Item 1.01.
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Entry into a Material Definitive Agreement.
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Amended and Restated Equity Incentive Plan
On May 8
,
2018, the board of directors of Janel Corporation ("
Janel
")
amended and restated the Janel Corporation 2017 Equity Incentive Plan (the "
Plan
" and, as amended and restated, the "
Amended Plan
"). A copy of the Plan was previously filed as Exhibit 3.7 to Janel's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017. The provisions and terms of the Amended Plan are the same as those in the Plan, except that
the Amended Plan removes the ability of Janel to award incentive stock options and removes the requirement for stockholder approval of the Plan.
The foregoing description of the Amended Plan does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the Amended Plan, a copy of which is filed herewith as Exhibit 10.1 and the terms of which are incorporated herein by reference.
Agreement and Plan of Merger
On May 8, 2018,
AB HoldCo, Inc. ("
Parent
"), a wholly-owned subsidiary of Janel, and AB Merger Sub, Inc. ("
Merger Sub
"), a wholly-owned subsidiary of Parent
, entered into an Agreement and Plan of Merger (the "
Merger Agreement
") with
Antibodies Incorporated ("
Antibodies
"), Richard Krogsrud, solely as the representative of the stockholders of Antibodies (the "
Stockholders
"), and certain Stockholders signatory thereto
. Pursuant to the Merger Agreement, Janel will indirectly acquire Antibodies by way of the merger of Merger Sub with and into Antibodies, with Antibodies being the surviving corporation (the "
Merger
"). Upon the closing of the Merger and as a result of the Merger, Antibodies will become a direct wholly-owned subsidiary of Parent and an indirect wholly-owned subsidiary of Janel.
Under the terms of the Merger Agreement, the aggregate merger consideration is $5,000,000, subject to certain adjustments as set forth in the Merger Agreement. Pursuant to the terms of the Merger Agreement, $500,000 of the merger consideration will be placed into an escrow account to secure general indemnification claims against the Stockholders, including, without limitation, (i) misrepresentations and breaches of warranties made by Antibodies and the Stockholders, (ii) breaches or nonperformance of any of Antibodies' covenants or agreements, and (iii) certain covered taxes. The indemnification obligations of the parties under the Merger Agreement are subject to certain monetary limitations as set forth in the Merger Agreement.
The Merger Agreement contains customary representations, warranties and covenants of the parties thereto. Antibodies has agreed, among other things, (i) to conduct its businesses in the ordinary course consistent with past customs and practice through the consummation of the Merger; (ii) to obtain requisite stockholder approval; and (iii) not to solicit alternative transactions. Each of the parties to the Merger Agreement covenants to use reasonable efforts to cause the Merger to be consummated.
The boards of directors of both Janel and Antibodies have approved the Merger and the Merger Agreement. The consummation of the Merger is subject to certain customary closing conditions, including, among others, approval of the Merger and the Merger Agreement by the holders of a majority of the outstanding shares of Antibodies' common stock, the receipt of certain consents from third parties, and no more than a certain percentage of shares of Antibodies' common stock having exercised appraisal rights under the California General Corporation Law (the "
CGCL
") prior to the deadline provided in the CGCL. The completion of the Merger is not subject to a financing condition. The Merger Agreement contains certain customary termination rights of each of Parent and Antibodies.
The Merger Agreement provides that, immediately prior to the consummation of the Merger, certain Stockholders of Antibodies will exchange some of their shares of Antibodies for promissory notes issued by the Parent with a principal amount equal to the amount of the merger consideration such Stockholders would have received at the closing of the Merger for the shares being exchanged.
The foregoing description of the Merger Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which is filed herewith as Exhibit 2.1 and the terms of which are incorporated herein by reference.
The Merger Agreement has been included with this Current Report on Form 8-K pursuant to applicable rules and regulations of the Securities and Exchange Commission in order to provide investors and stockholders with information regarding its terms. However, it is not intended to provide any other factual information about Janel, Parent, Merger Sub, or Antibodies, their respective subsidiaries and affiliates, or any other party. In particular, the representations, warranties and covenants contained in the Merger Agreement have been made only for the purpose of the Merger Agreement and, as such, are intended solely for the benefit of the parties to the Merger Agreement. In many cases, these representations, warranties and covenants are subject to limitations agreed upon by the parties and are qualified by certain disclosures exchanged by the parties in connection with the execution of the Merger Agreement. Furthermore, many of the representations and warranties in the Merger Agreement are the result of negotiated allocation of contractual risk among the parties and, taken in isolation, do not necessarily reflect facts about Janel, Parent, Merger Sub, or Antibodies, their respective subsidiaries and affiliates or any other party. Likewise, any references to materiality contained in the representations and warranties may not correspond to concepts of materiality applicable to investors or stockholders. Finally, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement and these changes may not be fully reflected in Janel's public disclosures.
As a result of the foregoing, investors and stockholders are strongly encouraged not to rely on the representations, warranties and covenants contained in the Merger Agreement, or on any descriptions thereof, as accurate characterizations of the state of facts or condition of Janel, Antibodies or any other party. Investors and stockholders are likewise cautioned that they are not third-party beneficiaries under the Merger Agreement and do not have any direct rights or remedies pursuant to the Merger Agreement.
Cautionary Note Regarding Forward-Looking Statements
Statements included in this Current Report on Form 8-K may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks and uncertainties, which could cause actual results to differ materially from those expressed or implied from such statements. These risks and uncertainties include, without limitation, the failure to satisfy the closing conditions necessary to complete the Merger. Other risks and uncertainties that may affect forward-looking statements are described in the "Risk Factors" section and elsewhere in Amendment No. 1 to Janel's Annual Report on Form 10-K/A as filed with the Securities and Exchange Commission on April 30, 2018. Janel undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Janel's ability to complete the Merger is dependent upon the satisfaction of certain closing conditions, not all of which are within the control of Janel or Antibodies.