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AGREEMENT AND
PLAN OF MERGER
by and
among
CODY
RESOURCES, INC.,
CDI
ACQUISITION, INC.
and
CHROMADEX,
INC.
May 21,
2008
LIST OF EXHIBITS
AGREEMENT AND
PLAN OF MERGER
THIS AGREEMENT AND
PLAN OF MERGER is entered into as of May 21, 2008 by and among CODY
RESOURCES, INC., a Nevada corporation (“ Parent ”), CDI
ACQUISITION, INC., a California corporation and a wholly-owned
subsidiary of Parent (“ Acquisition Corp. ”), and
CHROMADEX, INC., a California corporation (the “ Company
”).
R E C I T A L
S
A.
The Company is primarily engaged in the business of creating and
supplying botanical reference standards along with related
phytochemical products and services (the “ Business
”).
B.
The Board of Directors of each of Parent, Acquisition Corp. and the
Company has approved, and deems it advisable and in the best
interests of its stockholders to consummate, the acquisition of the
Company by Parent, which acquisition is to be effected by the
merger of Acquisition Corp. with and into the Company, with the
Company being the surviving entity (the “ Merger
”), upon the terms and subject to the conditions set forth in
this Agreement (as defined in Article I).
C.
The parties intend that the Merger shall qualify as a
reorganization within the meaning of Section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended (the “ Code
”), by reason of Section 368(a)(2)(E) of the
Code.
AGREEMENT
In consideration of
the mutual agreements and covenants hereinafter set forth, the
parties, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
Capitalized terms
used in this Agreement shall have the following
meanings:
“
Acquisition
Corp. ” shall have the meaning given to such term in
the preamble to this Agreement.
“
Action
” shall mean any claim, action, suit, litigation, proceeding,
investigation, arbitration, mediation or other
dispute.
“
Affiliate ” shall mean,
with respect to any Person, any Person, directly or indirectly,
controlling, controlled by or under common control with, such
Person. For the purposes of this definition, “
control ”
(including, with correlative meaning, the terms “
controlling
,” “ controlled by ” and
“ under common
control with ”) means the possession, directly
or indirectly, of the power to direct or cause the direction of
management and policies of such Person through the ownership of
voting securities, by contract or otherwise.
“ Agreement
” shall mean this Agreement and Plan of Merger, including the
Company Disclosure Schedule, the Parent Disclosure Schedule and the
exhibits attached hereto or referred to herein, as the same may be
amended or modified from time to time in accordance with the
provisions of this Agreement.
“
Ancillary
Agreements ” means each agreement, document,
instrument or certificate contemplated by this Agreement or to be
executed by the Company, Parent or Acquisition Corp. in connection
with the consummation of the transactions contemplated by this
Agreement, in each case, only as applicable to the relevant party
or parties to such Ancillary Agreement, as indicated by the context
in which such term is used.
“
Articles of Incorporation
” shall have the meaning given to such term in Section 2.3(a)
hereof.
“
Business
” shall have the meaning given to such term in Recital
A.
“
By-laws ” shall have the
meaning given to such term in Section 2.3(b)
hereof.
“
CGCL ”
shall mean the General Corporation Law of the State of
<?xml:namespace prefix = st1 ns =
"urn:schemas-microsoft-com:office:smarttags" />California, as
amended.
“
Closing ” shall have the
meaning given to such term in Section 2.5
hereof.
“
Closing Date ” shall have
the meaning given to such term in Section 2.5
hereof.
“
Code ”
shall have the meaning given to such term in Recital
C.
“
Commission
” shall mean the United States Securities and Exchange
Commission.
“
Common Stock Options ”
shall have the meaning given to such term in Section 3.3(a)
hereof.
“
Company
” shall have the meaning given to such term in the preamble
to this Agreement.
“
Company Balance Sheet ”
shall have the meaning given to such term in Section 4.5
hereof.
“
Company Balance Sheet Date
” shall have the meaning given to such term in Section 4.5
hereof.
“
Company Common Stock ”
shall have the meaning given to such term in Section 4.3
hereof.
“
Company Disclosure
Schedule ” shall mean the Company’s Disclosure
Schedules to this Agreement.
“ Consents
” shall mean any permits, filings, notices, licenses,
consents, authorizations, certificates, franchises, qualifications,
accreditation, waivers, approvals and other rights from, and
filings with, any governmental authority, used in or relating to a
Person’s business.
“
Contract
” shall mean all contracts, agreements, leases, licenses,
commitments, instruments, guarantees, bids, orders, proposals and
all oral understandings.
“
Dissenting Shares ” shall
have the meaning given to such term in Section 3.2(d)
hereof.
“
Effective Time ” shall
have the meaning given to such term in Section 2.2
hereof.
“
Employee Benefit Plans ”
shall have the meaning given to such term in Section 4.13
hereof.
