Surviving Corporation, Parent or the Exchange Agent, as the case may be, so withholds any such amounts, such amounts shall be treated for all purposes of this Agreement as having been paid to the applicable Person in respect of which the Company, Surviving Corporation, Parent or the Exchange Agent, as the case may be, made such deduction and withholding.

ARTICLE III

Representations And Warranties Of The Company

Except as set forth on the disclosure schedule delivered by the Company to Parent in connection with this Agreement (the "Company Disclosure Schedule"), which identifies items of disclosure by reference to a particular Section or Subsection of this Agreement, the Company hereby represents and warrants to each of Parent and Acquisition Sub as of the date hereof and as of the Closing Date as follows:

 

 

Section 3.1  Organization of the Company.  The Company is duly incorporated, validly existing and in good standing under the laws of the State of California with full corporate power and authority to conduct the Business as it is presently being conducted and to own or lease, as applicable, the Assets and to perform its obligations under its Material Contracts.  The Company is duly qualified to transact business as a foreign corporation and is in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities make such qualification necessary, except where the failure to be so qualified or in good standing would not have, individually or in the aggregate, a Company Material Adverse Effect.  Copies of the Articles of Incorporation and the Company's bylaws, and all amendments thereto, heretofore made available to Parent, are true and correct as of the date hereof.  The Company is not in violation of the Articles of Incorporation or the Company's bylaws in any material respect.  The Company does not have any Subsidiaries.

Section 3.2  Authorization.

 

 

Section 3.3Capitalization of the Company.

Section 3.4  Assets.  The Company has good and valid title to or, in the case of leased or subleased Assets, valid leasehold interests in, the Assets reflected in the Interim Financial Statements and the Assets acquired since the Interim Balance Sheet Date (other than such Assets which have been sold in the Ordinary Course of Business or otherwise as permitted under Section 6.1(f)), and, except as set forth on Section 3.4 of the Company Disclosure Schedule, such Assets are free and clear of all Encumbrances, except for Permitted Encumbrances.  Except as set forth on Section 3.4 of the Company Disclosure Schedule, the Assets are sufficient for the continued conduct of the Business after the Effective Time in substantially the same manner as currently conducted and conducted during the 12-month period ending on the date of this Agreement and constitute all of the rights, property and assets necessary to conduct the Business as currently conducted and conducted during the 12-month period ending on the date of this Agreement.  Except as set forth on Section 3.4 of the Company Disclosure Schedule, all of the Assets used in the Business and owned by the Company are in good operating condition and repair (except for ordinary wear and tear).

 

 

(viii)              Contracts providing for most-favored pricing or any similar provision requiring the Company to offer to a Person any terms or conditions that are at least as favorable as those offered to one or more other Persons;

 

 

Section 3.6  Property.

 

 

disclosed on Section 3.6(a)(iii) of the Company Disclosure Schedule and the Permitted Encumbrances do not materially adversely affect the Company's ability to use the Owned Real Property as reasonably necessary for the operation of the Business of the Company, consistent with past practice. The Company has not transferred any air, mineral, or development rights relating to the Owned Real Property.

 

 

 

 

 

Section 3.7  No Conflict or Violation.  Except as set forth on Section 3.7 of the Company Disclosure Schedule, neither the execution, delivery or performance of this Agreement, the consummation of the transactions contemplated hereby, nor compliance by the Company with any of the provisions hereof, will (a) result in or constitute a Default under the Articles of Incorporation or the Company's bylaws, (b) result in or constitute a Default under any Contract, (c) violate, conflict with, contravene or give any Person the right to exercise any remedy or obtain any relief under any Court Order, Law or Permit, or (d) give rise to additional rights under the Material Contracts or result in the creation of any Encumbrance (other than a Permitted Encumbrance) upon any of the properties or Assets of the Company.

Section 3.8  Financial Statements.  The Company heretofore has made available to Parent true and correct copies of the Financial Statements.  The Financial Statements (a) have been prepared in accordance with the books and records of the Company, (b) have been prepared consistent with the Company's historical practices, and (c) fairly present in all material respects the financial position and results of operations of the Company for the periods covered and as of the respective dates thereof (except, in each case, that the Interim Financial Statements may not contain all the footnote disclosures required by GAAP and are subject to normal year-end adjustments (none of which, individually or in the aggregate, are material)).

Section 3.9  Taxes.

 

 

 

 

Section 3.10  Compliance with Environmental Laws.  Except as set forth on Section 3.10 of the Company Disclosure Schedule:

 

 

Section 3.11 Employee Benefit Plans.

 

 

Section 3.12 Compliance with Law.  Except as set forth on Section 3.12 of the Company Disclosure Schedule, the Company is currently in compliance in all material respects with, and since January 1, 2014 have been in compliance in all material respects with, all Laws and Court Orders.  The Company has not received any written notice to the effect that it is not in compliance with any such Laws or Court Orders and the Company has no Knowledge of any facts that are likely to result in violations of any of the foregoing.

 

 

Section 3.13  Permits.  The Company heretofore has made available to Parent a true and correct copies of all material Permits, including any Permit required under any Environmental Law, used in the operation of the Business or otherwise held by the Company in connection with the Business, all of which are in full force and effect.  Such Permits constitute all of the licenses, franchises, permits and other authorizations necessary for the Company to own, operate, use and maintain the Assets in the manner in which they are now operated and maintained and to conduct the Business as currently conducted.  The Company is not in Default under any such Permit, and the Company has not received any written notice of any claim of Default with respect to any such Permit.

