Document:

Exhibit 10.5

COMMERCIAL GUARANTY

	
Principal

	
Loan Date

	
Maturity

	
Loan No

	
Call / Coll

	
Account

	
Officer

	
Initials

	
$2,024,750.00

	
06-14-2018

	
06-14-2028

	
86994

	 

References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item.

Any item above containing "***" has been omitted due to text length limitations.

	
Borrower:

	
AB Merger Sub, Inc.

303 Merrick Road, Suite 400

Lynbrook, NY  11563

	
Lender:

	
First Northern Bank of Dixon

Sacramento Branch

1375 Exposition Boulevard #101

Sacramento, CA  95815

	
Guarantor:

	
AB HoldCo, Inc.

303 Merrick Road, Suite 400

Lynbrook, NY  11563

CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE.  For good and valuable consideration, Guarantor absolutely and unconditionally guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower to Lender, and the performance and discharge of all Borrower's obligations under the Note and the Related Documents.  This is a guaranty of payment and performance and not of collection, so Lender can enforce this Guaranty against Guarantor even when Lender has not exhausted Lender's remedies against anyone else obligated to pay the Indebtedness or against any collateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness.  Guarantor will make any payments to Lender or its order, on demand, in legal tender of the United States of America, in same-day funds, without set-off or deduction or counterclaim, and will otherwise perform Borrower's obligations under the Note and Related Documents.  Under this Guaranty, Guarantor's liability is unlimited and Guarantor's obligations are continuing.

INDEBTEDNESS.  In this Guaranty, the term "Indebtedness" is broadly defined to mean and include all primary, secondary, direct, indirect, joint, several, fixed and contingent obligations of Borrower to Lender respecting the Loan, whether monetary or non-monetary in nature, including any obligations to pay principal, interest, prepayment charges, late charges, loan fees and any other charges, sums, costs and expenses, including attorneys' fees and costs incurred in defending or enforcing Lender's rights and remedies therefor.  The term "Indebtedness" also includes all duties and liabilities of Borrower to Lender under the Business Loan Agreement, the Note, Deed of Trust and all Related Documents to which Borrower is a party, as any or all such documents may be modified, amended, supplemented or replaced from time to time.  Guarantor acknowledges and agrees that upon the consummation of the merger of AB Merger Sub and Antibodies, Inc. pursuant to the Merger Agreement, AB Merger Sub shall no longer exist and Antibodies, Inc. will become the Borrower and obligor in respect of the Indebtedness.  Guarantor further acknowledges and agrees that none of its duties or obligations to Lender under this Guaranty shall be reduced, limited, diminished, impaired, exonerated, waived, released or discharged as a result of the consummation of the merger of AB Merger Sub and Antibodies, Inc. pursuant to the Merger Agreement.

CONTINUING GUARANTY.  THIS IS A "CONTINUING GUARANTY" UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL AND PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER TO LENDER, NOW EXISTING OR HEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING BASIS.  ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTOR'S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTY FOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE A ZERO BALANCE FROM TIME TO TIME.

DURATION OF GUARANTY.  This Guaranty will take effect when received by Lender without the necessity of any acceptance by Lender, or any notice to Guarantor or to Borrower, and will continue in full force until all the Indebtedness incurred or contracted before receipt by Lender of any notice of revocation shall have been fully and finally paid and satisfied and all of Guarantor's other obligations under this Guaranty shall have been performed in full.  If Guarantor elects to revoke this Guaranty, Guarantor may only do so in writing.  Guarantor's written notice of revocation must be mailed to Lender, by certified mail, at Lender's address listed above or such other place as Lender may designate in writing.  Written revocation of this Guaranty will apply only to new Indebtedness created after actual receipt by Lender of Guarantor's written revocation.  For this purpose and without limitation, the term "new Indebtedness" does not include the Indebtedness which at the time of notice of revocation is contingent, unliquidated, undetermined or not due and which later becomes absolute, liquidated, determined or due.  For this purpose and without limitation, "new Indebtedness" does not include all or part of the Indebtedness that is: incurred by Borrower prior to revocation; incurred under a commitment that became binding before revocation; any renewals, extensions, substitutions, and modifications of the Indebtedness.  This Guaranty shall bind Guarantor's estate as to the Indebtedness created both before and after Guarantor's death or incapacity, regardless of Lender's actual notice of Guarantor's death.  Subject to the foregoing, Guarantor's executor or administrator or other legal representative may terminate this Guaranty in the same manner in which Guarantor might have terminated it and with the same effect.  Release of any other guarantor or termination of any other guaranty of the Indebtedness shall not affect the liability of Guarantor under this Guaranty.  A revocation Lender receives from any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty.  Guarantor's obligations under this Guaranty shall be in addition to any of Guarantor's obligations, or any of them, under any other guaranties of the Indebtedness or any other person heretofore or hereafter given to Lender unless such other guaranties are modified or revoked in writing; and this Guarantor shall not, unless provided in this Guaranty, affect, invalidate, or supersede any such other guaranty.