“
Environmental
Law ” shall mean the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. §§
9601 et seq.; the Emergency Planning and Community Right-to-Know
Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Resource
Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq.;
the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et
seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7
U.S.C. §§ 136 et seq. and comparable state statutes
dealing with the registration, labeling and use of pesticides and
herbicides; the Clean Air Act, 42 U.S.C. §§ 7401 et seq.;
the Clean Water Act (Federal Water Pollution Control Act), 33
U.S.C. §§ 1251 et seq.; the Safe Drinking Water Act, 42
U.S.C. §§ 300f et seq.; and the Hazardous Materials
Transportation Act, 49 U.S.C. §§ 1801 et seq., as any of
the above referenced statutes have been amended as of the date
hereof, all rules, regulations and policies promulgated pursuant to
any of the above referenced statutes, and any other foreign,
federal, state or local law, statute, ordinance, rule, regulation
or policy governing environmental matters, as the same have been
amended as of the date hereof.
“
ERISA
” shall mean the Employee Retirement Income Securities Act of
1974, as amended, and the regulations issued
thereunder.
“
Evaluation Date ” shall
have the meaning given to such term in Section 5.5(d)
hereof.
“
Exchange Act
” shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations issued
thereunder.
“
GAAP ”
shall mean generally accepted accounting principles as in effect
from time to time in the United States applied on a consistent
basis during the respective periods.
“
Hazardous
Material ” means any substance or material meeting any
one or more of the following criteria: (a) it is or contains
a substance designated as or meeting the characteristics of a
hazardous waste, hazardous substance, hazardous material,
pollutant, chemical substance or mixture, contaminant or toxic
substance under any Environmental Law; (b) its presence at some
quantity requires investigation, notification or remediation under
any Environmental Law; (c) it contains, without limiting the
foregoing, asbestos, polychlorinated biphenyls, petroleum
hydrocarbons, petroleum derived substances or waste, pesticides,
herbicides, crude oil or any fraction thereof, nuclear fuel,
natural gas or synthetic gas; or (d) mold.
“ Indebtedness
” shall mean any obligation of a Person that under GAAP is
required to be shown on the balance sheet of such Person as a
Liability. Any obligation secured by a Lien on, or payable
out of the proceeds of production from, property of a Person shall
be deemed to be Indebtedness even though such obligation is not
assumed by the Company.
“
Indebtedness for
Borrowed Money ” shall mean (a) all Indebtedness in
respect of money borrowed including, without limitation,
Indebtedness which represents the unpaid amount of the purchase
price of any property and is incurred in lieu of borrowing money or
using available funds to pay such amounts and not constituting an
accounts payable or expense accrual incurred or assumed in the
ordinary course of business of the Person; (b) all Indebtedness
evidenced by a promissory note, bond or similar written obligation
to pay money; or (c) all such Indebtedness guaranteed by the
Company or for which the Company is otherwise contingently
liable.
“
Intellectual Property ”
shall have the meaning given to such term in Section 4.12(b)
hereof.
“
Investment Company
Act ” shall mean the Investment Company Act of 1940,
as amended.
“
Letter of Transmittal ”
shall have the meaning given to such term in Section 3.2(a)
hereof.
“
Liability
” shall mean any and all liability, debt, obligation,
deficiency, Tax, penalty, fine, claim, cause of action or other
loss, cost or expense of any kind or nature whatsoever, whether
asserted or unasserted, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, and whether due or to become
due and regardless of when asserted.
“
Lien ”
shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind, including, without limitation, any
conditional sale or other title retention agreement, any lease in
the nature thereof and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any
jurisdiction and including any lien or charge arising by statute or
other law.
“
Material Adverse
Effect ” shall mean any change, effect or circumstance
that by itself, or together with other changes, effects and
circumstances is materially adverse or is reasonably likely to be
materially adverse to the business, assets, liabilities, condition
(financial or otherwise), operations or prospects of a Person and
its subsidiaries, taken as a whole, or to the ability of such
Person to perform its obligations under this Agreement or any of
the Ancillary Agreements to which such Person is a
party
“
Merger
” shall have the meaning given to such term in Recital
B.
“
Merger Consideration ”
shall have the meaning given to such term in Section 3.1(b)
hereof.
“
Most Recent Parent SEC
Documents ” shall have the meaning given to such term
in Section
5.5(b) hereof.
“ Parent ” shall have the
meaning given to such term in the preamble to this Agreement.
In addition, “ Parent ” shall
mean the Delaware corporation for which Parent shall merge with and
into on or before the Closing Date for the sole purpose of changing
the domicile of Parent from the State of Nevada to the State of
Delaware.
“
Parent Balance Sheet ”
shall have the meaning given to such term in Section 5.6
hereof.
“
Parent Balance Sheet Date
” shall have the meaning assigned to it in Section 5.11
hereof.
“
Parent Common
Stock ” shall mean the common stock, par value $0.001
per share, of Parent.
