-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TY+Fdqg+1LURRGRzy13fhM9QXeXqpRfoD0F0V6wcJbv1WNU7C2dQ+jE9h4IeqsQF rdGDERW8t2b31qX60Bkhww== 0000898430-02-000382.txt : 20020414 0000898430-02-000382.hdr.sgml : 20020414 ACCESSION NUMBER: 0000898430-02-000382 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 29 CONFORMED PERIOD OF REPORT: 20020125 ITEM INFORMATION: Changes in control of registrant ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020207 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYNBIOTICS CORP CENTRAL INDEX KEY: 0000719483 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 953737816 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-11303 FILM NUMBER: 02529235 BUSINESS ADDRESS: STREET 1: 11011 VIA FRONTERA CITY: SAN DIEGO STATE: CA ZIP: 92127 BUSINESS PHONE: 6194513771 8-K 1 d8k.htm CURRENT REPORT Prepared by R.R. Donnelley Financial -- Current Report
 
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
 
FORM 8-K
 
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): January 25, 2002
 
 
SYNBIOTICS CORPORATION
(Exact name of registrant as specified in its charter)
 
Commission file number 0–11303
 
California
(State or other jurisdiction
of incorporation )
  
95–3737816
(I.R.S. Employer
Identification No.)
 
11011 Via Frontera
San Diego, California
(Address of principal executive offices)
  
92127
(Zip Code)
 
Registrant’s telephone number, including area code: (858) 451–3771
 

 
Item 1.    Changes in Control of Registrant
 
a)  On January 25, 2002, Redwood West Coast, LLC (“Redwood”) acquired, for $2,800,000 cash, 2,800 shares of a new issue of our Series B preferred stock. The beneficial owners of an aggregate of 94% of Redwood West Coast, LLC are Redwood Holdings, Inc., Thomas A. Donelan, Christopher P. Hendy and Jerry L. Ruyan. Redwood utilized funds derived from contributions of capital by its members which were supplied by them from investment funds on hand, except that Redwood Holdings, Inc., borrowed $800,000 of its investment from Jerry L. Ruyan pursuant to a promissory note due July 22, 2002. The 2,800 shares of Series B preferred stock are convertible into an aggregate of 21,796,668 shares of our common stock, at any time after the date we amend our Articles of Incorporation to increase the number of authorized shares of our common stock to at least 70,000,000. Pursuant to the stock purchase agreement for the Series B preferred stock issuance, we will use our best efforts to cause this to occur no later than July 31, 2002. In addition, under certain circumstances as set forth in the stock purchase agreement, Redwood may be issued additional shares of Series B preferred stock. The 2,800 shares of Series B preferred stock have voting rights, with the aggregate number of votes currently equal to 21,796,668. As a result, the 2,800 shares of Series B preferred stock represent approximately 54% of our voting stock, adjusted to include the issuance of all shares of our common stock which may be issuable upon the exercise or conversion of all outstanding options, warrants and other convertible securities as of January 25, 2002. Without the adjustment for the exercise and conversion of options, warrants and other convertible securities, the voting power of the 2,800 shares of Series B preferred stock represents approximately 69% of our voting stock. Including 8,254,300 shares of our common stock issuable to 41 key employees as contractual retention bonuses (see Item 5 below), but not including any other options, warrants or other convertible securities, the voting power of the 2,800 shares of Series B preferred stock represents approximately 55% of our voting stock.
 
The stock purchase agreement provided that two designees of Redwood, Thomas A. Donelan and Christopher P. Hendy, would become members of our board of directors at the time of closing and that all of our then current directors, with the exception of Paul A. Rosinack and Rigdon Currie, would resign. The stock purchase agreement further provides that, after we comply with the requirements of Rule 14f-1 under the Securities Exchange Act of 1934, Mr. Currie would resign so that our board of directors would then consist of Messrs. Donelan, Hendy and Rosinack.
 
b)  None.
 
Item 5.    Other Events
 
In connection with the Redwood transaction, we amended our credit agreement with Comerica Bank—California, the successor to Imperial Bank. The $7,132,000 principal amount outstanding under our revolving line of credit and term note, each due in March 2002, was converted into a new $7,132,000 term note due January 1, 2004. The new note bears interest at the rate of prime plus 2%, and is payable in monthly installments of $100,000 plus accrued interest through January 2003 and monthly installments of $125,000 plus accrued interest thereafter, with all remaining principal due January 1, 2004. In addition, we must make a partial prepayment if our EBITDA (earnings before interest, taxes, depreciation and amortization) in 2002 exceeds $4,000,000. The amended credit agreement includes only minimal financial covenants.
 
In June 2000, in conjunction with our announcement that we had engaged investment bankers to seek ways to maximize shareholder value, including a possible sale of our animal health business, we entered into cash retention bonus agreements with our employees. In contemplation of the Redwood transaction, we amended our agreements with 74 employees so that their cash retention bonuses would be payable on the earlier of January 1, 2003 or termination without cause. These cash retention bonuses, totaling $488,000, would otherwise have been payable the day after the Redwood transaction.
 
In addition, in contemplation of the Redwood transaction, we amended our agreements with 41 employees, including all of our most senior executives, so that instead of receiving cash retention bonuses they would receive, on or before May 15, 2002, an aggregate of 8,254,300 shares of our common stock. The aggregate

1

$1,486,000 cash retention bonuses for the 41 employees would otherwise have been payable the day after the Redwood transaction. The effective price of the 8,254,300 shares was $0.18 per share. The average closing price of our common stock for the 10 trading days through January 2, 2002, the day our board of directors approved the amendments, was $0.17 per share. The 41 employees also agreed to surrender all of their outstanding options to acquire an aggregate of 879,559 shares of our common stock in exchange for our satisfying their “primary” employee-side income tax withholding obligation with regard to the retention bonuses. The 8,254,300 shares issuable to the 41 employees will, upon issuance, constitute approximately 21% of our capital stock.
 
On January 25, 2002, we issued a press release which relates to the transactions described in Item 1 and this Item 5.
 
Item 7.    Financial Statements and Exhibits
 
c)  Exhibits
 
2.11
   
Stock Purchase Agreement between the Registrant and Redwood West Coast, LLC, dated January 25, 2002.
4.4.3
   
Third Amendment to Credit Agreement and Loan Documents and Waiver of Defaults by and between the Registrant and Comerica Bank—California, dated January 25, 2002.
4.4.4
   
Promissory Note from Registrant to Comerica Bank—California, dated January 25, 2002.
4.5
   
Certificate of Determination of Preferences of Series B Preferred Stock filed January 5, 2002.
4.5.1
   
Certificate of Amendment to Certificate of Determination of Preferences of Series B Preferred Stock filed January 24, 2002.
10.79†
   
Management Retention Plan Agreement between the Registrant and Paul A. Rosinack, dated June 16, 2000.
10.79.1†
   
Amended Management Retention Plan Agreement between the Registrant and Paul A. Rosinack, dated January 24, 2001.
10.79.2†
   
Memorandum Amending Management Retention Plan Agreement between the Registrant and Paul A. Rosinack, dated March 15, 2001.
10.79.3†
   
Amendment to Retention Plan Agreement between the Registrant and Paul A. Rosinack, dated January 4, 2002.
10.80†
   
Management Retention Plan Agreement between the Registrant and Michael K. Green, dated July 12, 2000.
10.80.1†
   
Amended Management Retention Plan Agreement between the Registrant and Michael K. Green, dated January 18, 2001.
10.80.2†
   
Memorandum Amending Management Retention Plan Agreement between the Registrant and Michael K. Green, dated March 15, 2001.
10.80.3†
   
Amendment to Retention Plan Agreement between the Registrant and Michael K. Green, dated January 4, 2002.
10.81†
   
Management Retention Plan Agreement between the Registrant and Francois Guillemin, dated June 26, 2000.
10.81.1†
   
Amended Management Retention Plan Agreement between the Registrant and Francois Guillemin, dated February 2, 2001.
10.81.2†
   
Memorandum Amending Management Retention Plan Agreement between the Registrant and Francois Guillemin, dated March 15, 2001.
10.81.3†
   
Amendment to Retention Plan Agreement between the Registrant and Francois Guillemin, dated January 4, 2002.

2

10.82†
   
Management Retention Plan Agreement between the Registrant and Serge Leterme, dated July 7, 2000.
10.82.1†
   
Amended Management Retention Plan Agreement between the Registrant and Serge Leterme, dated January 29, 2001.
10.82.2†
   
Memorandum Amending Management Retention Plan Agreement between the Registrant and Serge Leterme, dated March 15, 2001.
10.82.3†
   
Amendment to Retention Plan Agreement between the Registrant and Serge Leterme, dated January 4, 2002.
10.83†
   
Management Retention Plan Agreement between the Registrant and Robert D. Buchanan, dated July 7, 2000.
10.83.1†
   
Amended Management Retention Plan Agreement between the Registrant and Robert D. Buchanan, dated January 29, 2001.
10.83.2†
   
Memorandum Amending Management Retention Plan Agreement between the Registrant and Robert D. Buchanan, dated March 15, 2001.
10.83.3†
   
Amendment to Retention Plan Agreement between the Registrant and Robert D. Buchanan, dated January 4, 2002.
10.84
   
Form of Amendment to Retention Plan Agreement between the Registrant and an employee, dated January 4, 2002.
10.85†
   
Form of Amendment to Retention Plan Agreement between the Registrant and an employee, dated January 4, 2002. Agreements on this form were entered into with each of Carmen Adams, Kenneth Aeschbacher, Janet Anderson, Arnold Barron, Kathleen Bestul, Veronique Bouchot-Torres, Dana Brownell, Keith Butler, Allen Carlson, Emmanuel Combe, John Donovin, Judith Francello, Clifford Frank, Mary Hanavan, Mike Harrod, Denis Hartman, Kathy Hildebrand, Kevin Jones, Cherian Kadookunnel, Chinta Lamichhane, Rene Lampe, Catherine Lane, Barbara Livingston, Patrick Lopez, Donna Murphy, Krista Musil, Nadia Plantier, Michael Rees, Tracy Roberts, Ernesto Samson, Ron Sanders, John Shimmel, Greg Soulds, James Stoner, Tatijana Sutka, and Mary Anne Williams, respectively.
99
   
Press release date January 25, 2002 entitled “Synbiotics Corporation Receives $2.8 Million in Equity Financing and Restructures Bank Debt”.
†
 
Management contract or compensatory plan or arrangement.