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GUARANTOR'S AUTHORIZATION TO LENDER.  Guarantor authorizes Lender, either before or after any revocation hereof, without notice or demand and without lessening Guarantor's liability under this Guaranty, from time to time:  (A)   prior to revocation as set forth above, to make one or more additional secured or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend additional credit to Borrower;  (B)  to alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of the Indebtedness or any part of the Indebtedness, including increases and decreases of the rate of interest on the Indebtedness; extensions may be repeated and may be for longer than the original loan term;  (C)  to take and hold security for the payment of this Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any such security, with or without the substitution of new collateral;  (D)  to release, substitute, agree not to sue, or deal with any one or more of Borrower's sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose;  (E)  to determine how, when and what application of payments and credits shall be made on the Indebtedness;  (F)  to apply such security and direct the order or manner of sale thereof, including without limitation, any nonjudicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine;  (G)  to sell, transfer, assign or grant participations in all or any part of the Indebtedness; and  (H)  to assign or transfer this Guaranty in whole or in part.

GUARANTOR'S REPRESENTATIONS AND WARRANTIES.  Guarantor represents and warrants to Lender that  (A)  no representations or agreements of any kind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty;  (B)  this Guaranty is executed at Borrower's request and not at the request of Lender;  (C)  Guarantor has full power, right and authority to enter into this Guaranty;  (D)  the provisions of this Guaranty do not conflict with or result in a default under any agreement or other instrument binding upon Guarantor and do not result in a violation of any law, regulation, court decree or order applicable to Guarantor;  (E)  [Reserved];  (F)  upon Lender's request, Guarantor will provide to Lender financial and credit information in form acceptable to Lender, and all such financial information which currently has been, and all future financial information which will be provided to Lender is and will be true and correct in all material respects and fairly present Guarantor's financial condition as of the dates the financial information is provided;  (G)  no material adverse change has occurred in Guarantor's financial condition since the date of the most recent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor's financial condition;  (H)  no litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending or threatened;  (I)  Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and  (J)  Guarantor has established adequate means of obtaining from Borrower on a continuing basis information regarding Borrower's financial condition.  Guarantor agrees to keep adequately informed from such means of any facts, events, or circumstances which might in any way affect Guarantor's risks under this Guaranty, and Guarantor further agrees that, absent a request for information, Lender shall have no obligation to disclose to Guarantor  any information or documents acquired by Lender in the course of  its relationship with Borrower.

GUARANTOR'S WAIVERS.  Except as prohibited by applicable law, Guarantor waives any right to require Lender to  (A)  make any presentment, protest, demand, or notice of any kind, including notice of change of any terms of repayment of the Indebtedness, default by Borrower or any other guarantor or surety, any action or nonaction taken by Borrower, Lender, or any other guarantor or surety of Borrower, or the creation of new or additional Indebtedness;  (B)  proceed against any person, including Borrower, before proceeding against Guarantor;  (C)  proceed against any collateral for the Indebtedness, including Borrower's collateral, before proceeding against Guarantor;  (D)  apply any payments or proceeds received against the Indebtedness in any order;  (E)  give notice of the terms, time, and place of any sale of the collateral pursuant to the Uniform Commercial Code or any other law governing such sale;  (F)  disclose any information about the Indebtedness, the Borrower, the collateral, or any other guarantor or surety, or about any action or nonaction of Lender; or  (G)  pursue any remedy or course of action in Lender's power whatsoever.

Guarantor also waives any and all rights or defenses arising by reason of  (H)  any disability or other defense of Borrower, any other guarantor or surety or any other person;  (I)  the cessation from any cause whatsoever, other than payment in full, of the Indebtedness;  (J)  the application of proceeds of the Indebtedness by Borrower for purposes other than the purposes understood and intended by Guarantor and Lender;  (K)  any act of omission or commission by Lender which directly or indirectly results in or contributes to the discharge of Borrower or any other guarantor or surety, or the Indebtedness, or the loss or release of any collateral by operation of law or otherwise;  (L)  any statute of limitations in any action under this Guaranty or on the Indebtedness; or  (M)  any modification or change in terms of the Indebtedness, whatsoever, including without limitation, the renewal, extension, acceleration, or other change in the time payment of the Indebtedness is due and any change in the interest rate, and including any such modification or change in terms after revocation of this Guaranty on the Indebtedness incurred prior to such revocation.

 

 

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Guarantor waives all rights of subrogation, reimbursement, indemnification, and contribution and any other rights and defenses that are or may become available to Guarantor by reason of California Civil Code Sections 2787 to 2855, inclusive.

Guarantor waives all rights and any defenses arising out of an election of remedies by Lender even though that the election of remedies, such as a non-judicial foreclosure with respect to security for a guaranteed obligation, has destroyed Guarantor's rights of subrogation and reimbursement against Borrower by operation of Section 580d of the California Code of Civil Procedure or otherwise.

Guarantor waives all rights and defenses that Guarantor may have because Borrower's obligation is secured by real property.  This means among other things:  (N)  Lender may collect from Guarantor without first foreclosing on any real or personal property collateral pledged by Borrower.  (O)  If Lender forecloses on any real property collateral pledged by Borrower:  (1)  the amount of Borrower's obligation may be reduced only by the price for which the collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price.  (2)  Lender may collect from Guarantor even if Lender, by foreclosing on the real property collateral, has destroyed any right Guarantor may have to collect from Borrower.  This is an unconditional and irrevocable waiver of any rights and defenses Guarantor may have because Borrower's obligation is secured by real property. These rights and defenses include, but are not limited to, any rights and defenses based upon Section  580a, 580b, 580d, or 726 of the Code of Civil Procedure.