“
Parent Disclosure
Schedule ” shall mean Parent’s and Acquisition
Corp.’s Disclosure Schedules to this
Agreement.
“
Parent Financial Statements
” shall have the meaning given to such term in Section 5.5(b)
hereof.
“
Parent SEC Documents ”
shall have the meaning given to such term in Section 5.5(b)
hereof.
“
Parent SEC Reports ”
shall have the meaning given to such term in Section 5.5(a)
hereof.
“
Permitted
Liens ” shall mean (a) Liens for taxes and assessments
or governmental charges or levies not at the time due or in respect
of which the validity thereof shall currently be contested in good
faith by appropriate proceedings; (b) Liens in respect of pledges
or deposits under workmen’s compensation laws or similar
legislation, carriers’, warehousemen’s,
mechanics’, laborers’ and materialmen’s and
similar Liens, if the obligations secured by such Liens are not
then delinquent or are being contested in good faith by appropriate
proceedings; and (c) Liens incidental to the conduct of the
business of the Person that were not incurred in connection with
the borrowing of money or the obtaining of advances or credits and
which do not in the aggregate materially detract from the value of
its property or materially impair the use made thereof by the
Company in its business.
“
Person
” shall mean any individual, corporation, limited liability
company, partnership, joint venture, trust or other entity or
organization, including any government or political subdivision or
an agency or instrumentality thereof.
“
Securities
Act ” shall mean the Securities Act of 1933, as
amended, and the rules and regulations issued
thereunder.
“ Selling
Expenses ” shall mean all costs, fees and expenses of
outside professionals incurred by Parent, Acquisition Corp. or any
of the stockholders of Parent relating to the Merger or otherwise
incurred in connection with the process of marketing Parent to
potential buyers, whether incurred in connection with this
Agreement or otherwise, including, without limitation, all legal
fees, accounting, tax, investment banking fees and expenses and
title policy and survey fees.
“ Shareholder
” shall mean any record holder of Company Common
Stock.
“
Subsidiary ” shall have
the meaning given to such term in Section 4.1
hereof.
“
Surviving Corporation ”
shall have the meaning given to such term in Section 2.1
hereof.
“
Tax ” or “
Taxes
” shall mean (a) any and all taxes, assessments, customs,
duties, levies, fees, tariffs, imposts, deficiencies and other
governmental charges of any kind whatsoever (including, but not
limited to, taxes on or with respect to net or gross income,
franchise, profits, gross receipts, capital, sales, use, ad
valorem, value added, transfer, real property transfer, transfer
gains, transfer taxes, inventory, capital stock, license, payroll,
employment, social security, unemployment, severance, occupation,
real or personal property, estimated taxes, rent, excise,
occupancy, recordation, bulk transfer, intangibles, alternative
minimum, doing business, withholding and stamp), together with any
interest thereon, penalties, fines, damages costs, fees, additions
to tax or additional amounts with respect thereto, imposed by the
United States (federal, state or local) or other applicable
jurisdiction; (b) any liability for the payment of any amounts
described in clause (a) as a result of being a member of an
affiliated, consolidated, combined, unitary or similar group or as
a result of transferor or successor liability, including, without
limitation, by reason of Code Section 1.1502-6; and (c) any
liability for the payments of any amounts as a result of being a
party to any Tax Sharing Agreement or as a result of any express or
implied obligation to indemnify any other Person with respect to
the payment of any amounts of the type described in either clauses
(a) or (b).
“
Tax Return
” shall include all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information
returns (including Form 1099 and partnership returns filed on Form
1065)) required to be supplied to a Tax authority relating to
Taxes.
“
Tax Sharing Agreements ”
shall have the meaning given to such term in Section 4.11
hereof.
“
Written Consent ” shall
have the meaning given to such term in Section 3.2(a)
hereof.
ARTICLE
II
THE MERGER
2.1
Merger
. Upon the terms and
subject to the conditions of this Agreement, at the Effective Time,
Acquisition Corp. shall be merged with and into the Company in
accordance with the CGCL. Following the Effective Time, the
separate corporate existence of Acquisition Corp. shall cease, and
the Company shall continue as the corporation surviving the Merger
(sometimes hereinafter referred to as the “ Surviving
Corporation ”).
2.2
Effective Time
. The Company and
Acquisition Corp. shall cause to be filed on the Closing Date (or
on such other date as the Company and Parent may agree in writing)
a properly executed agreement of merger, together with the
appropriate officers’ certificates attached thereto,
conforming to the requirements of the CGCL, with the office of the
Secretary of State of the State of California, and shall make all
other filings or recordings required by the CGCL in connection with
the Merger. The Merger shall become effective at the later of
such
time as the
agreement of merger is duly filed in accordance with the CGCL with
the office of the Secretary of State of the State of California or
such later time as specified in the agreement of merger, and such
time is hereinafter referred to as the “ Effective
Time .”