3

 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
SYNBIOTICS CORPORATION
By:
  
/s/    MICHAEL K. GREEN        
   
Michael K. Green
Senior Vice President—Finance and Chief Financial Officer
 
Date: February 7, 2002

4

 
 
SECURITIES AND EXCHANGE COMMISSION
 
WASHINGTON, D.C.
 
EXHIBITS
 
TO
 
FORM 8-K
 
UNDER
 
SECURITIES EXCHANGE ACT OF 1934
 
SYNBIOTICS CORPORATION
 
 

 
EXHIBIT INDEX
 
Exhibit No.
   
Exhibit
2.11
   
Stock Purchase Agreement between the Registrant and Redwood West Coast, LLC, dated January 25, 2002.
4.4.3
   
Third Amendment to Credit Agreement and Loan Documents and Waiver of Defaults by and between the Registrant and Comerica Bank—California, dated January 25, 2002.
4.4.4
   
Promissory Note from Registrant to Comerica Bank—California, dated January 25, 2002.
4.5
   
Certificate of Determination of Preferences of Series B Preferred Stock filed January 5, 2002.
4.5.1
   
Certificate of Amendment to Certificate of Determination of Preferences of Series B Preferred Stock filed January 24, 2002.
10.79†
   
Management Retention Plan Agreement between the Registrant and Paul A. Rosinack, dated June 16, 2000.
10.79.1†
   
Amended Management Retention Plan Agreement between the Registrant and Paul A. Rosinack, dated January 24, 2001.
10.79.2†
   
Memorandum Amending Management Retention Plan Agreement between the Registrant and Paul A. Rosinack, dated March 15, 2001.
10.79.3†
   
Amendment to Retention Plan Agreement between the Registrant and Paul A. Rosinack, dated January 4, 2002.
10.80†
   
Management Retention Plan Agreement between the Registrant and Michael K. Green, dated July 12, 2000.
10.80.1†
   
Amended Management Retention Plan Agreement between the Registrant and Michael K. Green, dated January 18, 2001.
10.80.2†
   
Memorandum Amending Management Retention Plan Agreement between the Registrant and Michael K. Green, dated March 15, 2001.
10.80.3†
   
Amendment to Retention Plan Agreement between the Registrant and Michael K. Green, dated January 4, 2002.
10.81†
   
Management Retention Plan Agreement between the Registrant and Francois Guillemin, dated June 26, 2000.
10.81.1†
   
Amended Management Retention Plan Agreement between the Registrant and Francois Guillemin, dated February 2, 2001.
10.81.2†
   
Memorandum Amending Management Retention Plan Agreement between the Registrant and Francois Guillemin, dated March 15, 2001.
10.81.3†
   
Amendment to Retention Plan Agreement between the Registrant and Francois Guillemin, dated January 4, 2002.
10.82†
   
Management Retention Plan Agreement between the Registrant and Serge Leterme, dated July 7, 2000.
10.82.1†
   
Amended Management Retention Plan Agreement between the Registrant and Serge Leterme, dated January 29, 2001.
10.82.2†
   
Memorandum Amending Management Retention Plan Agreement between the Registrant and Serge Leterme, dated March 15, 2001.

2

Exhibit No.
   
Exhibit
10.82.3†
   
Amendment to Retention Plan Agreement between the Registrant and Serge Leterme, dated January 4, 2002.
10.83†
   
Management Retention Plan Agreement between the Registrant and Robert D. Buchanan, dated July 7, 2000.
10.83.1†
   
Amended Management Retention Plan Agreement between the Registrant and Robert D. Buchanan, dated January 29, 2001.
10.83.2†
   
Memorandum Amending Management Retention Plan Agreement between the Registrant and Robert D. Buchanan, dated March 15, 2001.
10.83.3†
   
Amendment to Retention Plan Agreement between the Registrant and Robert D. Buchanan, dated January 4, 2002.
10.84
   
Form of Amendment to Retention Plan Agreement between the Registrant and an employee, dated January 4, 2002.
10.85†
   
Form of Amendment to Retention Plan Agreement between the Registrant and an employee, dated January 4, 2002. Agreements were entered into on this form with each of Carmen Adams, Kenneth Aeschbacher, Janet Anderson, Arnold Barron, Kathleen Bestul, Veronique Bouchot-Torres, Dana Brownell, Keith Butler, Allen Carlson, Emmanuel Combe, John Donovin, Judith Francello, Clifford Frank, Mary Hanavan, Mike Harrod, Denis Hartman, Kathy Hildebrand, Kevin Jones, Cherian Kadookunnel, Chinta Lamichhane, Rene Lampe, Catherine Lane, Barbara Livingston, Patrick Lopez, Donna Murphy, Krista Musil, Nadia Plantier, Michael Rees, Tracy Roberts, Ernesto Samson, Ron Sanders, John Shimmel, Greg Soulds, James Stoner, Tatijana Sutka, and Mary Anne Williams, respectively.
99
   
Press release date January 25, 2002 entitled “Synbiotics Corporation Receives $2.8 Million in Equity Financing and Restructures Bank Debt”.
†
 
Management contract or compensatory plan or arrangement.