Guarantor understands and agrees that the foregoing waivers are unconditional and irrevocable waivers of substantive rights and defenses to which Guarantor might otherwise be entitled under state and federal law.  The rights and defenses waived include, without limitation, those provided by California laws of suretyship and guaranty, anti-deficiency laws, and the Uniform Commercial Code.  Guarantor acknowledges that Guarantor has provided these waivers of rights and defenses with the intention that they be fully relied upon by Lender.  Guarantor further understands and agrees that this Guaranty is a separate and independent contract between Guarantor and Lender, given for full and ample consideration, and is enforceable on its own terms.  Until all of the Indebtedness is paid in full, Guarantor waives any right to enforce any remedy Guarantor may have against the Borrower or any other guarantor, surety, or other person, and further, Guarantor waives any right to participate in any collateral for the Indebtedness now or hereafter held by Lender.

Guarantor's Understanding With Respect To Waivers.  Guarantor warrants and agrees that each of the waivers set forth above is made with Guarantor's full knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law.  If any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the extent permitted by law or public policy.

Subordination of Borrower's Debts to Guarantor.  Guarantor agrees that the Indebtedness, whether now existing or hereafter created, shall be superior to any claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent.  Guarantor hereby expressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Lender may now or hereafter have against Borrower.  In the event of insolvency and consequent liquidation of the assets of Borrower, through bankruptcy, by an assignment for the benefit of creditors, by voluntary liquidation, or otherwise, the assets of Borrower applicable to the payment of the claims of both Lender and Guarantor shall be paid to Lender and shall be first applied by Lender to the Indebtedness.  Guarantor does hereby assign to Lender all claims which it may have or acquire against Borrower or against any assignee or trustee in bankruptcy of Borrower; provided however, that such assignment shall be effective only for the purpose of assuring to Lender full payment in legal tender of the Indebtedness.  If Lender so requests, any notes or credit agreements now or hereafter evidencing any debts or obligations of Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Lender.  Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to file financing statements and continuation statements and to execute documents and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights under this Guaranty.

Miscellaneous Provisions.  The following miscellaneous provisions are a part of this Guaranty:

AMENDMENTS.  This Guaranty, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Guaranty.  No alteration of or amendment to this Guaranty shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.

EXPENSES.  If Lender institutes any suit or action to enforce any of the terms of this Guaranty, Lender shall be entitled to recover such sum as the court may adjudge reasonable.  Whether or not any court action is involved, and to the extent not prohibited by law, all reasonable expenses Lender incurs that in Lender's opinion are necessary at any time for the protection of its interest or the enforcement of its rights shall become a part of the Indebtedness payable on demand and shall bear interest at the Note rate from the date of the expenditure until repaid.  Expenses covered by this paragraph include, without limitation, however subject to any limits under applicable law, Lender's expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services, to the extent permitted by applicable law.  Guarantor also will pay any court costs, in addition to all other sums provided by law.

 

 

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CAPTION HEADINGS.  Caption headings in this Guaranty are for convenience purposes only and are not to be used to interpret or define the provisions of this Guaranty.

GOVERNING LAW.  This Guaranty will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of California without regard to its conflicts of law provisions.

CHOICE OF VENUE.  If there is a lawsuit, Guarantor agrees upon Lender's request to submit to the jurisdiction of the courts of Sacramento County, State of California.

INTEGRATION.  Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the opportunity to be advised by Guarantor's attorney with respect to this Guaranty; the Guaranty fully reflects Guarantor's intentions and parol evidence is not required to interpret the terms of this Guaranty.  Guarantor hereby indemnifies and holds Lender harmless from all losses, claims, damages, and costs (including Lender's attorneys' fees) suffered or incurred by Lender as a result of any breach by Guarantor of the warranties, representations and agreements of this paragraph.

INTERPRETATION.  In all cases where there is more than one Borrower or Guarantor, then all words used in this Guaranty in the singular shall be deemed to have been used in the plural where the context and construction so require; and where there is more than one Borrower named in this Guaranty or when this Guaranty is executed by more than one Guarantor, the words "Borrower" and "Guarantor" respectively shall mean all and any one or more of them.  The words "Guarantor," "Borrower," and "Lender" include the heirs, successors, assigns, and transferees of each of them.  If a court finds that any provision of this Guaranty is not valid or should not be enforced, that fact by itself will not mean that the rest of this Guaranty will not be valid or enforced.  Therefore, a court will enforce the rest of the provisions of this Guaranty even if a provision of this Guaranty may be found to be invalid or unenforceable.  If any one or more of Borrower or Guarantor are corporations, partnerships, limited liability companies, or similar entities, it is not necessary for Lender to inquire into the powers of Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on their behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Guaranty.