2.3
Articles of
Incorporation; By-laws; Directors and Officers
.
(a)
The articles of incorporation of the Company as in effect
immediately prior to the Effective Time, a copy of which is
attached as Exhibit A hereto, shall be the
articles of incorporation of the Surviving Corporation (the “
Articles of
Incorporation ”) until thereafter changed or
amended as provide therein or in accordance with applicable
law.
(b)
The by-laws of the Company as in effect immediately prior to the
Effective Time, a copy of which is attached as Exhibit B hereto, shall be the
by-laws of the Surviving Corporation (the “ By-laws ”) until
thereafter changed or amended as provided therein or in accordance
with applicable law.
(c)
The individuals identified on Exhibit C hereto under the
heading “Directors” shall, from and after the Effective
Time, be the directors of the Surviving Corporation until their
successors shall have been duly elected or appointed and qualified
or until their earlier death, resignation or removal in accordance
with the Articles of Incorporation and By-laws. The
individuals identified on Exhibit C hereto under the heading
“Officers” shall, from and after the Effective Time, be
the officers of the Surviving Corporation until their successors
shall have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the
Articles of Incorporation and By-laws.
2.4
Effects of the Merger. The
Merger shall have the effects set forth in Section 1107 of the
CGCL. Without limiting the generality of the foregoing, at
the Effective Time, except as otherwise provided herein, all of the
property, rights, privileges, powers and franchises of the Company
and Acquisition Corp. shall vest in the Surviving Corporation, and
all debts, liabilities and duties of the Company and Acquisition
Corp. shall become the debts, liabilities and duties of the
Surviving Corporation.
2.5
Closing
. The consummation of
the transactions contemplated by this Agreement, including the
Merger (the “ Closing ”), shall take
place: (i) at the offices of Andrew J. Levinson, Attorney at Law,
1350 Broadway, 11 th Floor, New York,
New York at 10:00 a.m. local time on the date on which all of the
conditions to the Closing set forth in Article VIII hereof shall have
been fulfilled or waived in accordance with this Agreement (other
than conditions that can be satisfied only at the Closing, but
subject to the fulfillment or waiver of those conditions at the
Closing); or (ii) at such other place, time and date as the Company
and Parent may agree in writing (the “ Closing Date
”).
ARTICLE
III
MERGER CONSIDERATION; CONVERSION OF SECURITIES
3.1
Manner and Basis of
Converting Capital Stock
At the Effective
Time, by virtue of the Merger and without any action on the part of
the Company, Parent or Acquisition Corp. or
the holders
of any outstanding shares of capital stock or other securities of
the Company, Parent or Acquisition Corp.:
(a)
Acquisition Corp. Stock . Each
share of common stock of Acquisition Corp. issued and outstanding
immediately prior to the Effective Time shall be converted into and
become one fully paid and nonassessable share of common stock of
the Surviving Corporation, such that, after giving effect to
Section
3.1(b) hereof, Parent shall be the holder of all of
the issued and outstanding shares of common stock of the Surviving
Corporation immediately following the Merger.
(b)
Company Common Stock . Except
as provided in Section
3.1(c) hereof, each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time shall be
converted into the right to receive one (1) share of Parent Common
Stock (the “ Merger
Consideration ”).
(c)
No Fractional
Shares . No fractional shares of Parent Common Stock
shall be issued in, or as a result of, the Merger. Any
fractional share of Parent Common Stock that a record holder of
Company Common Stock would otherwise be entitled to receive as a
result of the Merger shall be aggregated. If a fractional
share of Parent Common Stock results from such aggregation, the
number of shares required to be issued to such record holder shall
be rounded up to the nearest whole number of shares of Parent
Common Stock.
3.2 Surrender and
Exchange of Certificates .
(a)
Letter of Transmittal .
Promptly after the execution of this Agreement, the Company shall
deliver, or cause to be delivered, to each record holder of Company
Common Stock (i) a letter of transmittal in the form attached
hereto as Exhibit D
(“ Letter of
Transmittal ”), together with instructions for use in
effecting the surrender of certificate(s) representing ownership of
Company Common Stock, and (ii) an execution copy of the written
consent of shareholders of the Company in the form attached hereto
as Exhibit E (the
“ Written
Consent ”).
(b)
Exchange Procedures .
Parent shall issue to each former record holder of Company Common
Stock, upon delivery to Parent (or a duly authorized agent of
Parent) of (i) certificate(s) formerly representing ownership of
Company Common Stock endorsed in blank or accompanied by duly
executed stock powers (or an affidavit of lost certificate and
indemnification in form and substance reasonably acceptable to
Parent stating that, among other things, the former record holder
has lost its, his or her certificate(s) or that such certificate(s)
have been destroyed) and (ii) a properly completed and duly
executed Letter of Transmittal, a certificate or certificates
registered in the name of such former record holder representing
the number of shares of Parent Common Stock that such former record
holder is entitled to receive in accordance with Section 3.1 hereof.