Section 3.14  Consents and Approvals.  Except (a) as set forth on Section 3.14 of the Company Disclosure Schedule, (b) for filings and Permits as may be required under, and other applicable requirements of, state securities Laws, (c) for the filing and recordation of the Agreement of Merger as required by the California Corporations Code, and (d) for the Stockholder Approval, no permit, consent, approval, authorization or notice of, declaration to or filing or registration with any Person (whether under a Material Contract, with a Governmental Entity or otherwise) is required to be made or obtained by the Company in connection with the execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby.

Section 3.15  Litigation.  Except as set forth on Section 3.15 of the Company Disclosure Schedule, there has not been during the past four-year period any Actions against the Company, nor is there any Action pending or, to the Knowledge of the Company, threatened against the Company.  To the Knowledge of the Company, there is not any investigation pending or threatened in which the Company is the subject or target by any Governmental Entity.  Except as set forth on Section 3.15 of the Company Disclosure Schedule, the Company is not subject to any outstanding Court Order.  As of the date of this Agreement, there is no pending audit by a Major Customer occurring at the Company outside of the Ordinary Course of Business.

Labor Matters.

 

 

 

 

Section 3.17  Intellectual Property.

 

 

enforceable written agreements, (ii) developed by independent contractors or agents who have assigned their rights to the Company pursuant to enforceable written agreements, or (iii) otherwise acquired by the Company from a third party who has assigned all the Intellectual Property rights and ownership of all Intellectual Property it has developed on the Company's behalf to the Company.  No open source or public library Software, including any Software licensed pursuant to any GNU public license, is or was used in the creation, development or modification of, or is or was incorporated into, any Business Intellectual Property (other than Business Intellectual Property Section 3.17(c) of the Company Disclosure Schedule identifies as licensed from third parties), and, to the Knowledge of the Company, in Business Intellectual Property Section 3.17(c) of the Company Disclosure Schedule identifies as licensed from third parties.

 

 

Section 3.18  Insurance.  The Company has in place insurance policies in amounts and types that are prudent and customary in the industry for similar companies and sufficient to cover the full value of all of its Assets.  Section 3.18 of the Company Disclosure Schedule sets forth all policies of insurance ("Insurance") maintained by the Company on the date hereof with respect to the Business, the Assets or the employees of the Company, including for each such policy the type of coverage, the insurer, the expiration date, and the amounts of coverage.  All Insurance is in full force and effect, no notice of cancellation, non-renewal, termination, premium increase or change in coverage has been received with respect thereto and there is no existing Default by any insured thereunder.  There are no pending claims under any Insurance that have been disallowed, denied or disputed and, to the Knowledge of the Company, there is no basis for denial of any claim under any Insurance.  Except as disclosed on Section 3.18 of the Company Disclosure Schedule, there are no claims pending or, to the Knowledge of the Company, threatened against any Insurance maintained by the Company.  All premiums and other amounts due on Insurance have been paid, and the Company has complied in all material respects with the provisions of all Insurance.  The Company has made available to Parent true and correct copies of all Insurance.

Section 3.19  Brokers.  No investment banker, broker, finder or other Person is entitled to any commission, fee or similar payment in connection with this Agreement or with the transactions contemplated by this Agreement as a result of any actions or commitments of the Company or any of its Affiliates.

Section 3.20  No Undisclosed Liabilities; Indebtedness.

 

 

Section 3.21  Absence of Changes.

 

 

Section 3.22 Bank Accounts.  Section 3.22 of the Company Disclosure Schedule contains a true and correct list of all of the bank accounts, investment accounts, safe deposit boxes, lock boxes and safes held by, or in the name of, the Company, and the names of all officers, employees or other individuals who are authorized to make withdrawals therefrom or dispositions thereof.

 

 

 

Section 3.23  Officers and Directors.  Section 3.23 of the Company Disclosure Schedule contains a true and correct list of all of the executive officers and directors of the Company as of the date hereof.

Section 3.24  Related Party Transactions.  Except as set forth on Section 3.24 of the Company Disclosure Schedule, no Related Party (i) has any direct or indirect interest in any material Asset used in or otherwise relating to the Business, (ii) has entered into any Material Contract, transaction or business dealing involving the Company, or (iii) has any claim or right against the Company (other than rights to receive compensation for services performed as an officer, director or employee of the Company).

Section 3.25  Compliance with Anti-Corruption Laws.

Section 3.26  Customers; Suppliers.

 

 

Section 3.27  Accounts Receivable.  All accounts and notes receivable of the Company represent sales actually made in the Ordinary Course of Business or valid claims as to which full performance has been rendered by the Company.  The provision for uncollectible amounts set forth in the Financial Statements against the accounts receivable has been calculated in a manner consistent with past practice.  All accounts and notes receivable of the Company reflected on the Interim Balance Sheet are good and collectible, net of the provision for uncollectible amounts, at the aggregate recorded amounts thereof.  Except as set forth on Section 3.27 of the Company Disclosure Schedule, none of the accounts or notes receivable of the Company (a) are subject to any set-offs or counterclaims or (b) represent obligations for services subject to refund.