NOTICES.  Any notice required to be given under this Guaranty shall be given in writing, and, except for revocation notices by Guarantor, shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Guaranty.  All revocation notices by Guarantor shall be in writing and shall be effective upon delivery to Lender as provided in the section of this Guaranty entitled "DURATION OF GUARANTY."  Any party may change its address for notices under this Guaranty by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address.  For notice purposes, Guarantor agrees to keep Lender informed at all times of Guarantor's current address.  Unless otherwise provided or required by law, if there is more than one Guarantor, any notice given by Lender to any Guarantor is deemed to be notice given to all Guarantors.

NO WAIVER BY LENDER.  Lender shall not be deemed to have waived any rights under this Guaranty unless such waiver is given in writing and signed by Lender.  No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right.  A waiver by Lender of a provision of this Guaranty shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Guaranty.  No prior waiver by Lender, nor any course of dealing between Lender and Guarantor, shall constitute a waiver of any of Lender's rights or of any of Guarantor's obligations as to any future transactions.  Whenever the consent of Lender is required under this Guaranty, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.

SUCCESSORS AND ASSIGNS.  Subject to any limitations stated in this Guaranty on transfer of Guarantor's interest, this Guaranty shall be binding upon and inure to the benefit of the parties, their successors and assigns.

ATTORNEYS' FEES.   In any action arising from or relating to this Guaranty and subject to any limits under applicable law, the prevailing party shall be entitled to reasonable attorneys' fees in accordance with California Civil Code Section 1717.  Whether or not an action is involved, the expenses of Lender described in the paragraph of this Guaranty titled "Expenses" include, without limitation, attorneys' fees incurred by Lender.

 

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DEFINITIONS.  The following capitalized words and terms shall have the following meanings when used in this Guaranty.  Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America.  Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require.  Words and terms not otherwise defined in this Guaranty shall have the meanings attributed to such terms in the Uniform Commercial Code:

AB MERGER SUB.  The words "AB Merger Sub" mean AB Merger Sub, Inc., a California corporation, and its successors and assigns.

ANTIBODIES INC. The words "Antibodies, Inc." means Antibodies Incorporated, a California corporation, and its successors and assigns.

BORROWER.  The word "Borrower" means AB Merger Sub until the consummation of the merger of Borrower and Antibodies, Inc. pursuant to the Merger Agreement, at which time and thereafter "Borrower" means Antibodies, Inc.

BUSINESS LOAN AGREEMENT.  The words "Business Loan Agreement" means the Business Loan Agreement of even date herewith and executed by Borrower and Lender regarding the Loan, as the same may be amended or modified from time to time, together with all exhibits and schedules attached thereto from time to time.

GUARANTOR.  The word "Guarantor" means AB HoldCo, Inc. and its successors and assigns.

GUARANTY.  The word "Guaranty" means this guaranty from Guarantor to Lender.

INDEBTEDNESS.  The word "Indebtedness" means Borrower's indebtedness to Lender as more particularly described in this Guaranty.

LENDER.  The word "Lender" means First Northern Bank of Dixon, its successors and assigns.

LOAN.  The word "Loan" means the loan evidenced by the Note.

MERGER AGREEMENT.  The words "Merger Agreement" means the Agreement and Plan of Merger dated as of May 8, 2018, by and among Antibodies Inc., AB HoldCo, Inc., a Nevada corporation and the other parties thereto.

NOTE.  The word "Note" means the Note of even date herewith and executed by Borrower in the principal amount of $2,024,750.00, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, substitutions therefor and replacements thereof.

RELATED DOCUMENTS.  The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness.

DISPUTE RESOLUTION. Guarantor and Lender desire to resolve quickly and efficiently any disputes that might arise between them.  For any controversy, claim or judicial action arising from or relating to this Guaranty, any Related Documents or any related transaction or conduct, whether sounding in contract, tort or otherwise:

Judicial Reference.  Where an action is pending before a court of any judicial district of the State of California, Guarantor and Lender shall each have the right to require that all questions of fact or law be submitted to general reference pursuant to California Code of Civil Procedure Section 638 et seq., and any successor statutes thereto.

(1 )  A single referee who is a retired superior court judge shall be appointed by the court pursuant to Code of Civil Procedure 640 and shall preside over the reference proceeding.  If Guarantor and Lender do not agree upon the referee, each of them may submit to the court up to three nominees who are retired superior court judges.

(2)  If Guarantor and Lender do not agree on how the payment of the referee's fees and expenses will be shared, the court may apportion such fees and expenses between Guarantor and Lender in a fair and reasonable manner that is consistent with Code of Civil Procedure Section 645.1.

(3)  Guarantor and Lender shall be entitled to discovery, and the referee shall oversee discovery and may enforce all discovery orders in the same manner as any trial court judge.

(4)  The referee's statement of decision shall contain written findings of fact and conclusions of law, and the court shall enter judgment thereon pursuant to Code of Civil Procedure Sections 644(a) and 645.  The decision of the referee shall then be appealable as if made by the court.

No provision of this section shall limit the right of any party to exercise self-help remedies, to foreclose against or sell any real or personal property collateral or to obtain provisional or ancillary remedies, such as injunctive relief or appointment of a receiver, from a court of competent jurisdiction before, after, or during the pendency of any reference proceeding.  The exercise of a remedy does not waive the right of either party to resort to reference.

 

 

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Jury Trial Waiver.  In any action pending before any court of any jurisdiction, Guarantor waives, and Lender shall not have, any right to a jury trial.

EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITS TERMS.  IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY".  NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE.  THIS GUARANTY IS DATED JUNE 14, 2018.

GUARANTOR:

AB HOLDCO, INC.

By:

/s/ Brendan Killackey

Brendan Killackey,

President of AB HoldCo, Inc.

Page 6 of 6Exhibit 10.6

NOTE PURCHASE AGREEMENT

This Note Purchase Agreement (this "Agreement"), dated as of June 22, 2018, is entered into by and between (i) Richard Krogsrud ("Purchaser"), and (ii) AB HoldCo, Inc., a Nevada corporation (the "Company").  Capitalized terms used but not otherwise defined herein have the meanings set forth in the Merger Agreement (as defined below).

RECITALS

A. Antibodies Incorporated, a California corporation ("Antibodies"), the Company, AB Merger Sub, Inc., a California corporation and wholly owned subsidiary of the Company, certain stockholders of Antibodies, including the Purchaser, and Richard Krogsrud, solely as the representative of the stockholders of Antibodies, have entered into that certain Agreement and Plan of Merger, dated May 8, 2018 (as the same may be amended or supplemented, the "Merger Agreement"), pursuant to which, among other things, AB Merger Sub, Inc. will merge with and into Antibodies, with Antibodies as the surviving corporation in the merger (the "Merger").

B. Immediately prior to the consummation of the Merger (the "Merger Closing"), Purchaser desires to contribute to the Company the 14,000 shares of stock of Antibodies ("Target Stock") held by the Purchaser (the "Contributed Equity") in exchange for a promissory note issued by the Company in substantially the form attached hereto as Exhibit A (the "Note") having a principal amount equal to $46,916.02, all on the terms and conditions set forth in this Agreement (the "Contribution").

AGREEMENT

In consideration of the mutual representations, warranties, covenants and agreements set forth in this Agreement, and for other good and valid consideration, the receipt and sufficiency of which are acknowledged, intending to be legally bound, the parties agree as follows:

1. Contribution of Equity.  On the terms set forth in this Agreement, at the closing of the transactions contemplated by this Agreement as set forth in Section 2 (the "Note Purchase Closing"), (a) the Purchaser will contribute, assign and transfer to the Company, and the Company will acquire and accept from the Purchaser, the Contributed Equity, which Contributed Equity will be so contributed, assigned and transferred free and clear of all Encumbrances, except for Permitted Share Encumbrances, and (b) the Company will issue and deliver to the Purchaser the Note.

2. Note Purchase Closing.

a. The Note Purchase Closing will be consummated immediately prior to the consummation of the Merger Closing at the location of the Merger Closing set forth in Section 2.4 of the Merger Agreement.

b. At the Note Purchase Closing, (i) the Company will deliver to the Purchaser the Note, duly executed by the Company, and (ii) the Purchaser will deliver to the Company the stock certificates representing all of the Contributed Equity, along with duly executed stock powers with respect to such certificates.

 

 

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c. All of the representations and warranties set forth in Section 3 and Section 4 hereof shall be deemed to have been made at and as of the Note Purchase Closing.

3. Representations and Warranties of the Company.  The Company represents and warrants to the Purchaser that:

a. the Company is a corporation, duly organized, validly existing and in good standing under the laws of the State of Nevada, and has the corporate power and authority to execute and deliver this Agreement and to carry out the transactions contemplated hereby;

b. this Agreement constitutes the legal, valid and binding obligation of the Company, enforceable against the Company 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), and the execution, delivery and performance of this Agreement by the Company does not and will not conflict with, violate or cause a breach of any agreement or instrument to which the Company is a party or subject or any judgment, order or decree to which the Company is subject;

c. assuming the accuracy of the representations of the Purchaser in Section 4 hereof, the Note will be issued in compliance with all applicable federal and state securities laws and will constitute the valid and legally binding obligation of the Company enforceable against the Company 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).

d. the Company is acquiring the Contributed Equity for its own account and investment purposes and not in violation of any applicable securities laws and not with a view to distribution thereof and agrees that it will not make any sale, transfer or other disposition of the Contributed Equity in violation of any applicable securities Law; and

e. there is no claim, action, suit, proceeding or governmental investigation pending or, to the knowledge of the Company, threatened against the Company or its Affiliates, by or before any Governmental Entity or by any third party which would be reasonably likely to have a material adverse effect on the Company's ability to consummate the transactions contemplated hereby.

4. Representations and Warranties of the Purchaser.  The Purchaser represents and warrants to the Company that:

a. this Agreement constitutes a legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser 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), and the execution, delivery and performance of this Agreement by the Purchaser does not and will not conflict with, violate or cause a breach of any agreement or instrument to which the Purchaser is a party or subject or any judgment, order or decree to which the Purchaser is subject;

 