Subject to Section
3.2(d) hereof, until the certificate(s) (or affidavit) is
delivered together with the Letter of Transmittal in the manner
contemplated by this Section 3.2(b)
, each certificate
(or affidavit) previously representing ownership of Company Common
Stock shall be deemed at and after the Effective Time to represent
only the right to receive Parent
Common
Stock and the former record holders thereof shall cease to have any
other rights with respect to its, his or her Company Common
Stock.
(c)
Termination of
Exchange Process . Any Parent Common Stock that
remains unclaimed by a former record holder of Company Common Stock
at the first anniversary of the Effective Time may be deemed
“abandoned property” subject to applicable abandoned
property, escheat and other similar laws in the State in which the
former record holder resides. None of the Company, Parent,
Acquisition Corp. or the Surviving Corporation shall be liable to
any person in respect of any Parent Company Stock delivered to a
public official pursuant to any applicable abandoned property,
escheat or similar law.
(d)
Dissenting Shares .
Notwithstanding any provision of this Agreement to the contrary,
shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time and held by a Shareholder who has not
voted in favor of the Merger or consented thereto in writing and
who has demanded appraisal for such shares of Company Common Stock
in accordance with Chapter 13 of the CGCL (“ Dissenting Shares ”)
shall not be entitled to vote for any purpose or receive dividends,
shall not be converted into the right to receive Parent Common
Stock in accordance with Section 3.1 hereof, and shall
only be entitled to receive such consideration as shall be
determined pursuant to any such applicable law; provided , however , that if, after the
Effective Time, such Shareholder fails to perfect or withdraws or
loses its, his or her right to appraisal or otherwise fails to
establish the right to be paid the value of such
Shareholder’s shares of Company Common Stock under such
applicable law, such shares of Company Common Stock shall be
treated as if they had converted as of the Effective Time into the
right to receive Parent Common Stock in accordance with
Section 3.1
hereof, and
such shares of Company Common Stock shall no longer be Dissenting
Shares. All negotiations with respect to payment for
Dissenting Shares shall be handled jointly by Parent and the
Company prior to the Closing and exclusively by Parent
thereafter.
(e)
Stock Transfer Books . At
the Effective Time, the stock transfer books of the Company will be
closed and there will be no further registration of transfers of
shares of Company Common Stock thereafter on the records of the
Company. If, after the Effective Time, certificates formerly
representing Company Common Stock are presented to the Surviving
Corporation, these certificates shall be canceled and exchanged for
the number of shares of Parent Common Stock to which the former
record holder may be entitled pursuant to Section 3.1
hereof.
3.3 Options,
Warrants .
(a)
Common Stock Options .
The Company has issued and outstanding warrants and options
to purchase shares of Company Common Stock (collectively, the
“ Common Stock
Options ”). At the Effective Time, by
virtue of the Merger and without any action on the part of the
Company, Parent or Acquisition Corp. or the holders of any
outstanding Common Stock Options, Parent shall assume all of the
Company’s liabilities, obligations and commitments under each
Common Stock Option, including any equity incentive plans of the
Company pertaining thereto, and, as a result thereof, each
Common
Stock Option shall
be converted into the right to acquire one (1) share of Parent
Common Stock at an exercise price equal to the exercise price
stated in the Common Stock Option, subject in all respects to all
other terms and conditions of the Common Stock Option. Except
for the change in security underlying the Common Stock Options from
Company Common Stock to Parent Common Stock, it is the intent of
the parties hereto that the Common Stock Options shall continue
after the Effective Time, and that the terms and conditions of the
Common Stock Options shall otherwise remain
unchanged.
(b)
No Fractional Shares .
Notwithstanding anything to the contrary in this Section 3.3 , no fractional
shares of Parent Common Stock shall be issued in, or as a result
of, the Merger. Any fractional share of Parent Common Stock
that a Person would otherwise be entitled to receive as a result of
the transactions referenced in this Section 3.3 shall be
rounded up to the nearest whole number of shares of Parent Common
Stock.
3.4
Parent Common
Stock . Parent
shall reserve a sufficient number of shares of Parent Common Stock
to complete the conversion and exchange of Company Common Stock
into Parent Common Stock contemplated by Sections 3.1 and 3.2 hereof and the issuance of
any Parent Common Stock in accordance with Section 3.3 hereof. Parent
covenants and agrees that immediately prior to the Effective Time
there will be no more than 4,500,000 shares of Parent Common Stock
issued and outstanding, and that no other common or preferred stock
or equity securities of Parent, or any options, warrants, rights or
other agreements or instruments convertible, exchangeable or
exercisable into common or preferred stock or equity securities of
Parent, shall be issued or outstanding at the Effective
Time.