Section 3.28  Inventory.  All inventory of the Company, whether or not reflected in the Financial Statements, consists of a quality and quantity usable and salable in the Ordinary Course of Business, except for obsolete, damaged, defective or slow-moving items that have been written off or written down to fair market value or for which adequate reserves have been established. All such inventory is owned by the Company free and clear of all Encumbrances, other than Permitted Encumbrances and Encumbrances related to Indebtedness which will be released at or prior to the Closing, and no inventory is held on a consignment basis.  The quantities of each item of inventory (whether raw materials, work-in-process or finished goods) are not excessive, but are reasonable in the present circumstances of the Company.

ARTICLE IV

Representations And Warranties Of Parent And Acquisition Sub

Parent and Acquisition Sub, jointly and severally, hereby represent and warrant to the Company as of the date hereof and as of the Closing Date as follows:

Section 4.1  Organization.  Each of Parent and Acquisition Sub is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full corporate or similar organizational power and authority to conduct its business as it is presently being conducted and to own or lease, as applicable, its assets.

Section 4.2  Authorization.  Each of Parent and Acquisition Sub has all requisite corporate or similar organizational power and authority, and has taken all corporate or other requisite action necessary, to execute, deliver and perform this Agreement, to consummate the transactions contemplated hereby and to perform its obligations hereunder.  The execution and delivery of this Agreement by Parent and Acquisition Sub and the consummation by Parent and Acquisition Sub of the transactions contemplated hereby have been duly and validly authorized and approved by the respective boards of directors (or similar governing body) of Parent and Acquisition Sub and by Parent as the sole stockholder of Acquisition Sub.  No other proceedings on the part of Parent or Acquisition Sub are necessary to authorize this Agreement and the transactions contemplated hereby.  This Agreement has been duly executed and delivered by each of Parent and Acquisition Sub and, assuming the due authorization, execution and delivery hereof by each of the other parties hereto, is the legal, valid and binding obligation of each of Parent and Acquisition Sub, enforceable against each in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors' rights generally and except insofar as the availability of equitable remedies may be limited by applicable law.

 

 

Section 4.3  Consents and Approvals; No Conflict or Violation.

Section 4.4  Absence of Changes. Except as otherwise contemplated or permitted by, or as a consequence of, this Agreement, since its incorporation, Parent has conducted in all material respects its business in the ordinary course of business and there has not been a Parent Material Adverse Effect.

Section 4.5  Compliance with Law.  Parent is currently in compliance in all material respects with, and since its incorporation has been in compliance in all material respects with, all Laws and Court Orders.  Parent has not received any written notice to the effect that it is not in compliance with any such Laws or Court Orders and Parent has no knowledge of any facts that are likely to result in violations of any Laws or Court Orders.

Section 4.6  Litigation.  Each of Parent and Acquisition Sub is in compliance with all Laws and Court Orders which would materially affect its ability to perform its obligations hereunder and under the Note Purchase Agreements.  There is no Action pending or, to the knowledge of Parent or Acquisition Sub, threatened against Parent or Acquisition Sub which, individually or in the aggregate, will have a Parent Material Adverse Effect.

Section 4.7  Brokers.  No investment banker, broker, finder or other Person is entitled to any commission, fee or similar payment in connection with this Agreement or with the transactions contemplated by this Agreement as a result of any actions or commitments of the Parent, Acquisition Sub or any of their respective Affiliates.

 

 

Acquisition Sub.  Parent owns, directly, all of the issued and outstanding equity interests of Acquisition Sub.  Since the date of its incorporation, Acquisition Sub has not engaged in any activities other than as contemplated by this Agreement or incidental to its organization and existence.

ARTICLE V

Representations and Warranties of the Rollover Stockholders

Each Rollover Stockholder severally, but not jointly, hereby represents and warrants, as of the date hereof and as of the Closing Date as follows:

Section 5.1  Authorization.  Such Rollover Stockholder has all requisite power, authority and legal capacity to execute and deliver this Agreement and any Note Purchase Agreement to which such Rollover Stockholder is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated by this Agreement and any Note Purchase Agreement to which such Rollover Stockholder is a party.  This Agreement and any Note Purchase Agreement to which such Rollover Stockholder is a party have been, or will be, duly executed and delivered by such Rollover Stockholder, as applicable, and constitute, or will constitute, a valid and binding obligation of such Rollover Stockholder, enforceable against such Rollover Stockholder in accordance with their terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors' rights generally and except insofar as the availability of equitable remedies may be limited by applicable law.

Section 5.2  Consents and Approvals; No Conflict or Violation.  Neither the execution, delivery or performance by such Rollover Stockholder of this Agreement or any Note Purchase Agreement to which such Rollover Stockholder is a party, nor compliance by such Rollover Stockholder with any of the provisions hereof or thereof, will (i) result in or constitute a Default under any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which such Rollover Stockholder is a party or by which such Rollover Stockholder or any of its assets may be bound, (ii) violate, conflict with, contravene or give any Person the right to exercise any remedy or obtain any relief under, any Court Order, Law or Permit, or (iii) require any consent, approval, authorization of, notice to, or filing with any Person.