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b. the Note is being acquired for the Purchaser's own account for investment, with no intention of distributing or selling any portion of the Note within the meaning of the Securities Act, and the Note will not be transferred by the Purchaser in violation of the Securities Act or the then-applicable rules or regulations under the Securities Act.  No one other than the Purchaser has any interest in or any right to acquire the Contributed Equity or the Note;

c. the Purchaser has performed the Purchaser's own due diligence investigation with respect to the acquisition of the Note to the extent that the Purchaser deemed necessary or desirable.  In connection with such investigation, the Company has provided the Purchaser with such assistance as the Purchaser has requested, and has made available all additional information that the Purchaser has requested in connection with the Note, the Merger and the transactions contemplated by this Agreement.  The Purchaser has been afforded an opportunity to ask questions of and receive answers from the Company concerning the terms of this Agreement and the purchase of the Note and the opportunity to obtain any additional information (to the extent the Company has such information or could acquire it without unreasonable effort or expense) necessary to verify the accuracy of information otherwise furnished by the Company;

d. no representations or warranties have been made to the Purchaser by the Company or any equityholder, officer, director, employee, agent or representative of the Company, other than as set forth in this Agreement.  The Purchaser represents and warrants that in entering into this Agreement, he has not relied on any statement, representation, warranty, assurance or other information other than as expressly set forth in this Agreement;

e. the Purchaser has such knowledge and experience in financial and business matters that the Purchaser is capable of evaluating the merits and risks of the acquisition of the Note and of making an informed investment decision with respect thereto;

f. none of the "Bad Actor" disqualifying events described in Rule 506(d)(1)(i) to (viii) promulgated under the Securities Act (each, a "Disqualification Event") are applicable to the Purchaser or any of the Purchaser's Affiliates, except, if applicable, for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable; and

g. the Purchaser has good and marketable title to, and is the sole record and beneficial owner of, the Purchaser's Contributed Equity, free and clear of all Encumbrances, except for Permitted Share Encumbrances.

5. Acknowledgements of the Purchaser.  The Purchaser acknowledges that:

a. the Note has not been registered under the Securities Act or any state securities act in reliance on an exemption for private offerings;

 

 

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b. the Company has retained Pepper Hamilton LLP as legal counsel in connection with the Merger and the management and operation of the Company.  Pepper Hamilton LLP is not representing and will not represent the Purchaser in connection with the purchase and sale of the Note, the management and operation of the Company or any dispute that may arise between the Purchaser, on the one hand, and the Company or the directors of the Company, on the other hand (each, a "Company Legal Matter").  The Purchaser will, if the Purchaser wishes to engage counsel on a Company Legal Matter, retain the Purchaser's own independent counsel with respect thereto;

c. there are restrictions on the transferability of the Note; and the Note will not be, and the Purchaser has no rights to require that the Note be, registered under the Securities Act; and

d. the Note is being offered and sold in reliance on specific exemptions from the registration requirements of federal and state securities laws, and the Company is relying on the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings set forth in this Agreement to determine the applicability of such exemptions and the suitability of the Purchaser to acquire the Note.

6. Survival.  Each of the parties hereto agrees that the representations and warranties of such party contained in this Agreement will survive the Note Purchase Closing and continue in full force and effect until the date that is five (5) years following date of the Note Purchase Closing.

7. Termination.  The Purchaser acknowledges and agrees that the Purchaser will not be permitted to terminate or rescind this Agreement.  If the Merger Agreement is terminated prior to the Closing for any reason, then this Agreement will automatically terminate and be null and void ab initio and without any further force or effect and, at such time, no party hereto will be bound by any of the terms hereof.

8. Notices.  All notices required or permitted to be given hereunder will be in writing and may be delivered by hand, by email, or by internationally recognized private courier. Notices delivered by hand will be deemed delivered when actually delivered. Notices given by internationally recognized private courier will be deemed delivered on the date actually received. Notices given by email will be deemed delivered on the date sent. All notices will be addressed as follows:

a. if to the Purchaser:

1625 La Paloma Court

Davis, CA 95616

Email: rkrogsrud@antibodiesinc.com

with copies to:

Delfino Madden O'Malley Coyle & Koewler LLP

500 Capitol Mall, Suite 1550

Sacramento, CA 95814

Attention: Jeff Koewler, Esq.

 Email: jkoewler@delfinomadden.com

 

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b. if to the Company:

Janel Corporation

303 Merrick Road, Suite 400

Lynbrook, NY 11563

Attention: Brendan J. 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

or (c) to any party, to such other respective addresses or addressees as may be designated by notice given in accordance with the provisions of this Section 8.

9. Expenses and Fees.  If any party hereto brings an action to enforce its rights under this Agreement, the prevailing party may recover its expenses (including reasonable attorneys', accountants' and consulting fees) incurred in connection with the action and any appeal from the losing party.

10. Miscellaneous.  The terms of Article 11 of the Merger Agreement (except for Sections 11.2, 11.6, 11.10 and 11.13) are incorporated herein by reference as if set forth herein in their entirety and will apply mutatis mutandis to this Agreement.

11. Assignment.  This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns.  Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned (including by operation of law) without the prior written consent of the Company or the Purchaser; provided, however, that the Company may assign or delegate, without the prior written consent of the Purchaser, any of its rights, benefits or obligations under this Agreement to an Affiliate.

[The remainder of this page has been intentionally left blank.]

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The parties have executed this Agreement as of the date indicated in the preamble of this Agreement.

COMPANY:

AB HoldCo, Inc.