3
EX-2.11 3 dex211.txt STOCK PURCHASE AGREEMENT Exhibit 2.11 ------------ STOCK PURCHASE AGREEMENT dated January 25, 2002 between REDWOOD WEST COAST, LLC and SYNBIOTICS CORPORATION TABLE OF CONTENTS ARTICLE 1. DEFINED TERMS .................................................................... 1 ARTICLE 2. PURCHASE AND SALE TERMS .......................................................... 3 Section 2.1 Purchase and Sale ....................................................... 3 Section 2.2 Transfer Legends and Restrictions ....................................... 3 ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF SYNBIOTICS ..................................... 4 Section 3.1 Corporate Existence ..................................................... 4 Section 3.2 Power and Authority ..................................................... 4 Section 3.3 Financial Condition ..................................................... 5 Section 3.4 Absence of Certain Changes .............................................. 6 Section 3.5 Litigation .............................................................. 7 Section 3.6 Licenses; Compliance with Laws, Other Agreements, etc ................... 8 Section 3.7 Brokers, etc ............................................................ 11 Section 3.8 Private Sale ............................................................ 11 Section 3.9 Reports ................................................................. 12 Section 3.10 Investigation .......................................................... 12 Section 3.11 Section 83(b) Elections ................................................ 12 Section 3.12 Employment Contracts, etc.; Certain Material Transactions .............. 13 Section 3.13 Contracts and Commitments, etc ......................................... 13 Section 3.14 Employee Plans ......................................................... 13 Section 3.15 Banks, Agents, etc ..................................................... 15 Section 3.16 Minute Books ........................................................... 15 Section 3.17 Environmental Liabilities .............................................. 16 Section 3.18 Maintenance of Corporate Existence ..................................... 16 ARTICLE 4. COVENANTS OF SYNBIOTICS .......................................................... 16 Section 4.1 Proprietary Information ................................................. 16 Section 4.2 Licenses and Trademarks ................................................. 17 Section 4.3 Liability Insurance ..................................................... 17 Section 4.4 Taxes and Assessments ................................................... 17 Section 4.5 Governmental Consents ................................................... 17 Section 4.6 Further Assurances ...................................................... 17 Section 4.7 Expenses ................................................................ 18 Section 4.8 Negative Covenants in Effect as Long as Preferred Stock is Outstanding .. 18 Section 4.9 Negative Covenants in Effect until Closing .............................. 18 Section 4.10 Additional Common Stock ................................................ 19 Section 4.11 Other Transactions ..................................................... 19 Section 4.12 Consulting Fees ........................................................ 19 Section 4.13 Amendment to Rights Agreement .......................................... 19 Section 4.14 Waiver ................................................................. 20 Section 4.15 Additional Shares ...................................................... 20 ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF REDWOOD ........................................ 21 Section 5.1 Power and Authority ..................................................... 21 Section 5.2 Purchase for Investment ................................................. 21 Section 5.3 Financial Matters ....................................................... 21
Section 5.4 Brokers, etc .................................................... 21 ARTICLE 6. THE CLOSING AND CLOSING CONDITIONS ....................................... 21 Section 6.1 The Closing ..................................................... 21 Section 6.2 Issuance of Preferred Stock ..................................... 22 Section 6.3 Legal Opinion from Counsel for Synbiotics ....................... 22 Section 6.4 Representations and Warranties of Synbiotics True and Correct ... 22 Section 6.5 Employee Documents .............................................. 22 Section 6.6 Redwood Review .................................................. 22 Section 6.7 Certificate of Determination .................................... 23 Section 6.8 Opinion ......................................................... 23 Section 6.9 Performance ..................................................... 23 Section 6.10 All Proceedings to Be Satisfactory ............................. 23 Section 6.11 Supporting Documents ........................................... 23 Section 6.12 Reasonable Satisfaction of Redwood and Counsel ................. 24 Section 6.13 Financing ...................................................... 24 Section 6.14 Reconstitution of Board of Directors ........................... 24 ARTICLE 7. MISCELLANEOUS ............................................................ 24 Section 7.1 Severability .................................................... 24 Section 7.2 Parties in Interest ............................................. 25 Section 7.3 Notices ......................................................... 25 Section 7.4 No Waiver ....................................................... 26 Section 7.5 Survival of Agreements, etc ..................................... 26 Section 7.6 Construction .................................................... 26 Section 7.7 Entire Understanding ............................................ 26 Section 7.8 Counterparts .................................................... 26 Section 7.9 Assignment; No Third-Party Beneficiaries ........................ 27 ARTICLE 8. TERMINATION .............................................................. 27 Section 8.1 Termination ..................................................... 27 Section 8.2 Termination Pursuant to Section 4.11 ............................ 27 Section 8.3 Effect of Termination ........................................... 27
EXHIBITS Exhibit 1.1 - Certificate of Determination/(1)/ Exhibit 6.3 - Legal Opinion Exhibit 6.13 - Third Amendment to Credit Agreement and Loan Documents and Waiver of Defaults/(2)/ (1) Incorporated herein by reference to Exhibit 4.5 of this Current Report on Form 8-K. (2) Incorporated herein by reference to Exhibit 4.4.3 of this Current Report on Form 8-K. -ii- EXHIBIT 2.11 This STOCK PURCHASE AGREEMENT ("Agreement") entered into this 25th day of JANUARY, 2002, between REDWOOD WEST COAST, LLC, a Delaware limited liability company ("Redwood"), and SYNBIOTICS CORPORATION, a California corporation ("Synbiotics"). Redwood and Synbiotics desire to enter into this Agreement to provide for the purchase by Redwood of a new issue of Preferred Stock of Synbiotics with the characteristics set forth in a Certificate of Determination attached as Exhibit 1.1 and to provide such other terms and conditions with respect to such transaction as contained herein. Article 1. Defined Terms The following terms, when used in this Agreement, have the following meanings, unless the context otherwise indicates: "'33 Act" means the Securities Act of 1933. "'34 Act" means the Securities Exchange Act of 1934. "Affiliate" means, with respect to any specified Person, (1) any other Person who, directly or indirectly, owns or controls, is under common ownership or control with, or is owned or controlled by, such specified Person, (2) any other Person who is a manager, director, officer or partner or is, directly or indirectly, the beneficial owner of 10 percent or more of any class of equity securities, of the specified Person or a Person described in clause (1) of this paragraph, (3) another Person of whom the specified Person is a manager, director, officer or partner or is, directly or indirectly, the beneficial owner of 10 percent or more of any class of equity securities, (4) another Person in whom the specified Person has a substantial beneficial interest or as to whom the specified Person serves as trustee or in a similar capacity, or (5) any relative or spouse of the specified Person or any of the foregoing Persons, any relative of such spouse or any spouse of any such relative; provided, however, that at any time after the Closing Date, Synbiotics and the Subsidiaries on the one hand and Redwood and its Affiliates (other than Synbiotics and the Subsidiaries) shall not be deemed to be Affiliates of each other. "Articles of Incorporation" means the articles of incorporation of Synbiotics, as originally filed with the California Secretary of State together with all amendments thereof (including certificates of determination) and restatements thereof. "Best Knowledge" shall mean and include (a) actual knowledge of the Person, including, the actual knowledge of any of the officers or directors of Synbiotics and the administrators of any of the facilities operated by Synbiotics or any of its subsidiaries and (b) that knowledge which a prudent businessperson could have obtained in the management of his business after making due inquiry, and after exercising due diligence, with respect thereto. "Bylaws" means the bylaws of Synbiotics, as amended. "Certificate of Determination" means the certificate of determination (as amended) adopted by the Synbiotics board of directors establishing the rights, limitations, etc., of the Preferred Stock. -1- "Closing" and "Closing Date" mean the consummation of Synbiotics' issuance and sale and Redwood's purchase of the Preferred Stock, and the date on which the same occurs or occurred. "Common Stock" means the common stock of Synbiotics. "Employee Plan" has the meaning set forth in Section 3.14.1 hereof. "Employee Retention Agreements" means agreements held by employees of Synbiotics entitling them to certain payments in the event of a change in control of Synbiotics. "Financial Statements" means any financial statements (including the notes thereto) of Synbiotics certified by Synbiotics' independent public accountants and any such statements not so certified but containing substantially all the information covered in such certified statements, including a balance sheet as of the end of a fiscal period and statements of income and retained earnings and of sources and applications of funds for such fiscal period, together with all notes thereto. "Financial Statements" shall mean all of the following: (a) the audited financial statements of Synbiotics as of December 31, 2000 (including all schedules and notes thereto), consisting of the balance sheet at such date and the related statements of income and expenses, retained earnings, changes in financial position and cash flows for the twelve-month period then ended; and (b) the unaudited financial statements of Synbiotics as of September 30, 2001 (including all schedules and notes thereto), consisting of the balance sheet at such date and the related statements of income and expenses, retained earnings, changes in financial position and cash flows for the nine-month period then ended. In addition to (a) and (b) above, after the date of this Agreement, the term "Financial Statements" shall include any and all interim financial statements thereafter issued. "Financial Statement Date" means September 30, 2001. "Independent Public Accountants" means that firm of independent certified public accountants selected by Synbiotics' Board of Directors with the approval of the Redwood Board Members. "Person" means any natural person or entity including, but not limited to, a corporation, partnership, or limited liability company. "Preferred Stock" means the Series B Preferred Stock of Synbiotics having the characteristics set forth in the Certificate of Determination. "Redwood" means Redwood West Coast, LLC. "Redwood Board Members" means that individual or individuals (initially Thomas Donelan and Christopher Hendy) who sit on Synbiotics' Board of Directors at the request of Redwood. "SEC" means the United States Securities and Exchange Commission. -2- "Shares" means any shares of Synbiotics' Series B Preferred Stock or Common Stock issued or issuable upon conversion thereof, as the context requires. "Subsidiary" or "Subsidiaries" of any Person means any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions are at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person. "Synbiotics" means Synbiotics Corporation, a California corporation. The masculine form of words includes the feminine and the neuter and vice versa, and, unless the context otherwise requires, the