Section 5.3  Title to Shares.  Such Rollover Stockholder is the sole record and beneficial owner of, and has good and marketable title to, the number of Shares set forth opposite his, her or its name on Schedule 2.1, free and clear of any Encumbrance, except for Permitted Share Encumbrances.  Such Rollover Stockholder is not a party to any option, warrant, purchase right or other contract or commitment that requires it to sell, transfer or otherwise dispose of any Shares, except for this Agreement and any Note Purchase Agreement to which such Rollover Stockholder is a party.  On the Closing Date, pursuant to the terms set forth herein, such Rollover Stockholder will sell, transfer and deliver to Parent good and marketable title to its Shares, free and clear of any Encumbrance, except for Permitted Share Encumbrances.

 

 

Section 5.4  Compliance with Laws; Litigation.  Such Rollover Stockholder is in compliance with all Laws and Court Orders which would materially affect his, her or its ability to perform its obligations hereunder and under any Note Purchase Agreement to which such Rollover Stockholder is a party.  There is no Action pending or, to the knowledge of such Rollover Stockholder, threatened against such Rollover Stockholder which would reasonably be expected to prevent or materially delay the ability of such Rollover Stockholder to perform his, her or its obligations hereunder or under any Note Purchase Agreement to which such Rollover Stockholder is a party, including to consummate the transactions contemplated hereby or thereby.

Section 5.5  Brokers.  No investment banker, broker, finder or other Person is entitled to any commission, fee or similar payment in connection with this Agreement or with the transactions contemplated by this Agreement as a result of any actions or commitments of such Rollover Stockholder or any of his, her or its Affiliates.

Section 5.6  Investment Representations.  Such Rollover Stockholder is an "accredited investor" within the meaning of Rule 501(a) under the Securities Act.  Such Rollover Stockholder has such knowledge and experience in financial and business matters and investments in general that make it capable of evaluating the merits and risks of the Merger and the Exchange.  Such Rollover Stockholder understands that the offer and sale of a Note to such Rollover Stockholder has not been, and will not be, registered under the Securities Act or under any state securities Laws, and that the Notes are being offered and sold in reliance upon exemptions from the Securities Act and state securities Laws.

Section 5.7  Access to Information.  Such Rollover Stockholder acknowledges that he, she or it has been afforded access to information sufficient to enable such Rollover Stockholder: (a) to evaluate whether to proceed with the execution and delivery of this Agreement and any Note Purchase Agreement to which such Rollover Stockholder is a party and the consummation of the Merger and the Exchange and (b) to have the opportunity to obtain such additional information that is necessary to make an informed decision with respect to the execution and delivery of this Agreement and any Note Purchase Agreement to which such Rollover Stockholder is a party and the consummation of the Merger and the Exchange.

ARTICLE VI

Covenants

Section 6.1  Conduct of Business of the Company.  During the Pre-Closing Period, the Company will conduct its operations in the Ordinary Course of Business and will use commercially reasonable efforts to (x) keep available the service of its current officers, (y) keep available the services of its employees, and (z) preserve in all material respects its relationships and goodwill with customers, suppliers and others having business dealings with it.  Without limiting the generality of the foregoing, except as otherwise expressly provided in or allowed under this Agreement, during the Pre-Closing Period, the Company will not, without the prior consent of Parent, which consent shall not be unreasonably delayed, withheld or conditioned:

 

 

 

 

Section 6.2  No Solicitation.

 

 

Section 6.3  Stockholder Approvals.

Section 6.4  Access to Information.

 

 

Section 6.5  Approvals and Consents.  During the Pre-Closing Period, each of the parties shall, as applicable to such party, make all filings with and provide all notices to all appropriate regulatory authorities and use reasonable best efforts to obtain all consents, waivers, approvals, authorizations or orders, including (a) all regulatory rulings and approvals of any Governmental Entity and (b) all actions, consents, approvals or waivers from any Person that is required or reasonably appropriate, in connection with the consummation of the transactions contemplated by this Agreement, including, in the case of the Company, the consents, waivers and approvals listed on Section 3.14 of the Company Disclosure Schedule.  Subject to the terms and conditions of this Agreement, in taking the actions or making the filings referred to in the immediately preceding sentence, the parties hereto shall furnish information required in connection therewith and seek timely to obtain any such actions, consents, approvals or waivers. The Company shall provide the notices listed or described on Section 3.14 of the Company Disclosure Schedule within five Business Days after the execution of this Agreement.

Section 6.6  Additional Agreements; Reasonable Efforts.  During the Pre-Closing Period, subject to the terms and conditions herein provided, (a) each of the parties hereto agrees to use reasonable efforts to take or cause to be taken all actions and to do or cause to be done all things reasonably necessary, proper or advisable under applicable Court Orders or Laws to consummate and make effective the transactions contemplated by this Agreement, including (i) contesting any legal proceeding relating to the Merger and (ii) executing any additional instruments necessary to consummate the transactions contemplated hereby; and (b) each of the parties hereto agrees to use reasonable efforts to cause the Effective Time to occur as soon as practicable after the date hereof.  If at any time after the Effective Time any further action is necessary to carry out the purposes of this Agreement in accordance with the terms hereof, the proper officers and directors of each party hereto shall take all such necessary action.

 

 

Section 6.7  Indemnification; Insurance.

Section 6.8  Tax Matters.

(a)                                  Preparation of Tax Returns and Payment of Taxes.