ARTICLE
IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise
set forth in Company Disclosure Schedule to be delivered by the
Company to Parent and Acquisition Corp. concurrently with the
execution of this Agreement, the Company represents and warrants as
follows:
4.1
Organization
. The Company
(i) is duly organized, validly existing and in good standing under
the laws of the State of California, (ii) has all Consents
necessary to own, lease and operate its properties and assets and
to carry on its business as it is now being conducted and (iii) has
all requisite corporate power and corporate authority to own, lease
and operate its properties and assets and to carry on its business
as it is now being conducted, except with respect to the foregoing
clauses (i) and (ii) where such failure could not reasonably be
expected to have a Material Adverse Effect. The Company is
duly qualified or authorized to conduct business and is in good
standing (or its equivalent) as a foreign corporation or other
entity in all jurisdictions in which the ownership or use of its
assets or nature of the business conducted by it makes such
qualification or authorization necessary, except where the failure
to be so duly qualified, authorized and in good standing could not
reasonably be expected to have a Material Adverse Effect. The
Company has no subsidiaries other than ChromaDex Analytics, Inc., a
Nevada corporation (“ Subsidiary
”).
4.2
Authorization;
Validity of Agreement . The Company
has the requisite corporate power and corporate authority to
execute and deliver this Agreement and each of the
Ancillary
Agreements and to
consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance by the Company of this
Agreement and the Ancillary Agreements and the consummation by the
Company of the transactions contemplated hereby and thereby, have
been duly authorized by the Board of Directors of the Company and
no other corporate action (except the approval of the Shareholders
with respect to the approval of the principal terms of the Merger)
on the part of the Company or any of its Shareholders is necessary
to authorize the execution and delivery of this Agreement and the
Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby. This Agreement has been, and
at Closing each of the Ancillary Agreements will have been, duly
executed and delivered by the Company (and assuming due and valid
authorization, execution and delivery hereof by Parent and
Acquisition Corp.) is, or at Closing shall be, a valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforcement is limited by
bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors’ rights generally and by general
principles of equity.
4.3
Capitalization
. As of the
date hereof, the authorized capital stock of the Company consists
of 110,000,000 shares, of which (i) 100,000,000 shares have been
designated “Common Stock” (“ Company Common
Stock ”), of which 24,744,917 shares are issued and
outstanding, and (ii) 10,000,000 shares have been designated
“Preferred Stock,” of which no shares are issued or
outstanding. All of the outstanding shares of Company Common
Stock are duly authorized, validly issued, fully paid and
non-assessable. As of the date hereof, there are issued and
outstanding Company Stock Options to purchase up to 4,616,240
shares of Company Common Stock.
4.4
Consents and
Approvals; No Violations . Except for
(i) approval of the principal terms of the Merger by the
Shareholders and (ii) filing of an agreement of merger, together
with the appropriate officers’ certificates thereto, with the
office of the Secretary of State of the State of California,
neither the execution, delivery or performance of this Agreement or
any of the Ancillary Agreements by the Company, nor the
consummation of the transactions contemplated hereby and thereby
will, (a) violate any provision of the Articles of Incorporation or
By-laws; (b) violate, conflict with or result in a breach of any
provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under,
require the consent of or result in the creation of any encumbrance
upon any of the properties of the Company or Subsidiary under,
Contract to which the Company or Subsidiary or any of their
respective properties may be bound; (c) require the Consent of any
governmental entity by or with respect to the Company or
Subsidiary; or (d) violate any order, writ, judgment, injunction,
decree, law, statute, rule or regulation applicable to the Company
or Subsidiary or any of their respective properties or
assets.
4.5
Financial
Statements . The Company
has delivered or made available as of the date hereof or shall,
prior to the Closing Date, deliver or make available to Parent, (i)
the Company’s audited consolidated balance sheet for the
fiscal year ended December 29, 2007, and the related consolidated
and consolidating statements of income, shareholders’ equity
and cash flows for the fiscal year ended December 29, 2007, and
(ii) the Company’s internally prepared balance sheet (the
“ Company Balance Sheet ”)
for the fiscal quarter ended March 29, 2008, and the related
consolidated and consolidating statements of income,
shareholders’ equity and cash
flows for the
fiscal quarter ended March 29, 2008 (the “ Company Balance Sheet
Date ”). The foregoing financial
statements (including any notes thereto) (i) have been prepared
based upon the books and records of the Company, (ii) except in the
case of the Company’s March 29, 2008 financial statements for
the absence of footnote disclosure and the customary year-end
accruals and adjustments, have been prepared in accordance with
GAAP (except as otherwise noted therein), and (iii) present fairly,
in all material respects, the financial position, results of
operations and cash flows of the Company as at their respective
dates and for the periods then ended.