singular form of words includes the plural and vice versa. The words "herein," "hereof," "hereunder," and other words of similar import when used in this Agreement refer to this Agreement as a whole, and not to any particular section or subsection. Article 2. Purchase and Sale Terms Section 2.1 Purchase and Sale. ----------------- Subject to the terms of this Agreement, at the Closing Synbiotics shall issue and sell to Redwood, and Redwood shall purchase from Synbiotics for $2,800,000 cash, 2,800 shares of Series B Preferred Stock. Synbiotics represents and warrants to Redwood that, as of immediately after the Closing, such Shares will entitle Redwood to approximately fifty four and one-half percent of the total voting power of all classes of stock of Synbiotics after giving effect to the deemed issuance of (1) all shares of Common Stock called for by any and all warrants, options, convertible notes, convertible securities and other agreements of any nature of Synbiotics outstanding on the Closing Date calling for the issuance of Common Stock at less than $1.99 per share plus (2) all shares of Common Stock issuable on or before May 15, 2002 pursuant to amended Employee Retention Agreements. In addition, Synbiotics shall issue additional shares of Series B Preferred Stock to Redwood when, as and if required by Section 4.15 hereof. Section 2.2 Transfer Legends and Restrictions. --------------------------------- The transfer of the Shares will be restricted in accordance with the terms hereof. Each certificate evidencing the Shares, including any certificate issued to any transferee thereof, shall be imprinted with a legend in substantially the following form: "THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE '33 ACT. THEY MAY NOT BE OFFERED OR TRANSFERRED BY SALE, ASSIGNMENT, PLEDGE OR OTHERWISE UNLESS (1) A REGISTRATION STATEMENT FOR THE SHARES UNDER THE '33 ACT IS IN EFFECT OR (2) SYNBIOTICS HAS RECEIVED AN OPINION OF COUNSEL, WHICH OPINION IS REASONABLY SATISFACTORY TO SYNBIOTICS, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE '33 ACT. -3- Redwood, by acceptance of the Shares, agrees, so long as any legend described in this Section shall remain on the certificates evidencing the Shares, prior to any transfer of any of the same (except for a transfer effected pursuant to an effective registration statement under the `33 Act or in compliance with Rule 144 or Rule 144A thereunder), to give written notice to Synbiotics of Redwood's intention to effect such transfer and agrees to comply in all material respects with the provisions of this Section. Such notice, if required, shall describe the proposed method of transfer of the Shares in question. Upon receipt by Synbiotics of such notice, if required, and if in the opinion of counsel to Redwood, which opinion shall be reasonably satisfactory to Synbiotics, the proposed transfer may be effected without registration under the `33 Act in compliance with Section 4(2) or Rules 144 or 144A thereunder and under applicable state securities laws, then the proposed transfer may be effected. Provided, however, that no such opinion of counsel shall be necessary for a transfer by Redwood to a member or other Affiliate of Redwood, if the transferee agrees in writing to be subject to the terms of this Section to the same extent as if such transferee were originally a signatory to this Agreement. Upon receipt by Synbiotics of such opinion and of such agreement by the transferee to be bound by this Section, the holder of such Shares shall thereupon be entitled to transfer the same in accordance with the terms of the notice (if any) delivered by such holder to Synbiotics. Each certificate evidencing the Shares issued upon any such transfer shall bear the legend set forth in this Section. Upon the written request of Redwood or a subsequent holder of the Shares, Synbiotics shall remove the foregoing legend from the certificates evidencing such Shares and issue to such holder new certificates therefor, free of any transfer legend if, with such request, Synbiotics shall have received an opinion of counsel selected by the holder, such opinion to be reasonably satisfactory to Synbiotics, to the effect that any transfers by said holder of such Shares may be made to the public without compliance with either Section 5 of the `33 Act or Rule 144 thereunder and applicable state securities laws. In no event will such legend be removed if such opinion is based upon the "private offering" exemption of Section 4(2) of the `33 Act. Article 3. Representations and Warranties of Synbiotics Except as set forth in the Disclosure Letter furnished by Synbiotics to Redwood before the date of this Agreement, Synbiotics represents and warrants to Redwood: Section 3.1 Corporate Existence. ------------------- Synbiotics is a corporation duly incorporated, validly existing and in good standing under California law and has full power and authority to conduct its business and own its properties as now conducted and owned. Synbiotics is qualified as a foreign corporation to do business in all jurisdictions in which the nature of its properties and business requires such qualification. Section 3.2 Power and Authority. ------------------- Synbiotics has full power and authority, and has taken all required corporate and other action necessary to permit it to own and hold properties to carry on its current business, to execute and deliver this Agreement, to issue and sell the Preferred Stock as herein provided and otherwise to carry out the terms of this Agreement and all other documents, instruments, or transactions required by this Agreement, and none of such actions will violate any provision of Synbiotics' Bylaws or Articles of Incorporation, or result in the breach of or constitute a default under any agreement or instrument to which Synbiotics is a party or by which it is bound or result in the creation or imposition of any material lien, claim or encumbrance on any Synbiotics' asset. This Agreement has -4- been duly executed and delivered by Synbiotics and constitutes the valid and binding obligation of Synbiotics enforceable against Synbiotics in accordance with its terms. No event has occurred and no condition exists which would constitute a violation of this Agreement. Neither this Agreement nor any other document gives any person rights to terminate any agreements with Synbiotics or otherwise to exercise rights against Synbiotics. Section 3.3 Financial Condition. ------------------- Synbiotics has previously furnished to Redwood reports filed by Synbiotics with the SEC (the "SEC Reports") containing its Financial Statements, which, together with the footnotes thereto, are complete and correct, have been prepared in accordance with generally accepted accounting principles consistently applied, and fairly present the financial condition of Synbiotics as of the dates specified. The Financial Statements are in accordance with the books and records of Synbiotics as of the dates and for the periods indicated, present fairly the financial position, results of operations, shareholders' equity and changes in financial position of such corporations as of the respective dates and for the respective periods indicated, and have been prepared in accordance with generally accepted accounting principles ("GAAP") applied on a consistent basis (except as described in such statements, notes thereto and reports). 3.3.1 Absence of Undisclosed Liabilities. As of the Financial ---------------------------------- Statement Date, Synbiotics had no material liabilities (matured or unmatured, fixed or contingent), which are not fully reflected or provided for on the balance sheet of Synbiotics as at the Financial Statement Date, or any material loss contingency (as defined in Statement of Financial Accounting Standards No. 5) whether or not required by GAAP to be shown on the Balance Sheets, except (1) obligations to perform under commitments incurred in the ordinary course of business after the Financial Statement Date, (2) tax and related liabilities due and specifically set forth in the Disclosure Letter, which liabilities shall be fully paid concurrently with the Closing as provided in the Disclosure Letter, and (3) other liabilities as set forth in the Disclosure Letter. 3.3.2 Taxes. For all periods ended on or prior to the ----- Financial Statement Date, Synbiotics has accurately completed and filed or will file within the time prescribed by law (including extensions of time approved by the appropriate taxing authority) all tax returns and reports required to be filed with the Internal Revenue Service, the State of California, any other states or governmental subdivisions and all foreign countries and has paid, or made adequate provision in the Financial Statements dated the Financial Statement Date for the payment of, all taxes, interest, penalties, assessments or deficiencies shown to be due (or, to the Best Knowledge of Synbiotics, claimed by such authority or jurisdiction to be due) on or in respect of such tax returns and reports. Synbiotics knows of (1) no other federal, California, state, county, municipal or foreign taxes which are due and payable by Synbiotics which have not been so paid; (2) no other federal, California, state, county, municipal or foreign tax returns or reports which are required to be filed which have not been so filed; and (3) no unpaid assessment for additional taxes for any fiscal period or any basis thereof; except for taxes which are due and are specifically set forth in the Disclosure Letter hereto but which shall be paid in full concurrently with the Closing as provided in the Disclosure Letter. Synbiotics' federal or state income tax returns have never been audited. Proper and -5- accurate amounts have been withheld by Synbiotics from its employees for all periods in compliance with the tax, social security and any employment withholding provisions of applicable federal and state law. Proper and accurate federal and state returns have been filed by Synbiotics for all periods for which returns were due with respect to employee income tax withholding, social security and unemployment taxes, and the amounts shown thereon to be due and payable have been paid in full or provision therefor included on the books of Synbiotics in accordance with and to the extent required by GAAP. Synbiotics has not made any election under Section 341(f) of the Internal Revenue Code of 1986, as amended (the "Code"). 3.3.3 Subsidiaries. The Disclosure Letter hereto sets forth a list of ------------ all Subsidiaries of Synbiotics. Each Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation as stated on the Disclosure Letter, has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted, and is duly qualified as a foreign corporation in all jurisdictions in which it is required to be so qualified. Each Subsidiary is wholly owned by Synbiotics and/or by other Subsidiaries and no Person other than Synbiotics and its Subsidiaries has any right to participate in, or receive any payment based on any amount relating to, the revenue, income, value or net worth of the Subsidiaries or any component or portion thereof, or any increase or decrease in any of the foregoing or acquire any capital stock of any Subsidiary. Section 3.4 Absence of Certain Changes. -------------------------- Since the Financial Statement Date there has not been: 3.4.1 any damage, destruction or loss of any of the properties or assets of Synbiotics (whether or not covered by insurance) materially adversely affecting the business or business prospects of Synbiotics or any agreement to do any such acts; 3.4.2 any dividend, declaration, setting aside or payment or other distribution in respect of any of Synbiotics' capital stock or any direct or indirect redemption, purchase or other acquisition of any of such stock by Synbiotics; 3.4.3 any labor dispute, or any other event, development, or condition, of any character, or threat of the same, materially adversely affecting the business or business prospects of Synbiotics; 3.4.4 any material asset or property of Synbiotics made subject to a lien of any kind; 3.4.5 any material liability or obligation of any nature whatsoever (contingent or otherwise) incurred by Synbiotics, other than current material liabilities or obligations incurred in the ordinary course of business; 3.4.6 any waiver of any valuable right of Synbiotics, or the cancellation of any material debt or claim held by Synbiotics; -6- 3.4.7 any issuance of any stock, bonds or other securities (including options, warrants or rights) of Synbiotics or any agreements or commitments respecting the same; 3.4.8 any sale, assignment or transfer of any material tangible or intangible assets of Synbiotics except with respect to tangible assets in the ordinary course of business; 3.4.9 any loan by Synbiotics to any officer, director, employee or stockholder of Synbiotics, or any agreement or commitment therefor; or 3.4.10 any increase, direct