 

 

 

 

Section 6.9  Certain Notices.  During the Pre-Closing Period, the Company shall promptly notify Parent of the following matters of which the Company has Knowledge: (a) the occurrence or non-occurrence of any fact or event that would reasonably be likely to cause any representation or warranty of the Company contained in this Agreement to be untrue or inaccurate in any material respect as of the date hereof or as of the Closing Date; (b) any failure of the Company to comply with or satisfy any covenant or condition to be complied with or satisfied by such party or parties hereunder in any material respect as of the Closing Date; (c) any written notice or other communication from any Person alleging that the consent or approval of such Person is or may be required in connection with the transactions contemplated by this Agreement or that such transactions otherwise may violate the rights of or confer remedies upon such Person; (d) any written notice or other communication from any Governmental Entity in connection with the transactions contemplated by this Agreement; (e) any actions commenced relating to the Company that, if pending on the date of this Agreement, would have been required to have been disclosed to Parent pursuant to this Agreement; (f) any audit by a Major Customer occurring at the Company outside of the Ordinary Course of Business; (g) any repurchases of any Shares by the Company; (h) any transfers of record of Shares effectuated on the stock ledger of the Company during the Pre-Closing Period; and (i) the award of any transaction, stay or similar bonuses to employees or directors pursuant to Section 6.1(e).

Section 6.10  Preservation of Books and Records.  Each of Parent and the Surviving Corporation agrees to preserve and keep, or cause to be preserved and kept, all original books and records in respect of the Business in the possession of Parent, the Surviving Corporation or their respective Affiliates for a period of three years after the Closing Date (the "Record Retention Period").  The Representative or its representatives, upon reasonable notice shall have reasonable access during normal business hours to examine and inspect such books and records that relate to periods prior to the Closing Date (and make and retain copies of such books and records, at the Representative's sole cost) to the extent necessary for the preparation of insurance claims, financial statements, regulatory filings, Tax Returns, or Tax audits of a Stockholder, or the defense of any Third Party Claim, but specifically excluding any Action in which Parent, the Surviving Corporation, any of their respective Affiliates, or any of their respective successors, on the one hand, and the Representative, any Stockholder, any of their respective Affiliates, or any of their respective successors or heirs, on the other hand, are adverse.  Notwithstanding anything herein to the contrary, no such access shall be permitted to the extent that it would (a) unreasonably disrupt the operations of Parent, the Surviving Corporation or their respective Affiliates, as determined by Parent in good faith, (b) in the reasonable opinion of outside counsel be reasonably likely to result in the waiver of any attorney-client privilege, work product doctrine or other applicable privilege, or (c) violate any confidentiality obligation to which Parent or the Surviving Corporation is bound or any Law applicable to Parent or the Surviving Corporation; provided that Parent and the Surviving Corporation shall use commercially reasonable efforts to provide access to information in a manner that does not waive any privilege or violate any confidentiality obligation or Law, including by redacting documents.

 

 

Section 6.11 Covenants Regarding Delivery of Exchange Shares.  Upon the consummation of the Exchange, each Rollover Stockholder shall deliver to Parent a Certificate for its Exchange Shares and a stock power relating thereto, along with such other good and sufficient instruments of conveyance, transfer and assignment as are necessary, appropriate and effective to vest in Parent all of the right, title and interest in and to its ownership interests in its Exchange Shares.

Section 6.12  Transactions in Janel Securities. From the date of this Agreement until such time as the transactions contemplated by this Agreement have been appropriately disclosed in accordance with all applicable securities Laws, neither the Company nor any Stockholder nor any Related Party shall purchase, sell, transfer or otherwise enter into any transaction involving any securities of Janel.  Following the disclosure of the transactions contemplated by this Agreement, all purchases, sales, transfers and other transactions involving securities of Janel shall be made only in compliance with all applicable securities Laws.

ARTICLE VII

Conditions To Consummation Of The Merger

Section 7.1  Conditions to Each Party's Obligation to Effect the Merger.  The respective obligations of each party hereto to consummate, or cause to be consummated, the transactions contemplated by this Agreement are subject to the satisfaction at or prior to the Effective Time of the following conditions:

Section 7.2  Conditions to the Obligation of the Company and the Rollover Stockholders.  The obligation of the Company and the Rollover Stockholders to consummate, or cause to be consummated, the transactions contemplated by this Agreement is subject to the satisfaction at or prior to the Effective Time of the following conditions:

 

 

 

Section 7.3  Conditions to the Obligations of Parent and Acquisition Sub.  The respective obligations of Parent and Acquisition Sub to consummate, or cause to be consummated, the transactions contemplated by this Agreement are subject to the satisfaction at or prior to the Effective Time of the following conditions:

 

 

Section 7.4  Frustration of Closing Conditions.  No party may assert that it is not required to consummate the transactions contemplated by this Agreement based on the failure of a closing condition if such failure was due to a breach by such party of its obligations under this Agreement.

 

 

ARTICLE VIII

Termination; Waiver

Section 8.1  Termination.  This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after Stockholder Approval has been obtained:

 

 

Section 8.2  Effect of Termination.  In the event of the termination and abandonment of this Agreement pursuant to Section 8.1, this Agreement shall forthwith become void and have no effect, without any liability on the part of any party hereto or any party's Affiliates, directors, officers or stockholders; provided, however, that no such termination will relieve any party hereto from liability or damages for fraud or willful or intentional breach of any representation, warranty, covenant or agreement under this Agreement occurring prior to such termination; provided, further, that nothing herein shall be deemed to waive any rights of specific performance of this Agreement available to any party.  The provisions of Section 6.4(d), this Section 8.2 and ARTICLE X shall survive any termination of this Agreement and shall be enforceable hereunder.  No termination of this Agreement shall affect the obligations of the parties under the Confidentiality Agreement, all of which shall survive termination of this Agreement in accordance with the terms thereof.