4.6
No Undisclosed
Liabilities . Except for
(i) Liabilities reflected on the Company Balance Sheet or the notes
thereto, (ii) trade payables and accrued or accruable expenses
incurred since the Company Balance Sheet Date in the ordinary
course of the Business, consistent with past practices, (iii)
contract obligations under the Contracts listed in the Company
Disclosure Schedule, and (iv) the additional Liabilities set forth
in the Company Disclosure Schedule, the Company does not have any
material Liabilities (whether accrued, absolute, or contingent, and
whether or not of a nature required to be reflected or reserved
against in a balance sheet in accordance with
GAAP).
4.7
Litigation
. There is no
Action pending or, to the knowledge of the Company, threatened,
involving the Company or Subsidiary
or affecting
any of the officers, directors or employees of the Company or
Subsidiary with respect to the Company’s or any
Subsidiary’s business by or before any governmental entity or
by any third party. Neither the Company nor Subsidiary is in
default under any judgment, order or decree of any governmental
entity applicable to its business which could reasonably be
expected to result in a Material Adverse
Effect.
4.8
No Default;
Compliance with Applicable Laws . The Company
is not in default or violation of any material term, condition or
provision of (i) the Articles of Incorporation or By-laws or (ii)
to the knowledge of the Company, any law applicable to the Company
or its property and assets, and the Company has not received notice
of any violation of or Liability under any of the foregoing
(whether material or not).
4.9
Broker’s and
Finder’s Fees .
Except as set forth in the Company Disclosure Schedule, no Person
has, or as a result of the transactions contemplated or described
herein will have, any right or valid claim against the Company,
Parent, Acquisition Corp. or any Shareholder for any commission,
fee or other compensation as a finder or broker, or in any similar
capacity in connection with the negotiations relating to, and the
consummation of, the transactions contemplated by this Agreement or
any of the Ancillary Agreements.
4.10
Assets and
Contracts . Except for
this Agreement and except as described in the Company Disclosure
Schedule, the Company is not a party to any Contract not made in
the ordinary course of business that is material to the
Company. Without limiting the generality of the foregoing,
the Company is not a party to any contract (i) with a labor union,
(ii) for the purchase of fixed assets or for the purchase of
materials, supplies or equipment in excess of normal operating
requirements, (iii) for the employment of any officer, individual
employee or other Person on a full-time basis, (iv) with respect to
bonus, pension, profit sharing, retirement, stock purchase,
deferred compensation, medical, hospitalization or life insurance
or similar plan,
contract or
understanding any or all of the employees of the Company or any
other Person, (v) relating to or evidencing Indebtedness for
Borrowed Money or subjecting any asset or property of the Company
to any Lien or evidencing any Indebtedness, (vi) guaranteeing any
Indebtedness, (vii) under which the Company is lessee of or holds
or operates any property, real or personal, owned by any other
Person under which payments to such Person exceed $100,000 per year
and with an unexpired term (including any period covered by an
option to renew exercisable by any other party) of more than 60
days, (viii) under which the Company is lessor or permits any
Person to hold or operate any property, real or personal, owned or
controlled by the Company, (ix) granting any preemptive right,
right of first refusal or similar right to any Person, (x) with any
Affiliate of the Company or any present or former officer, director
or shareholder of the Company, (xi) obligating the Company to pay
any royalty or similar charge for the use or exploitation of any
tangible or intangible property, (xii) containing a covenant not to
compete or other restriction on the Company’s ability to
conduct a business or engage in any other activity, (xiii) with
respect to any distributor, dealer, manufacturer’s
representative, sales agency, franchise or advertising contract or
commitment, (xiv) regarding registration of securities under the
Securities Act, (xv) characterized as a collective bargaining
agreement, or (xvi) with any Person continuing for a period of more
than three months from the Closing Date which involves an
expenditure or receipt by the Company in excess of $100,000.
The Company has made available to Parent and Acquisition Corp. true
and complete copies of all Contracts and other documents requested
by Parent or Acquisition Corp.
4.11
Tax Returns and
Audits . All
required federal, state and local Tax Returns of the Company have
been duly and timely filed, and all federal, state and local Taxes
required to be paid with respect to the periods covered by such
returns have been paid. The Company is not and has not been
delinquent in the payment of any Tax. The Company has not had
a Tax deficiency proposed or assessed against it and has not
executed a waiver of any statute of limitations on the assessment
or collection of any Tax. None of the Company’s federal
income Tax Returns nor any state or local income or franchise Tax
Returns has been audited by governmental authorities. The
reserves for Taxes reflected on the Balance Sheet are and will be
sufficient for the payment of all unpaid Taxes payable by the
Company as of the Balance Sheet Date. Since the Balance Sheet
Date, the Company has made adequate provisions on its books of
account for all Taxes with respect to its business, properties and
operations for such period. The Company has withheld or
collected from each payment made to each of its employees the
amount of all Taxes (including, but not limited to, federal, state
and local income taxes, Federal Insurance Contribution Act taxes
and Federal Unemployment Tax Act taxes) required to be withheld or
collected therefrom, and has paid the same to the proper Tax
receiving officers or authorized depositaries. There are no
federal, state, local or foreign Actions relating to Taxes or any
Tax Returns of the Company now pending, and the Company has not
received any notice of any proposed Actions relating to Taxes or
any Tax Returns. The Company is not obligated to make a
payment, nor is it a party to any agreement that under certain
circumstances could obligate it to make a payment, that would not
be deductible under Section 280G of the Code. The Company has
not agreed nor is required to make any adjustments under Section
481(a) of the Code (or any similar provision of state, local and
foreign law) by reason of a change in accounting method or
otherwise for any Tax period for which the applicable statute of
limitations has not yet expired. The Company is not a party
to, is not bound by and does not have any obligation under, any Tax
sharing agreement, Tax indemnification agreement or similar
contract
or arrangement,
whether written or unwritten (collectively, “ Tax
Sharing Agreements ”), nor does it have any potential
liability or obligation to any Person as a result of, or pursuant
to, any Tax Sharing Agreements.
