Item 1.01.
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Entry into a Material Definitive Agreement.
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Business Loan Agreement
On June 21, 2018, AB Merger Sub, Inc. (“
Merger Sub
”), a wholly-owned, indirect subsidiary of Janel Corporation (the “
Company
”), as borrower, entered into that certain Business Loan Agreement (the “
Loan Agreement
”) and that certain Promissory Note with First Northern Bank of Dixon (“
First Northern
”), with respect to a $2.0 million senior secured term loan (the “
Senior Secured Term Loan
”). The Loan Agreement and Promissory Note are dated and effective as of June 14, 2018. The proceeds of the Senior Secured Term Loan were used to fund a portion of the purchase price to acquire the interests of Antibodies Incorporated (“
Antibodies
”), which became the borrower under the Loan Agreement following the merger of Merger Sub with and into Antibodies at the closing of the transactions contemplated by Merger Agreement (as defined below). In connection with the execution of the Loan Agreement, both the Company and AB HoldCo, Inc., a wholly-owned, direct subsidiary of the Company and direct parent of Merger Sub (“
Parent
”), entered into Commercial Guaranties pursuant to which the Company and Parent each guaranteed the borrower’s obligations under the Loan Agreement. Interest will accrue on the Senior Secured Term Loan at an annual rate based on the 5-year Treasury constant maturity (index) + 2.50% (margin) for years 1-5 then adjusted and fixed for years 6-10 using the same index and margin. The borrower’s and the Company’s obligations to First Northern under the Loan Agreement are secured by certain real property owned by the Antibodies as of the closing of the Merger (as defined below), as evidenced by that certain Deed of Trust, effective June 14, 2018. The Senior Secured Term Loan will mature on June 14, 2028 (subject to earlier termination as provided in the Loan Agreement).
The above description of the Loan Agreement and associated documentation is not complete and is qualified in its entirety by reference to the full text of the Loan Agreement, the Promissory Note, the Deed of Trust, and the Commercial Guaranties, copies of which are attached hereto as Exhibits 10.1 through 10.5, respectively, and are incorporated herein by reference.
Note Purchase Agreements
On June 22, 2018, in connection with the closing of the transactions contemplated by the Merger Agreement, Parent entered into note purchase agreements with two stockholders of Antibodies: Richard Krogsrud (“
Krogsrud
,” as purchaser under the “
Krogsrud Agreement
”) and the Michael L. Smith and Ardyce F. Smith 1994 Revocable Trust (the “
Trust
,” as purchaser under the “
Trust Agreement
”). The Trust Agreement provides for the Trust’s contribution of 88,594 shares of Antibodies common stock to Parent in exchange for a promissory note issued by Parent in the amount of $296,891.26. The Krogsrud Agreement provides for Krogsrud’s contribution of 14,000 shares of Antibodies common stock in exchange for a promissory note issued by Parent in the amount of $46,916.02. Both the Krogsrud Agreement and the Trust Agreement (together, the “
Note Purchase Agreements
”) contain customary representations and warranties made by Parent and the applicable purchaser.
The above description of the Note Purchase Agreements is not complete and is qualified in its entirety by reference to the full text of the Note Purchase Agreements, copies of which are attached hereto as Exhibits 10.6 and 10.7 and are incorporated herein by reference.
Subordinated Promissory Notes
On June 22, 2018, in connection with and as contemplated by the Note Purchase Agreements, Parent, as maker, entered into corresponding subordinated promissory notes with Krogsrud (as payee under the “
Krosgsrud Note
”) and the Trust (as payee under the “
Trust Note
”). Both the Krogsrud Note and the Trust Note (together, the “
Subordinated Promissory Notes
”) are guaranteed by the Company. The Subordinated Promissory Notes are subordinate to the terms of any credit agreement, loan agreement, indenture, promissory note, guaranty or other debt instrument pursuant to which Parent or any affiliate of Parent incurs, borrows, extends, guarantees, renews or refinances any indebtedness for borrowed money or other extensions of credit with any federal or state bank or other institutional lender. Each of the Subordinated Promissory Notes has a 4% annual interest rate and a maturity date of June 22, 2021.
The above description of the Subordinated Promissory Notes is not complete and is qualified in its entirety by reference to the full text of the Subordinated Promissory Notes, copies of which are attached hereto as Exhibits 10.8 and 10.9 and are incorporated herein by reference.