ARTICLE IX

Indemnification

Section 9.1  Survival of Representations.  All representations and warranties of the parties contained herein shall survive the Effective Time until the date that is 12 months after the Closing Date (the "General Survival Date"); provided, however, the representations and warranties set forth in Section 3.1, Section 3.2, Section 3.3, Section 3.9, Section 3.10, Section 3.11, Section 3.19, Section 4.1, Section 4.2, Section 4.7, Section 5.1, Section 5.3 and Section 5.5 (the "Fundamental Representations") shall survive until 30 days following the expiration of applicable statute of limitations (as extended), and the covenants and agreements of the parties contained herein shall survive the Closing until fully performed in accordance with their terms or for their stated term, as applicable (each, the applicable "Survival Date").  Any claims under this Agreement must be asserted by written notice delivered prior to 5:00 p.m. New York City time on the applicable Survival Date and, if written notice is received prior to such time, the claim set forth in any such notice shall survive until such claim is fully resolved.  Notwithstanding anything herein to the contrary, any claims based on fraud or intentional misrepresentation shall not be subject to any limitations under this Section 9.1.

Section 9.2  Indemnification.

 

 

 

 

 

 

Section 9.3  Limitation on Indemnity.

 

 

Section 9.4  Exclusivity of Remedy.  From and after the Closing, the remedies set forth in Section 2.13 and in this ARTICLE IX shall be the exclusive remedies of the parties with respect to any and all matters covered by this Agreement, except for the remedies of specific performance, injunction and other equitable relief; provided that no party hereto shall be deemed to have waived any claims for fraud or intentional misrepresentation against a party hereto.

 

 

Section 9.5  Notice of Claims.

 

 

Section 9.6  Third Person Claims.

 

 

Section 9.7  Insurance Proceeds.  Any Losses that may be recovered by the Indemnified Party with respect to such claim shall be net of any insurance proceeds actually received with respect thereto (net of the out-of-pocket costs reasonably incurred in pursuing or obtaining such insurance proceeds, deductibles and any increased premium amounts attributable to such claim).  The Indemnified Party shall use its commercially reasonable efforts to make and pursue (or cause its Affiliates to make and pursue) any and all insurance claims relating to any claim for which it is seeking indemnification under this ARTICLE IX; provided that in no event shall an Indemnified Party be required to pursue any claim under any insurance policy prior to bringing a claim for indemnification pursuant to this ARTICLE IX.  To the extent that insurance proceeds are actually collected after an indemnification claim has been settled, the Indemnified Party shall restore the Indemnitor to the same economic position as would have existed had such insurance proceeds been collected prior to the settlement of such indemnification claim (net of the out-of-pocket costs reasonably incurred in pursuing or obtaining such insurance proceeds, deductibles and any increased premium amounts attributable to such claim).

 

 

 

Section 9.8  Order of Recovery.  Subject to the limitations set forth in this ARTICLE IX, if the Stockholders shall be obligated to indemnify the Parent Indemnified Parties with respect to a claim for Losses pursuant to Section 9.2(a), or if any Stockholder shall be obligated to indemnify the Parent Indemnified Parties with respect to a claim for Losses pursuant to Section 9.2(c), recovery and payment therefore shall be made first from the Escrow Account (if claim made prior to the Escrow Release Date) pursuant to the Escrow Agreement and then, to the extent that the amount then remaining in the Escrow Account is insufficient to fully indemnify the Parent Indemnified Parties for such Losses, the Parent Indemnified Parties shall be entitled to seek recovery and payment directly from the Stockholders.

Section 9.9  Release of Funds from Escrow Account.  In accordance with the terms of the Escrow Agreement, any funds remaining in the Escrow Account on the Escrow Release Date shall be disbursed to the Representative, with the Representative to pay to each Stockholder an amount equal to (a) the Escrow Per Share Distribution Amount multiplied by (b) the number of Shares owned by such Stockholder immediately prior to the transactions contemplated by this Agreement, and Parent and the Representative shall deliver a joint written instruction directing the Escrow Agent to make such distribution from the Escrow Account; provided, however, that an amount equal to the aggregate amount of all claims for which a Parent Indemnified Party has provided the Representative written notice prior to the Escrow Release Date shall be retained by the Escrow Agent until, with respect to each such claim, the matter underlying such claim is resolved, in which event Parent and the Representative shall direct the Escrow Agent to make a distribution from the Escrow Account of the funds remaining in the Escrow Account applicable to such claim, consistent with such final resolution to the Parent Indemnified Party and to the Representative, as applicable.

Section 9.10  Adjustments to Merger Consideration.  All indemnification payments under this ARTICLE IX shall be treated as adjustments to the Final Merger Consideration for Tax purposes, except as otherwise provided by Law.