4.12
Patents and Other
Intangible Assets .
(a)
Except as set forth in the Company Disclosure Schedule, the Company
(i) owns or has the right to use, free and clear of all Liens, all
patents, trademarks, service marks, trade names, copyrights,
licenses and rights with respect to the foregoing used in or
necessary for the conduct of the Business as now conducted without
infringing upon or otherwise acting adversely to the right or
claimed right of any Person under or with respect to any of the
foregoing and (ii) is not obligated or under any obligation to make
any payments by way of royalties, fees or otherwise to any owner or
licensor of, or other claimant to, any patent, trademark, service
mark, trade name, copyright or other intangible asset, with respect
to the use thereof or in connection with the conduct of its
business or otherwise.
(b)
To the knowledge of the Company, the Company owns and has the
unrestricted right to use all trade secrets, if any, including
know-how, negative know-how, formulas, patterns, programs, devices,
methods, techniques, inventions, designs, processes, computer
programs and technical data and all information that derives
independent economic value, actual or potential, from not being
generally known or known by competitors (collectively, “
Intellectual
Property ”) required for or incident to the
development, operation and sale of all products and services sold
by the Company, free and clear of any right, Lien or claim of
others. All Intellectual Property can and will be transferred
by the Company to the Surviving Corporation as a result of the
Merger and without the consent of any Person other than the
Company.
4.13 Employee Benefit
Plans; ERISA .
(a)
All “employee benefit plans” (within the meaning of
Section 3(3) of ERISA) of the Company and other employee benefit or
fringe benefit arrangements, practices, contracts, policies or
programs of every type, other than programs merely involving the
regular payment of wages, commissions, or bonuses established,
maintained or contributed to by the Company, whether written or
unwritten and whether or not funded (collectively, “
Employee Benefit
Plans ”), are in material compliance with the
applicable requirements of ERISA, the Code and any other applicable
state, federal or foreign law.
(b)
There are no pending claims or lawsuits that have been asserted or
instituted against any Employee Benefit Plan of the Company, the
assets of any of the trusts or funds under the Employee Benefit
Plans of the Company, the plan sponsor or the plan administrator of
any of the Employee Benefit Plans of the Company or against any
fiduciary of an Employee Benefit Plan of the Company with respect
to the operation of such plan, nor does the Company have any
knowledge of any incident, transaction, occurrence or circumstance
which might reasonably be expected to form the basis of any such
claim or lawsuit.
(c)
There is no pending or, to the knowledge of the Company,
contemplated investigation, or pending or possible enforcement
action by the Pension Benefit Guaranty Corporation, the Department
of Labor, the Internal Revenue Service or any other government
agency with respect to any Employee Benefit Plan and the Company
has no knowledge of any incident, transaction, occurrence or
circumstance which might reasonably be expected to trigger such an
investigation or enforcement action.
(d)
No actual or, to the knowledge of the Company, contingent Liability
exists with respect to the funding of any Employee Benefit Plan or
for any other expense or obligation of any Employee Benefit Plan,
except as disclosed on the Company Balance Sheet, and no contingent
Liability exists under ERISA with respect to any
“multi-employer plan,” as defined in Section 3(37) or
Section 4001(a)(3) of ERISA.
(e)
No events have occurred or are reasonably expected to occur with
respect to any Employee Benefit Plan that would cause a material
change in the costs of providing benefits under such Employee
Benefit Plan or would cause a material change in the cost of
providing such Employee Benefit Plan.
4.14
Title to Property
and Encumbrances . The Company
has good and marketable title to all properties and assets used in
the conduct of the Business (except for property held under valid
and subsisting leases or licenses which are in full force and
effect and which are not in default) free of all Liens except
Permitted Liens and such ordinary and customary imperfections of
title, restrictions and encumbrances that would not reasonably be
expected to result in a Material Adverse
Effect.
4.15
Condition of
Properties . All
facilities, machinery, equipment, fixtures and other properties
owned, leased or used by the Company are in operating condition,
subject to or
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