By:  /s/ Brendan J. Killackey

       Name: Brendan J. Killackey

        Title: President, Secretary and Treasurer

PURCHASER:

/s/ Richard Krogsrud

Richard Krogsrud

 

 

 

[Signature Page to Note Purchase Agreement]

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EXHIBIT A

FORM OF SUBORDINATED PROMISSORY NOTE

THE SECURITY REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH FEDERAL AND STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION THEREUNDER.

SUBORDINATED PROMISSORY NOTE

OF

AB HOLDCO, INC.

	
$46,916.02

	
June 22, 2018

  

FOR VALUE RECEIVED, AB HoldCo, Inc., a Nevada Corporation (including any successor or assign thereof, including, without limitation, a receiver, trustee or debtor-in-possession, "Maker"), hereby promises to pay to Richard Krogsrud, a resident of the State of California ("Payee"), the aggregate principal sum of Forty-Six Thousand Nine Hundred Sixteen Dollars and Two Cents ($46,916.02) on the dates and in the amounts set forth in this Subordinated Promissory Note (this "Note"), and to pay to Payee interest on the unpaid principal balance hereof at the rate and times set forth herein.

1. Reference to Note Purchase Agreement and Credit Agreements.  This Note is being issued and delivered by Maker to Payee pursuant to the terms of that certain Note Purchase Agreement, dated as of the date hereof, by and among Maker and Payee (the "Note Purchase Agreement").  Capitalized terms used and not otherwise defined in this Note have the meanings assigned to such terms in the Note Purchase Agreement.  This Note and the obligations of Maker hereunder are subject to the terms of any credit agreement, loan agreement, indenture, promissory note, guaranty or other debt instrument, including, without limitation, (a) that certain Loan and Security Agreement, effective as of October 17, 2017, by and between Janel Corporation, Janel Group, Inc., PCL Transport, LLC, Janel Alpha GP, LLC, W.J. Byrnes & Co., Liberty International, Inc., and The Janel Group of Georgia, Inc., and Santander Bank, N.A., (b) that certain Credit Agreement, effective as of February 29, 2016, by and between Indco, Inc. and First Merchants Bank, and (c) that certain Business Loan Agreement, dated June 14, 2018, by and between AB Merger Sub, Inc. and First Northern Bank of Dixon (as such agreements and instruments may be entered into, amended, supplemented, restated, replaced, refinanced or otherwise modified from time to time, the "Credit Agreements") pursuant to which Maker and/or any Affiliate of Maker (collectively, the "Credit Parties") 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 (collectively, the "Senior Lenders").

 

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2. Payment of Principal.  Subject to the terms of the Credit Agreements, including any restrictions on the ability of Maker to pay principal hereunder, Maker shall pay the outstanding principal amount of this Note to Payee in a single payment on the three-year anniversary of the date hereof (the "Maturity Date").

3. Payment of Interest.  The unpaid principal balance of this Note bears interest at an annual rate equal to four percent (4%), calculated on the basis of a year consisting of 365 days.  Subject to the terms of the Credit Agreements, including any restrictions on the ability of Maker to pay interest hereunder, Maker shall pay interest on this Note to Payee quarterly in arrears on the last business day of each calendar quarter, commencing on September 30, 2018.  In the event that the terms of the Credit Agreements prohibit Maker from making any scheduled payment of interest hereunder, the payment of the interest shall be deferred until such time as the payment is permitted under the Credit Agreements, but in no event shall such payment be deferred beyond the Maturity Date.

4. Prepayment.  Subject to the terms of the Credit Agreements, including any restrictions on the ability of Maker to pay principal and interest hereunder, at any time and from time to time after the date hereof, Maker may prepay in whole or in part, without premium or penalty, the outstanding principal amount of this Note, together with all accrued but unpaid interest on such principal amount up to the date of prepayment.  Any prepayment shall be applied first to accrued but unpaid interest, and then to outstanding principal.

5. Subordination.  All principal, interest, premiums and other amounts payable by Maker to Payee under this Note and any security therefor are subordinated and junior in right of payment to the prior payment in full in cash of all indebtedness for borrowed money and other obligations of the Credit Parties owed to the Senior Lenders under the Credit Agreements (the "Senior Indebtedness").  Until the earlier of (a) prior payment in full of all of the Senior Indebtedness and (b) the Maturity Date, Payee may not, without the prior written consent of the Senior Lenders, take any of the following actions with respect to any amounts owed to Payee under this Note: (i) initiate any suit, action or proceeding against Maker to enforce payment of, or to collect the whole or any part of any amounts owed under, this Note; (ii) commence judicial enforcement of any of the rights and remedies under this Note; or (iii) accelerate this Note.  In the event of any default under this Note, upon written demand by Payee, Maker will identify those Senior Lenders from whom any such consent must be obtained.  Payee hereby agrees to negotiate in good faith with respect to any requirement by a Senior Lender to enter into a subordination agreement and take any other actions reasonably required by any such Senior Lender with respect to indebtedness evidenced by this Note and any security therefor.  For the avoidance of doubt, in the event that any of the Credit Agreements is refinanced or replaced in full, the Payee agrees that the subordination provisions of this Note will continue for the benefit of the lenders party to such refinancing.