ARTICLE X

Representative

Section 10.1  Designation of Representative.  The parties have agreed that it is desirable to designate a representative to act on behalf of the Stockholders for certain limited purposes as specified herein.  The Stockholders have designated the Representative as the initial representative of the Stockholders.  The Representative shall act as true and lawful attorney-in-fact, agent and representative of the Stockholders and shall be authorized to act on behalf of the Stockholders and to take any and all actions required or permitted to be taken by the Representative under this Agreement and the Escrow Agreement.  In all matters relating to this ARTICLE X, the Representative shall be the only party entitled to assert the rights of the Stockholders hereunder.  This power of

 

 

attorney is granted and conferred in consideration of and for the purpose of completing the transactions contemplated by this Agreement.  The authority conferred upon the Representative shall be irrevocable and coupled with an interest and shall not be terminated by any act of any Stockholder, or by operation of law, whether by the death, incapacity, illness, dissolution or other inability to act of any of the Stockholders or by the occurrence of any event or events (including the termination of any trust or estate or the dissolution of any partnership or other entity), and if after the execution hereof any Stockholder shall die or become incapacitated, or if any other event shall occur before the completion of the transactions contemplated by this Agreement, the Representative is nevertheless authorized and directed to complete all such transactions as if such death, incapacity or other event or events had not occurred and regardless of notice thereof.  Notwithstanding any provision of this Agreement to the contrary, any obligation of Parent herein to consult with, notify, advise or otherwise communicate with the Stockholders shall be deemed an obligation to consult with, notify, advise or otherwise communicate solely with the Representative.

Section 10.2  Resignation and Replacement of Representative.  The Representative may resign at any time, and the Representative may be removed by the vote of Persons which collectively owned more than 60% or more of the Shares ("Majority Holders").  In the event that a Representative has resigned or been removed, a new Representative shall be appointed by a vote of Majority Holders, such appointment to become effective upon the written acceptance thereof by the new Representative.

Section 10.3  Authority and Rights of Representative;.  The Representative shall have such powers and authority acting on behalf of the Stockholders as are necessary to carry out all of the duties, responsibilities and obligations assigned to it pursuant to this Agreement and the Escrow Agreement, including acting on behalf of the Stockholders with respect to:

 

 

 

 

Section 10.5  Representative Expense Account.

ARTICLE XI

Miscellaneous

Section 11.1  Entire Agreement.  This Agreement (including the Company Disclosure Schedule), the Escrow Agreement, the Confidentiality Agreement and the Note Purchase Agreements constitute the entire agreement between the parties hereto with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. 

 

 

Section 11.2  Assignment; Successors and Assigns.  Except as otherwise provided herein, this Agreement may not, without the prior written consent of Parent and the Company or, after the Effective Time, Parent and the Representative, be assigned by operation of Law or otherwise, and any attempted assignment shall be null and void; provided that Parent and Acquisition Sub may assign this Agreement without the consent of any other party to (a) any Affiliate of Parent, (b) for collateral security purposes to any lender of Parent, Acquisition Sub, the Surviving Corporation or any Subsidiary of Parent, and (c) any acquirer of all the equity or all or any material portion of the assets of Parent or any Subsidiary of Parent (including, following the Closing, the Surviving Corporation), whether such sale is structured as a sale of stock, a sale of assets, a merger or otherwise.  Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors, permitted assigns, and legal representatives.

Section 11.3  Severability.  If any provision of this Agreement or the application thereof to any Person or circumstance is held invalid or unenforceable, the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected thereby and, to such end, the provisions of this Agreement are agreed to be severable.

Section 11.4  Amendment.  This Agreement may be amended by action taken by the Company, the Representative, Parent and Acquisition Sub at any time before or after Stockholder Approval has been obtained, but, after Stockholder Approval has been obtained, no amendment shall be made which requires the approval of such Stockholders under applicable law without obtaining such approval in writing of the requisite vote of such Stockholders.  This Agreement may be amended only by an instrument in writing signed on behalf of the Company, the Representative, Parent and Acquisition Sub.

Section 11.5  Extension; Waiver.  At any time prior to the Effective Time, each party hereto may (a) extend the time for the performance of any of the obligations or other acts of the other party, (b) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document, certificate or writing delivered pursuant hereto, or (c) waive compliance by the other party with any of the agreements or conditions contained herein.  Any agreement on the part of any party hereto to any such extension or waiver shall be valid only if set forth in an instrument, in writing, signed on behalf of such party.  The failure of any party hereto to assert any of its rights hereunder shall not constitute a waiver of such rights.

Section 11.6  Notices.  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by email, by nationally-recognized overnight courier or by registered or certified mail (postage prepaid, return receipt requested) to each other party as follows:

if to Parent or

Acquisition Sub:

AB HoldCo, Inc.

c/o Janel Corporation
303 Merrick Road, Suite 400
Lynbrook, NY 11563

Attention: Brendan Killackey

Email: bkillackey@janelcorp.com

 

 

 

with copies to:

Pepper Hamilton LLP 400 Berwyn Park

899 Cassatt Road

Berwyn, PA 19312

Attention: Scott R. Jones, Esq.

Email: jonessr@pepperlaw.com

if to the Company to:

Antibodies Incorporated P.O. Box 1560 Davis, CA 95617-1560 Attention: Richard Krogsrud, Ph.D.