or indirect, in the compensation paid or payable to any officer, director, employee or agent of Synbiotics; 3.4.11 any cancellation or compromise of any debt or claim, except in the ordinary course of business and consistent with past practice; 3.4.12 any waiver or release of any rights of material value; 3.4.13 any transfer or grant of any material rights under any concessions, leases, licenses, agreements, patents, inventions, trademarks, trade names, service marks or copyrights or with respect to any know-how; 3.4.14 any wage or salary increase applicable to any group or classification of employees generally (other than in connection with the general salary plan of Synbiotics), any employment contract with any officer or employee or made any loan to, or any material transaction of any other nature with any officer or employee of Synbiotics; 3.4.15 any material transaction, contract or commitment, except contracts listed, or which pursuant to the terms hereof are not required to be listed, in the Disclosure Letter by virtue of this Section 3.4, and except this Agreement and the transactions contemplated hereby; 3.4.16 any change in its accounting methods or practices. Section 3.5 Litigation. ---------- There are no suits, proceedings or investigations pending or threatened against or affecting Synbiotics or an officer of Synbiotics which could have a material adverse effect on the business, assets, or financial condition of Synbiotics or the ability of any officer to participate in the affairs of Synbiotics, or which concern the transactions contemplated by the Agreement. The foregoing includes, without limiting its generality, actions pending or threatened or any basis therefor known to Synbiotics, involving the prior employment of any employees or currently contemplated prospective employees of Synbiotics or their use, in connection with the business of Synbiotics, of any information or techniques which might be alleged to be proprietary to their former employers. 3.5.1 Conflict of Interests. Neither Synbiotics nor any officer, --------------------- employee, agent or any other person acting on behalf of Synbiotics has, directly or indirectly, given or agreed to give any money, gift or similar benefit (other than legal price concessions to customers in the -7- ordinary course of business) to any customer, supplier, employee or agent of a customer or supplier, or official or employee of any governmental agency or instrumentality of any government (domestic or foreign) or other Person who was, is, or may be in of a position to help or hinder the business of Synbiotics (or assist in connection with any actual or proposed transaction) which (1) might subject Synbiotics to any damage or penalty in any civil, criminal or governmental litigation or proceeding, (2) if not given in the past, might have had a material adverse effect on the assets, business or operations of Synbiotics as reflected in the Financial Statements, or (3) if not continued in the future, might materially adversely affect the assets, business, operations or prospects of Synbiotics. 3.5.2 Other Relationships. The officers of Synbiotics have no ------------------- interest other than as noncontrolling holders of securities of a publicly traded company, either directly or indirectly, in any entity, including without limitation, any corporation, partnership, joint venture, proprietorship, firm, person, licensee, business or association (whether as an employee, officer, director, shareholder, agent, independent contractor, security holder, creditor, consultant, or otherwise) that presently (1) provides any services or designs, produces and/or sells any products or product lines, or engages in any activity which is the same, similar to or competitive with any activity or business in which Synbiotics is now engaged; (2) is a supplier of, customer of, creditor of, or has an existing contractual relationship with Synbiotics; or (3) has any direct or indirect interest in any asset or property used by Synbiotics or any property, real or personal, tangible or intangible, that is necessary or desirable for the conduct of the business of Synbiotics. No current or former stockholder, director, officer or employee of Synbiotics nor any Affiliate of any such person, is at present, or since 1994 has been, directly or indirectly through his affiliation with any other person or entity, a party to any transaction (other than as an employee or consultant) with Synbiotics providing for the furnishing of services by, or rental of real or personal property from, or otherwise requiring cash payments to any such person. Section 3.6 Licenses; Compliance with Laws, Other Agreements, etc. ----------------------------------------------------- Synbiotics has all franchises, permits, licenses, and other rights which it currently deems necessary for the conduct of its business and it knows of no basis for the denial of such rights in the future. Synbiotics is not in material violation of any order or decree of any court, or of the provisions of any contract or agreement to which it is a party or by which it may be bound, or, to its Best Knowledge, of any law, order, or regulation of any governmental authority, and neither this Agreement nor the transactions contemplated hereby will result in any such violation. 3.6.1 Intellectual Property Rights and Government Approvals. ----------------------------------------------------- Included in the Disclosure Letter is a true and complete list and summary description of all patents, trademarks, service marks, trade names, copyrights (which have been filed with the federal copyright authorities) and rights or licenses to use the same, and any and all applications therefor, presently owned or held by Synbiotics. Such patents, trademarks, service marks, trade names, copyrights and rights or licenses to use the same, and any and all applications therefor, as well as all trade secrets and similar proprietary information owned or held by Synbiotics, are all that are required to enable Synbiotics to conduct its business as now conducted, and Synbiotics believes that it either now owns, has the right to use, possesses or -8- will be able to obtain possession of or develop, and (with respect to its trade secrets and similar proprietary information) has provided adequate safeguards and security for the protection of, all such rights which it will require to conduct its business as proposed to be conducted as described in the SEC Reports. Synbiotics has not received any formal or informal notice of infringement or other complaint that Synbiotics' operations traverse or infringe rights under patents, trademarks, service marks, trade names, trade secrets, copyrights or licenses or any other proprietary rights of others, nor does Synbiotics have any reason to believe that there has been any such infringement. No person affiliated with Synbiotics has wrongfully employed any trade secrets or any confidential information or documentation proprietary to any former employer, and no person affiliated with Synbiotics has violated any confidential relationship which such person may have had with any third party. Synbiotics has and will have full right and authority to utilize the processes, systems and techniques presently employed by it in the design, development and manufacture of its present products and all of its other products contemplated by the SEC Reports and all rights to any processes, systems and techniques developed by any employee or consultant of Synbiotics has been and will be duly and validly assigned to Synbiotics. No royalties, honorariums or fees are or will be payable by Synbiotics to other persons by reason of the ownership or use by Synbiotics of said patents, trademarks, service marks, trade names, trade secrets, copyrights or rights or licenses to use the same or similar proprietary information, or any and all applications therefor. Synbiotics has all material governmental approvals, authorizations, consents, licenses and permits necessary or required to conduct its business as described in the SEC Reports. Synbiotics to its Best Knowledge represents and warrants that no employee of Synbiotics owns or holds, directly or indirectly, any interests in any patents, trademarks, service marks, trade names, trade secrets, copyrights, licenses, inventions, any and all applications therefor, or any other proprietary rights used or currently contemplated to be used by Synbiotics. 3.6.2 Government Approvals. Except as may be required by any state -------------------- "blue sky" laws, no authorization, consent, approval, license, qualification or formal exemption from, nor any filing, declaration or registration with, any court, governmental agency, regulatory authority or political subdivision thereof, any securities exchange or any other Person is required in connection with the execution, delivery or performance by Synbiotics of this Agreement or the business of Synbiotics or any of its Subsidiaries in order to consummate the transactions contemplated in this Agreement. All such material authorizations, consents, approvals, licenses, qualifications, exemptions, filings, declarations and registrations have been obtained or made, as the case may be, and are in full force and effect and are not the subject of any pending or, to the Best Knowledge of Synbiotics, threatened attack by appeal or direct proceeding or otherwise. 3.6.3 Products, Inventories and Operations. ------------------------------------ 3.6.3.1 Synbiotics manufactures and has at all times manufactured all of its products (the "Products") in compliance in all material respects with (i) all rules and regulations with respect to Good Manufacturing Practices as such may be determined by the Federal Food and Drug Administration ("FDA") ("GMP Requirements") and in compliance in all material respects with all representations made in any submissions -9- to the FDA concerning or relating to the Products, including submissions to obtain marketing approval, and (ii) all relevant rules and regulations as promulgated by the United States Department of Agriculture ("USDA"). Synbiotics has maintained its registration of its manufacturing facilities with FDA and USDA at all times. 3.6.3.2 The finished goods inventories, net of reserves for excess and obsolete inventories, of the Products at the closing are in good, usable and salable condition, free from any defect, whether latent or patent, and currently of a quality, strength and purity which is in conformity with applicable FDA and USDA regulations. No article in such inventories is adulterated or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act nor is any finished article contained in such inventories an article which may not, under the provisions of Sections 404 or 505 of the said Act, be introduced into interstate commerce for the uses thereof previously made by Synbiotics or in violation with any rules and regulations of the USDA. The inventories of finished goods of the Products are packaged for resale in customary packaging used for those products by Synbiotics. 3.6.3.3 The manufacture, use and sale by Synbiotics of the Products are in accordance in all material respects with the provisions of the applicable authorizations, comply in all material respects with all applicable laws and regulations and do not interfere with the rights of any Person to know-how or to any property right the existence of which would materially adversely affect the value of the Products. 3.6.3.4 Since January 1, 1995, Synbiotics has not failed to file any report, data, or other information with respect to the Products, the materials or the operation of Synbiotics's plants where the Products are manufactured that is required to be filed with the FDA, USDA, or any other federal, state or local government agency or other governmental agency, which failure to file would materially adversely affect the Products, the materials or the operations of Synbiotics' plants where the Products are manufactured. Synbiotics is in all material respects in compliance with current federal, state, state agency and local government and other governmental reporting requirements, if any, relating to the Products, the materials and the plant operation where the Products are manufactured. To its Best Knowledge, Synbiotics is not under any investigation by the FDA and/or USDA, nor is Synbiotics subject to any outstanding FDA and/or USDA warning letter or any FDA and/or USDA order of any nature concerning any aspect of its business. 3.6.3.5 All material information concerning the Products, the materials and the operation of Synbiotics's plants where the Products are manufactured, including published and unpublished data, relating to the safety and efficacy of the Products, coming to the attention of Synbiotics within four years prior to the Closing Date not already listed in the Disclosure Letter will be promptly disclosed to Redwood prior to Closing. Synbiotics will transmit to Redwood any adverse reaction, adverse experience or quality complaints pertaining to the Products coming to Synbiotics -10- attention after the Closing Date addressed to Redwood at the address set forth hereafter. 