6. Defaults.  Maker shall be deemed in default hereunder upon the occurrence of any of the following: (a) Maker fails to pay when due any principal or interest payment required to be made hereunder, and such failure is not cured by Maker on or before the 5th day following its due date; (b) an involuntary case against Maker under any applicable bankruptcy or insolvency law commences and is not dismissed on or before the date 60 days after its commencement; (c) a court with proper jurisdiction enters a decree or order for relief against Maker in an involuntary case under any applicable bankruptcy or insolvency law; (d) a court with proper jurisdiction appoints a receiver, liquidator, custodian or trustee for Maker or for any substantial part of Maker's property with respect to  the winding up or liquidation of Maker's affairs; or (e) Maker commences a voluntary case under any applicable bankruptcy or insolvency law, makes a general assignment for the benefit of Maker's creditors, consents to the appointment of a receiver, liquidator, custodian or trustee for Maker or for any substantial part of Maker's property, or consents to the entry of an order for relief against Maker in an involuntary case under any applicable bankruptcy or insolvency law.

 

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7. Consequences of Default.  Upon the occurrence of a default under Section 6 of this Note, subject to the Credit Agreements and Section 5 of this Note, the entire outstanding principal balance of this Note, together with all accrued and unpaid interest and all other sums payable hereunder shall, at the option of Payee, become immediately due and payable.  Notwithstanding anything herein to the contrary, from and during the continuation of any default under Section 7 of this Note, interest shall accrue on the principal amount of this Note at a per annum rate equal to ten percent (10%) until such default has been cured.

8. Payments.  Principal and interest due and payable under this Note shall be paid to Payee in lawful money of the United States of America at the address for notices to Payee as set forth in Section 8 of the Note Purchase Agreement, or at such other address as may be specified in a written notice to Maker by Payee.  If any payment on this Note is due on a Saturday, Sunday or a bank or legal holiday, such payment shall be made on the next succeeding business day.

9. Guaranty.  Janel Corporation (the "Guarantor") hereby absolutely and unconditionally guarantees the prompt payment in full of all principal and interest due and payable under this Note (the "Obligations") as and when the respective parts thereof become due and payable.  If the Obligations, or any part thereof, shall not be paid in full when due and payable, Payee shall have the right to proceed directly against Guarantor under this Guaranty to collect the payment in full of the Obligations, regardless of whether or not Payee shall have theretofore proceeded or shall then be proceeding against Maker, it being understood that Payee, in its sole discretion, may proceed against Maker or Guarantor, and may exercise each right, power or privilege that Payee may then have at such time or times and as often and in such order as Payee, in its sole discretion, may from time to time deem expedient to collect the payment in full of the Obligations.  In furtherance and not in limitation of the foregoing, to the fullest extent permitted by law, Guarantor hereby waives any right it may have whether now or in the future, to require Payee to make an election of remedies or otherwise bring a single action to enforce its remedies hereunder.  This is a guaranty of payment and not merely a guaranty of collection, and Guarantor hereby waives each and every guarantorship and suretyship defense, generally. Regardless of the duration of time, regardless of whether Maker may from time to time cease to be indebted to Payee, and irrespective of any act, omission or course of dealing whatever on the part of Payee, Guarantor's liabilities and other obligations hereunder shall remain in full effect until the payment in full of the Obligations.  Guarantor acknowledges that the consideration for this guaranty is not a mere recital and is adequate regardless of actual amount. Guarantor hereby waives presentment, protest and demand, notice of protest, demand and dishonor, nonpayment and acceleration of this Note.

10. No Security.  The obligations under this Note are unsecured.

 

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11. No Assignment.  This Note may not be assigned or sold without the prior written consent of Maker.

12. Cancellation.  On final payment or other satisfaction of all principal and accrued interest owed on this Note, this Note shall be surrendered to Maker for cancellation and shall not be reissued.

13. Lawful Interest Rate.  If  interest payable under this Note is in excess of the maximum permitted by law, the interest chargeable hereunder shall be reduced to the maximum amount permitted by law.

14. Waivers by Maker.  Maker hereby waives presentment, protest and demand, notice of protest, demand and dishonor, nonpayment and acceleration of this Note.

15. Exercise of Remedies.  No delay or omission on the part of Payee in the exercise of any right or remedy under this Note shall operate as a waiver thereof, and no partial exercise of any right or remedy, acceptance of a past due installment or other indulgences granted from time to time shall be construed as a novation of this Note or preclude other or further exercise thereof or the exercise of any other rights or remedy.

16. Collection Costs.  If a default under Section 6 of this Note occurs, Maker shall pay to Payee on demand all reasonable and documented costs and expenses of collection, including reasonable and documented attorneys' fees.

17. Governing Law.  This Note shall be governed and construed in accordance with the laws of the State of New York.

[The remainder of this page is intentionally blank]

 

 

 

 

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IN WITNESS WHEREOF, the Maker has executed and delivered this Subordinated Promissory Note as of the date first written above.

AB HOLDCO, INC.,

as Maker

By: _________________________ 

       Name: Brendan J. Killackey

        Title:   President, Secretary and Treasurer

Acknowledged and agreed:

 _____________________________

Richard Krogsrud, as Payee

JANEL CORPORATION,

as Guarantor

By:  _____________________________ 

       Name: Brendan J. Killackey

        Title:   President and Chief Executive Officer

[Signature Page to Subordinated Promissory Note]

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