Email: rkrogsrud@antibodiesinc.com

with a copy to:

Delfino Madden O'Malley Coyle & Koewler LLP 500 Capitol Mall, Suite 1550 Sacramento, CA 95814 Attention: Jeff Koewler, Esq. Email: jkoewler@delfinomadden.com

if to the Representative to:

Richard Krogsrud, Ph.D. P.O. Box 1560 Davis, CA 95617-1560 Email: rkrogsrud@antibodiesinc.com

with a copy to:

Delfino Madden O'Malley Coyle & Koewler LLP 500 Capitol Mall, Suite 1550 Sacramento, CA 95814 Attention: Jeff Koewler, Esq. Email: jkoewler@delfinomadden.com

or to such other address as the Person to whom notice is given may have previously furnished to the others in writing in the manner set forth above.

Section 11.7 Governing Law; Jurisdiction; Service of Process; Waiver of Jury Trial.

 

 

Section 11.8  Public Announcements.  All press releases or other public communications of any nature whatsoever relating to the transactions contemplated by this Agreement, and the method of the release for publication thereof, shall be subject to the prior mutual approval of Parent, the Company and the Representative, which approval shall not be unreasonably withheld or delayed, unless, in the sole judgment of Parent or the Company disclosure is otherwise required by applicable Law or by the applicable rules of any stock exchange or over-the-counter market on which Parent or the Company lists securities; provided that, to the extent required by applicable Law, Parent shall use its commercially reasonable efforts consistent with such applicable Law to consult with the Representative with respect to the timing and content thereof.

Section 11.9  Parties in Interest.  This Agreement shall be binding upon and inure solely to the benefit of each party hereto and its successors and permitted assigns and, except as provided in Section 6.7 and ARTICLE VII, nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement.

Section 11.10  Expenses.  Except as set forth in this Agreement, each of the parties hereto will bear its own costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby, including all legal, accounting, investment banking and other expenses incurred by it or on its behalf, whether or not such transactions are consummated, it being understood that the fees of (a) the Escrow Agent and (b) the Exchange Agent shall be shared equally by Parent, on the one hand, and the Stockholders, as a Transaction Fee, on the other hand.

 

 

Section 11.11  Specific Performance.  Each of Parent, Acquisition Sub, the Company, the Rollover Stockholders and the Representative hereby acknowledges and agrees that the failure of any other party to perform its agreements and covenants hereunder, including the failure to take all actions as are necessary on its part in accordance with the terms and conditions of this Agreement to consummate the Merger, may cause irreparable injury to the other parties, for which damages, even if available, will not be an adequate remedy.  Accordingly, each of Parent, Acquisition Sub, the Company, the Rollover Stockholders and the Representative hereby consents to, in addition to any other remedy which such party may have at law or in equity, the issuance of injunctive relief by any court of competent jurisdiction to compel performance of its obligations and to the granting by any court of the remedy of specific performance of its obligations hereunder, without any requirement that a bond or other security be posted.  Each of Parent, Acquisition Sub, the Company, the Rollover Stockholders and the Representative, to the maximum extent permitted by law, hereby waives any defenses it may have to the remedy of specific performance provided for herein.

Section 11.12  Counterparts; Effectiveness.  This Agreement may be executed by facsimile in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. This Agreement shall become effective when each party hereto shall have received counterparts thereof signed and delivered (by facsimile, electronic mail in "portable document format" (PDF) form, electronic transmission or otherwise) by all of the parties hereto.  This Agreement and any signed agreement, document, or certificate entered into or executed in connection herewith or contemplated hereby, and any amendments hereto or thereto, to the extent signed and delivered by facsimile, electronic mail in PDF form, or any other electronic transmission, shall be treated in all manner and respects as an original contract and shall be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person.

Section 11.13  Company Disclosure Schedule.  The representations and warranties contained in ARTICLE III are qualified by reference to the Company Disclosure Schedule.  The parties agree that the Company Disclosure Schedule is not intended to constitute, and shall not be construed as constituting, representations or warranties of the Company except as and to the extent expressly provided in this Agreement.  Parent and Acquisition Sub acknowledge that: (a) the Company Disclosure Schedule may include items or information which the Company is not required to disclose under this Agreement and (b) inclusion of information in the Company Disclosure Schedule shall not be construed as an admission that such information is material to the Company.  The Company Disclosure Schedule have been arranged for purposes of convenience in separately titled sections corresponding to the sections of this Agreement; however, each section of the Company Disclosure Schedule shall be deemed to incorporate by reference all information disclosed in any other section of the Company Disclosure Schedule only where (i) an express reference thereto is made or (ii) it is clear and readily apparent from a reasonable reading of the Company Disclosure Schedule that such information is also applicable to such other section of the Company Disclosure Schedule.

[Signature Pages Follow]

Each of the parties has caused this Agreement to be duly executed on its behalf as of the day and year first above written.

COMPANY:

ANTIBODIES INCORPORATED

By:

/s/  Richard Krogsrud                            Name: Richard Krogsrud Title:President

PARENT:

AB HOLDCO, INC.

 

ACQUISITION SUB:

AB MERGER SUB, INC.

 

 

REPRESENTATIVE:

ROLLOVER STOCKHOLDERS:

/s/  Richard Krogsrud                           
 Richard Krogsrud

/s/  Michael Smith                                 
 Michael Smith

[Signature Page to the Agreement and Plan of Merger]