3.6.3.6 The Disclosure Letter contains a true and correct list of the Products currently in inventory, currently being manufactured and products or technology related to the Products. 3.6.3.7 With respect to the Products currently being manufactured, Synbiotics has a sufficient combination of manufacturing and testing instructions, formulae and other documentation. Synbiotics shall preserve all such manufacturing instructions, formulae and other documentation and all available information concerning the Products under development and shall disclose to Redwood in confidence all manufacturing processes and trade secrets possessed by Synbiotics relating to the Products. 3.6.3.8 Ownership and Status of Stock. ----------------------------- The Disclosure Letter sets forth the number of shares of Common Stock of Synbiotics that is outstanding and that is reserved upon the conversion of all existing warrants, options, convertible notes and other convertible securities and agreements of any nature to issue additional Common Stock of any nature. All the outstanding Common Stock is, and upon issuance and payment therefor in accordance with the terms of this Agreement, all of the outstanding shares of the Preferred Stock will be, validly issued, fully paid and nonassessable. All the outstanding Common Stock has been issued in full compliance with applicable law. None of the shares of the Common Stock or the Preferred Stock are held in Synbiotics' treasury. The Common Stock and the Preferred Stock are not entitled to cumulative voting rights, preemptive rights, antidilution rights or so-called registration rights under the `33 Act, except as otherwise provided in this Agreement or in the powers, designations, rights and preferences of the Preferred Stock contained in the Certificate of Determination. Synbiotics has not issued any phantom stock or stock appreciation rights. The Common Stock and the Preferred Stock have the preferences, voting powers, qualifications, and special or relative rights or privileges set forth in the Articles of Incorporation. Immediately after issuance of the Preferred Stock, the voting rights of the Preferred Stock will, consistent with Section 2.1 hereof, be as provided in the Certificate of Determination. There is, and immediately upon consummation of the transactions contemplated hereby there will be, no agreement, restriction or encumbrance with respect to the sale or voting of any shares of capital stock of Synbiotics (whether outstanding or issuable upon conversion or exercise of outstanding securities) except for the offering and sale of Preferred Stock pursuant to this Agreement. Synbiotics has no obligation to register any of its presently outstanding securities or any of its securities which may thereafter be issued under the `33 Act. -11- Section 3.7 Brokers, etc. ------------ Synbiotics has not dealt with any broker, finder, or other similar person in connection with the offer or sale of the Preferred Stock and the transactions contemplated by this Agreement, and Synbiotics is not under any obligation to pay any broker's fee, finder's fee or commission in connection with such transactions. Section 3.8 Private Sale. ------------ Synbiotics has not, either directly or through any agent, since before 1998 offered any securities to or solicited any offers to acquire any securities from, or otherwise approached, negotiated, or communicated in respect of any securities with, any person in such a manner as to require that the offer or sale of such securities, including but not limited to the Preferred Stock, be registered pursuant to the `33 Act or the securities laws of any state, except where such registration has been duly obtained, and neither Synbiotics nor anyone acting on its behalf will take any action prior to the Closing that would cause any such registration to be required (including, without limitation, any offer, issuance or sale of any security of Synbiotics under circumstances which might require the integration of such security with the Preferred Stock under the `33 Act or the rules and regulations of the SEC thereunder) which might subject the offering, issuance or sale of the Preferred Stock to the registration provisions of the `33 Act. The issuance of Preferred Stock and the issuance of shares of Common Stock issuable upon the conversion of the Preferred Stock, are exempt from registration under the `33 Act. Synbiotics has complied with all federal and state securities and blue sky laws in all issuances and purchases of its capital stock prior to the date hereof and has not violated any applicable law in making such issuances and purchases of its capital stock prior to the date hereof. Any notices required to be filed under federal and state securities and blue sky laws prior to or subsequent to the Closing shall be filed on a timely basis prior to or as so required. Section 3.9 Reports. ------- Synbiotics has filed with the SEC all filings required to be made and such filings set forth complete and accurate descriptions of all material plans, agreements and arrangements by which Synbiotics may be bound and certain financial and other information concerning Synbiotics. Such filings are true and correct in all material respects, including the financial statements and other financial information contained therein, do not contain any untrue statement of material fact nor do they omit to state any material fact necessary to make the statements in such reports in light of the circumstances in which they were made not misleading. The SEC Reports read in connection with materials made available to Redwood by Synbiotics do not contain any untrue statement of a material fact nor do they omit to state any material fact necessary to make the statement therein not misleading. 3.9.1 Projections; Material Facts. Synbiotics knows of no --------------------------- information or fact which has or would have a material adverse effect on the financial condition, business or business prospects of Synbiotics which has not been disclosed to Redwood. Since the respective dates as of which information is given in the SEC Reports, Synbiotics knows of no material adverse change in the business, business prospects, property, condition or results of -12- operations of Synbiotics. All projected information supplied to Redwood by Synbiotics has been prepared by Synbiotics in good faith based on its Best Knowledge, information and belief and assumptions which Synbiotics believes to be reasonable. Section 3.10 Investigation. ------------- It shall be no defense to an action for breach of this Agreement that Redwood or its agents have made investigations into the affairs of Synbiotics or that Synbiotics could not have known of the misrepresentation or breach of warranty. Damages for breach of a representation or warranty or other provision of this Agreement shall not be diminished by alleged tax savings resulting to the complaining party as a result of the loss complained of. Section 3.11 Section 83(b) Elections. ----------------------- To Synbiotics' Best Knowledge, all elections and notices required by Section 83(b) of the Code and any analogous provisions of applicable state tax laws have been timely filed by all individuals who have purchased unvested shares of Synbiotics' Common Stock and Synbiotics has been notified of the same and will be so notified in the future. Section 3.12 Employment Contracts, etc.; Certain Material Transactions. --------------------------------------------------------- Synbiotics is not a party to any employment or deferred compensation agreements. Synbiotics does not have any bonus, incentive or profit-sharing plans. Synbiotics does not have any pension, retirement or similar plans or obligations, whether funded or unfunded, of a legally binding nature or in the nature of informal understandings. There are no existing material arrangements or proposed material transactions between Synbiotics and any officer or director or holder of more than 10% of the capital stock of Synbiotics. Synbiotics is not a party to any collective bargaining agreement and, to its Best Knowledge, no organizational efforts are currently being made with respect to any of their respective employees. To the Best Knowledge of Synbiotics, none of its employees have any plans to terminate their respective relationships with Synbiotics and/or any of its Subsidiaries. The Disclosure Letter sets forth the name (and, where applicable, the title) of each person employed by Synbiotics as of December 31, 2001, whose total compensation (inclusive of salary and bonuses) for the fiscal year then ended exceeded $75,000 as well as the specific amount paid during or accrued in respect of such fiscal year to or for the account of each such person (i) as basic salary and (ii) as bonus and other compensation. Section 3.13 Contracts and Commitments, etc. ------------------------------ Synbiotics is not a party to any written or oral contract or commitment not made in the ordinary course of business. Whether or not made in the ordinary course of business, Synbiotics is not a party to any written or oral (1) contract or commitment with any labor union, (2) contract or commitment for the future purchase of fixed assets, materials, supplies, or equipment involving an amount in excess of $25,000, (3) contract of commitment for the employment of any officer, individual employee or other person on a full-time basis or any contract with any individual on a consulting basis, (4) bonus, pension, profit-sharing, retirement, stock purchase, stock option, or extraordinary hospitalization, medical insurance or similar plan, contract or understanding in effect -13- with respect to employees or any of them or the employees of others, (5) agreements, indentures or commitments relating to the borrowing of money or to the mortgaging, pledging or otherwise placing of a lien on any assets of Synbiotics, (6) guaranty of any obligation for borrowed money or otherwise, (7) lease or agreement under which Synbiotics is lessor of or permits any third party to hold or operate any property, real or personal, owned or controlled by Synbiotics, (8) agreement or other commitment for capital expenditures in excess of $25,000 in the aggregate, (9) contract or agreement under which Synbiotics is obligated to pay any broker's fees, finder's fees or any such similar fees to any third party, (10) contract, agreement or commitment entered into on or after January 1, 1999 under which Synbiotics has issued, or may become obligated to issue, any shares of capital stock of Synbiotics, or any warrants, options, convertible securities or other commitments pursuant to which Synbiotics is or may become obligated to issue any shares of its Common Stock, or (11) any other contract, agreement, arrangement or understanding which is material to the business of Synbiotics or which is material to a prudent investor's understanding of the business of Synbiotics. Synbiotics has furnished to counsel for Redwood true and correct copies of such agreements and other documents requested by Redwood or their authorized representatives. Section 3.14 Employee Plans. -------------- 3.14.1 The Disclosure Letter sets forth a complete list of each "employee benefit plan" (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), including, without limitation, all stock purchase, stock option, severance, employment, change-in-control, fringe benefit, collective bargaining, bonus, incentive, deferred compensation and all other employee benefit plans, agreements, programs, policies or other arrangements, whether or not subject to ERISA, whether formal or informal, oral or written, legally binding or not, under which any employee or former employee of Synbiotics has any present or future right to benefits sponsored or maintained by Synbiotics or under which Synbiotics has had or has any present or future liability. All such plans, agreements, programs, policies and arrangements shall be collectively referred to as the "Employee Plans." 3.14.2 With respect to each Employee Plan, Synbiotics has provided to counsel to Redwood a current, accurate and complete copy (or, to the extent no such copy exists, an accurate description) thereof and, to the extent applicable: (1) any related trust agreement or other funding instrument; (2) the most recent determination letter, if applicable; (3) any summary plan description and other written communications (or a description of any oral communications) by Synbiotics to its employees concerning the extent of the benefits provided under an Employee Plan; and (4) for the three most recent years, (A) the Form 5500 and attached schedules, (B) audited financial statements, (C) actuarial valuation reports and (D) attorney's response to an auditor's request for information. 3.14.3 (1) Each Employee Plan has been duly authorized by the Board of Directors of Synbiotics; (2) Each Employee Plan has been established and administered in accordance with its terms, and in substantial compliance with the applicable provisions of ERISA, the Code and all other applicable laws, rules and regulations; (3) each Employee Plan which is intended to be qualified within the meaning of Code Section 401(a) is so qualified, has received a favorable determination letter as to its qualification, and nothing has occurred, -14- whether by action or failure to act, that could reasonably be expected to cause the loss of such qualification; (4) no event has occurred and no condition exists that would subject Synbiotics, either directly or by reason of their affiliation with any member of its "Controlled Group" (defined as any organization which is a member of a controlled group of organizations within the meaning of Code Sections 414(b), (c), (m) or (o)), to any tax, fine, lien, penalty or other liability imposed by ERISA, the Code or other applicable laws, rules and regulations; (5) for each Employee Plan with respect to which a Form 5500 has been filed, no material change has occurred with respect to the matters covered by the most recent Form since the date thereof; (6) no "reportable event" (as such term is defined in ERISA Section 4043), "prohibited transaction" (as such term is defined in ERISA Section 406 and Code Section 4975) or "accumulated funding deficiency" (as such term is defined in ERISA Section 302 and Code Section 412 (whether or not waived)) has occurred with respect to any Employee Plan; (7) no Employee Plan provides retiree welfare benefits, and Synbiotics has no obligation to provide any retiree welfare benefits; and (8) neither Synbiotics nor any member of its Controlled Group has engaged in, or is a successor or parent corporation to an entity that has engaged in, a transaction described in Section 4069 or 4212(c) of ERISA. 3.14.4 None of the Employee Plans is subject to Title IV of ERISA (including without limitation, any multiemployer plan within the meaning of ERISA Section 4001(a)(3)) and neither Synbiotics or any member of their Controlled Group has incurred any liability under Title IV of ERISA which remains unsatisfied. 3.14.5 None of the Employee Plans is an employee stock ownership plan as defined in Section 4975(e)(7) of the Code. 3.14.6 Neither Synbiotics nor any member of its Controlled Group maintains or contributes to, or has ever maintained or contributed to, or been required to contribute to a multiemployer plan within the meaning of Section 3(37) of ERISA. 3.14.7 With respect to any Employee Plan: (1) no actions, suits, claims (other than routine claims for benefits in the ordinary course) are pending or, to the Best Knowledge of Synbiotics, threatened; (2) no facts or circumstances exist that could give rise to any such actions, suits or claims; (3) no administrative investigation, audit or other administrative proceeding by the Department of Labor, the Pension Benefit Guaranty Corporation, the Internal Revenue Service or other governmental agencies are pending, in progress or, to the Best Knowledge of Synbiotics, threatened; (4) there are no negotiations, demands or proposals which are pending or have been made which concern matters now covered, or that would be covered, by such Employee Plans; and (5) no contributions are required to be made by Synbiotics, and all other liabilities shall have been satisfied prior to or on the Closing Date. 3.14.8 No Employee Plan exists that could result in the payment to any present or former employee of Synbiotics of any money or other property or accelerate or provide any other rights or benefits to any present or former employee of Synbiotics as a result of the transactions contemplated by this Agreement. There is no contract, plan or arrangement (written or otherwise) covering any employee or former employee of Synbiotics that, -15 individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 280G of the Code. 3.14.9 All group health plans of Synbiotics or any member of its Controlled Group have been operated in compliance with the group health plan continuation coverage requirements of Section 4980B of the Code to the extent such requirements are applicable. 3.14.10 There have been no acts or omissions by Synbiotics which have given rise to or may give rise to fines, penalties, taxes, or related charges under Section 502(c) or (k) or 4071 of ERISA or Chapter 43 of the Code. Section 3.15 Banks, Agents, etc. ------------------ The Disclosure Letter contains a complete and correct list setting forth the name of (1) each bank in which Synbiotics has an account, safe deposit box or borrowing privilege and the names of all persons authorized to draw thereon, to have access thereto or to borrow thereupon, as the case may be, and (2) each agent to whom such corporation has granted a written power of attorney or similar authority to act on its behalf. Section 3.16 Minute Books. ------------ The minute books of Synbiotics contain a complete summary of all meetings of directors and stockholders since the time of incorporation and reflect all transactions referred to in such minutes accurately in all material respects. Section 3.17 Environmental Liabilities. ------------------------- Synbiotics, together with any real property that it owns, leases, or otherwise occupies or uses and the operations of its business (the "Premises") are in compliance in all material respects with all applicable Environmental Laws (as defined below) and orders or directives or any governmental authorities having jurisdiction under such Environmental Laws, including, without limitation, any Environmental Laws or orders or directives with respect to any cleanup or remediation of any release or threat of release of Hazardous Substances. Synbiotics has not since 1998 received any citation, directive, letter or other communication, written or oral, or any notice of any proceedings, claims or lawsuits, from any person, entity or governmental authority arising out of the ownership or occupation of the Premises or the conduct of its operations, nor is it aware of any basis therefor. Synbiotics has obtained and is maintaining in full force and effect all necessary permits, licenses and approvals required by any Environmental Laws applicable to the Premises and the business operations conducted thereon (including operations conducted by tenants on the Premises), and is in compliance with all such permits, licenses and approvals. Synbiotics has not caused or allowed a release, or a threat of release, of any Hazardous Substance unto, at or near the Premises nor, to its Best Knowledge, has the Premises or any property at or near the Premises ever been subject to a release, or a threat of release, of any Hazardous Substance, except as would not have a material adverse effect on Synbiotics or its business. For purposes of this Agreement, the term "Environmental Laws" shall mean any federal, state or local law, ordinance or regulation pertaining to the protection of human health or the environment, including without limitation, the -16- Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq., Emergency Planning and Community Right-to-Know Act, 42 U.S.C. -- --- 11001 et seq., and the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et -- --- -- seq. For purposes of this Agreement, the term "Hazardous Substances" shall - --- include oil and petroleum products, asbestos, polychlorinated biphenyls and urea formaldehyde, and any other materials classified as hazardous or toxic under any Environmental Laws. Section 3.18 Maintenance of Corporate Existence. ---------------------------------- Since the Financial Statement Date, each of Synbiotics and its Subsidiaries have and will preserve, renew and keep in full force and effect, its corporate existence, qualification in requisite jurisdictions and rights and privileges necessary or desirable in the normal conduct of its business and have and will carry on its business in the ordinary course consistent with past practices. Article 4. Covenants of Synbiotics Section 4.1 Proprietary Information. ----------------------- Synbiotics shall use its reasonable best efforts to (1) ensure that no person employed by Synbiotics will wrongfully employ any confidential information or documentation proprietary to any former employer, (2) protect, by maintenance of secrecy to the extent appropriate, all technical and business information developed by and belonging to Synbiotics which has not been patented, (3) cause to be patented all technological information developed by and belonging to Synbiotics, which, in the opinion of Synbiotics and its counsel, is patentable and is best protected by patenting, and (4) cause each person who becomes an employee of Synbiotics and who shall have access to confidential or proprietary information of Synbiotics, to execute an agreement relating to matters of noncompetition and nondisclosure and assignment. Section 4.2 Licenses and Trademarks. ----------------------- Synbiotics shall use its reasonable best efforts to own, possess and maintain all patents, trademarks, service marks, trade names, copyrights and licenses necessary or useful in the conduct of its business. Section 4.3 Liability Insurance. ------------------- Synbiotics will maintain in full force and effect a policy or policies of standard comprehensive general liability insurance underwritten by a U.S. insurance company insuring its properties and business against such losses and risks, and in such amounts as are adequate for its business and as are customarily carried by entities of similar size engaged in the same or similar business. Such policies shall include property loss insurance policies, with extended coverage, sufficient in amount to allow the replacement of any of its tangible properties which might be damaged or destroyed by the risks or perils normally covered by such policies. -17- Section 4.4 Taxes and Assessments. --------------------- Synbiotics will pay and will cause each of its Subsidiaries to pay any taxes, assessments and governmental charges, and any liabilities thereon, outstanding and past due as of the Closing Date. Synbiotics will pay and discharge and will cause each of its Subsidiaries to pay and discharge, before the same become delinquent and before penalties accrue thereon, all taxes, assessments and governmental charges upon or against Synbiotics or any of its Subsidiaries, or any of their respective properties, and all other material liabilities at any time existing, except to the extent and so long as (1) the same are being contested in good faith and by appropriate proceedings in such manner as not to cause any material adverse effect upon the financial condition of Synbiotics or any of its Subsidiaries, or the loss of any right of redemption from any sale thereunder and (2) Synbiotics or any of its Subsidiaries shall have set aside on its books adequate reserves with respect thereto. Section 4.5 Governmental Consents. --------------------- Synbiotics will obtain all consents, approvals, licenses and permits required by federal, state, local and foreign law to carry on its business. Section 4.6 Further Assurances. ------------------ Synbiotics will cure promptly any defects in the creation and issuance of the Shares, and in the execution and delivery of this Agreement. Synbiotics, at its expense, will promptly execute and deliver promptly to Redwood upon request all such other and further documents, agreements and instruments in compliance with or pursuant to its covenants and agreements herein, and will make any recordings, file any notices, and obtain any consents as may be necessary or appropriate in connection therewith. Section 4.7 Expenses. -------- Synbiotics will, upon proper documentation thereof, reimburse Redwood for up to $60,000.00 of Redwood's out-of-pocket expenses incurred by it in connection with transactions contemplated by this Agreement whether or not such transactions are consummated. Section 4.8 Negative Covenants in Effect as Long as Preferred Stock is ---------------------------------------------------------- Outstanding. - ----------- Synbiotics hereby agrees that as long as any shares of Preferred Stock are outstanding it will not without the consent of a majority in interest of the Preferred Stock: 4.8.1 authorize or issue shares of any class of stock having any preference or priority as to dividends or assets superior to or on a parity with any such preference or priority of the Preferred Stock; increase or decrease the number of directors constituting the Board of Directors of Synbiotics; or reduce the percentage of shares of Preferred Stock required to consent to any of the above matters, or alter or negate the need for such consent; -18 4.8.2 reclassify any shares of any class of stock into shares having any preference or priority as to dividends or assets superior to or on a parity with any such preference or priority of the Preferred Stock; 4.8.3 make any amendment to its Articles of Incorporation or Bylaws adversely affecting (directly or indirectly) the rights of holders of the Preferred Stock; declare, agree to declare, pay or agree to pay dividends or make any other distribution on, or redeem, any shares of any class or series of its equity securities other than the Preferred Stock, unless all dividends accrued on shares of the Preferred Stock shall have been declared and paid, and Synbiotics' consolidated net worth (determined in accordance 4.8.4 with generally accepted accounting principles consistently applied) will be in excess of $100,000.00 immediately after such payment, distribution or redemption; or 4.8.5 enter into any new agreement or make any amendment to any existing agreement, which by its terms would restrict Synbiotics' performance of its obligations to holders of Preferred Stock pursuant to this Agreement or any agreement contemplated hereby. Section 4.9 Negative Covenants in Effect until Closing. ------------------------------------------ Synbiotics hereby represents and agrees that from the Financial Statement Date until Closing, it will not: 4.9.1 engage in any business other than businesses engaged in or proposed to be engaged in by Synbiotics on the date hereof or businesses similar thereto; 4.9.2 merge or consolidate with any person or entity (other than mergers of wholly owned subsidiaries into Synbiotics), or sell, lease or otherwise dispose of its assets other than in the ordinary course of business involving an aggregate consideration of more than ten percent of the book value of its assets on a consolidated basis in any 12-month period, or liquidate, dissolve, recapitalize or reorganize; 4.9.3 repurchase or agree to repurchase any shares of its Common Stock from any of its existing stockholders; or 4.9.4 enter into any employment or severance agreement (other than the January 2002 amendments of Retention Plan Agreements described in Section 6.12). Section 4.10 Additional Common Stock. ----------------------- Synbiotics agrees to place before its shareholders at its next Shareholders Meeting which shall be held on or before June 15, 2001 a proposal to amend its Articles of Incorporation so as to increase the authorized Common Stock to that number of shares which will be necessary to be issued to Redwood upon conversion of the Preferred Stock plus at least an additional two million shares. -19- Section 4.11 Other Transactions. ------------------ Neither Synbiotics nor any of its agents shall solicit an offer from any party other than Redwood with respect to any sale, merger of Synbiotics or any similar transaction or the sale of any capital stock or material assets of Synbiotics ("alternative offer"). Synbiotics' Board of Directors may, in the exercise of their fiduciary obligation to their shareholders, accept an alternative offer which is superior to that set forth by Redwood. Before accepting any alternate offer, Synbiotics will notify Redwood promptly of any alternative offer received identifying the offeror, providing a written copy of the offer and allowing Redwood five business days to respond with a counter-offer. Should this process result in the substantial amount of assets or stock of Synbiotics being sold to another party or the acceptance of any other alternative offer, and Redwood having been willing to close the transactions contemplated by this Agreement in accordance with its terms, Synbiotics will pay Redwood $150,000 (in addition to the expenses contemplated by Section 4.7 hereof) to compensate it for its time and costs involved in the transactions contemplated by this Agreement. Section 4.12 Consulting Fees. --------------- Synbiotics will pay Redwood Holdings, Inc. a consulting fee of $15,000 per month so long as Redwood Holdings, Inc. controls at least 50% of the voting power of Synbiotics through its control of Redwood. Section 4.13 Amendment to Rights Agreement. ----------------------------- Prior to Closing, Synbiotics will enter into an amendment to its Rights Agreement dated October 1, 1998 with Mellon Investor Services LLC ("Rights Agreement") for the purpose of excluding Redwood and its principals from the definition of "Acquiring Person" so that the provisions of the Rights Agreement will not be triggered by the transactions contemplated by this Agreement. Section 4.14 Waiver. ------ Any violation of an affirmative or negative covenant of Synbiotics may be waived prospectively or retrospectively in a given instance by a vote of the Redwood Board Members, but such waiver shall operate only with respect to the particular violation specified in the waiver. The Redwood Board Members, and Redwood on whose behalf they act, disclaim any intent or purpose to control Synbiotics or to manage its affairs for the benefit of Redwood or otherwise. Section 4.15 Additional Shares. ----------------- If, as and when Synbiotics issues more than 8,254,300 shares of Common Stock pursuant to amendments of pre-2001 Employee Retention Agreements, Synbiotics shall issue to Redwood, without the payment of any further consideration, a number of shares of Series B Preferred Stock convertible into 119.78% of the number of such extra shares of Employee Retention Agreements Common Stock. -20- Article 5. Representations And Warranties Of Redwood Redwood represents and warrants to Synbiotics, at and as of the Closing that: Section 5.1 Power and Authority. ------------------- Redwood has full power and authority and, has taken all required limited liability company, corporate and other action necessary to permit it to execute and deliver this Agreement, and all other documents or instruments required by this Agreement, and to carry out the terms of this Agreement and of all such other documents or instruments. Section 5.2 Purchase for Investment. ----------------------- Redwood is purchasing the Preferred Stock and any Common Stock into which such Preferred Stock may be converted for investment, for its own account and not with a view to distribution thereof, except for transfers permitted hereunder and under the `33 Act. Redwood understands that the Preferred Stock and any Common Stock received upon conversion of the Preferred Stock must be held indefinitely unless it is registered under the `33 Act or an exemption from such registration becomes available, and that the Preferred Stock and any Common Stock received upon conversion thereof may only be transferred as provided in this Agreement. Section 5.3 Financial Matters. ----------------- Redwood represents and warrants to Synbiotics that it understands that the purchase of the Shares involves substantial risk and that its financial condition and investments are such that it is in a financial position to hold the Shares for an indefinite period of time and to bear the economic risk of, and withstand a complete loss of its investment in, such Shares. In addition, by virtue of its expertise, the advice available to it and previous investment experience, Redwood has extensive knowledge and experience in financial and business matters, investments, securities and private placements and the capability to evaluate the merits and risks of the transactions contemplated by this Agreement. Redwood represents that it is an "accredited investor" as that term is defined in Regulation D promulgated under the `33 Act. Section 5.4 Brokers, etc. ------------ Redwood has dealt with no broker, finder, commission agent, or other similar person in connection with the offer or sale of the Preferred Stock and the transactions contemplated by this Agreement, and is under no obligation to pay any broker's fee, finder's fee, or commission in connection with such transactions. Article 6. The Closing and Closing Conditions Section 6.1 The Closing. ----------- The purchase and sale of the Preferred Stock shall take place at the Closing to be held at the offices of Keating, Muething & Klekamp, P.L.L. in Cincinnati, Ohio. The Closing shall occur on or -21- before January 25, 2002. The obligation of Redwood to purchase the Preferred Stock at the Closing shall be subject to satisfaction of the conditions set forth in Article 4 at and as of the Closing: Section 6.2 Issuance of Preferred Stock. --------------------------- Synbiotics shall have duly issued and delivered certificates to Redwood for the 2,800 shares of the Preferred Stock. Section 6.3 Legal Opinion from Counsel for Synbiotics. ----------------------------------------- Redwood shall have received from Brobeck, Phleger & Harrison LLP, counsel for Synbiotics, a legal opinion in the form attached as Exhibit 6.3 hereto. Section 6.4 Representations and Warranties of Synbiotics True and ----------------------------------------------------- Correct. - ------- The obligation of Redwood to consummate the transactions contemplated by this Agreement is subject to the condition that the representations and warranties of Synbiotics are true in all material respects at and as of the Closing as if made at and as of the Closing, and that each of the conditions in the control of Synbiotics in this Article 6 has been satisfied in all material respects. At Closing Synbiotics shall have delivered to Redwood a certificate of its chief executive and chief financial officers, or alternatives therefor satisfactory to counsel for Redwood, dated the date of the Closing, to this effect. Section 6.5 Employee Documents. ------------------ Prior to the Closing, each employee of and consultant to Synbiotics shall have executed a Proprietary Information and Inventions Agreement. Section 6.6 Redwood Review. -------------- Prior to the Closing, Redwood shall have completed its review of, and shall be satisfied with its conclusions regarding, Synbiotics' markets, business, projected operations and prospects and nothing shall have come to the attention of Redwood which, in its judgment, would materially or adversely affect the value of the proposed transaction to it. In this connection, Redwood shall be satisfied that that the following conditions have been met: 6.6.1 There shall be no litigation pending seeking to enjoin, or questioning the validity of or restricting the transactions contemplated by this Agreement. 6.6.2 Synbiotics shall not have experienced a material decrease in its revenues, and shall not have lost significant business from its customers. 6.6.3 There shall not have occurred any material adverse change in the business, operations, financial condition, capital structure, or prospects of Synbiotics. -22- Section 6.7 Certificate of Determination. ---------------------------- The Certificate of Determination concerning the Preferred Stock shall have been filed with the Secretary of State of California in accordance with California law. Section 6.8 Opinion. ------- The Directors of Synbiotics have received an opinion of a financial advisory firm to the effect that the consideration to be received by Synbiotics in the transaction contemplated by this Agreement is fair, from a financial point of view, to both Synbiotics and its shareholders. Section 6.9 Performance. ----------- Synbiotics shall have performed and complied in all material respects with all agreements and conditions contained herein required to be performed or complied with by it prior to or at the Closing Date. Section 6.10 All Proceedings to Be Satisfactory. ---------------------------------- All corporate and other proceedings to be taken by Synbiotics in connection with the transactions contemplated hereby and all documents incident thereto shall be satisfactory in form and substance to Redwood and its counsel, and Redwood and said counsel shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request. Section 6.11 Supporting Documents. -------------------- On or prior to the Closing Date Redwood and its counsel shall have received copies of the following supporting documents: 6.11.1 copies of the Articles of Incorporation of Synbiotics, and all amendments thereto, certified as of a recent date by the Secretary of State of the State of California. 6.11.2 a certificate of said Secretary dated as of a recent date as to the due incorporation and good standing of Synbiotics and listing all documents of Synbiotics on file with said Secretary 6.11.3 a certificate of the Secretary or an Assistant Secretary of Synbiotics, dated the Closing Date and certifying: (1) that attached thereto is a true and complete copy of the Bylaws of Synbiotics as in effect on the date of such certification; (2) that attached thereto is a true and complete copy of resolutions adopted by the Board of Directors of Synbiotics authorizing the execution, delivery and performance of this Agreement, the issuance, sale, and delivery of the Preferred Stock, and that all such resolutions are still in full force and effect and are all the resolutions adopted in connection with the transactions contemplated by this Agreement; (3) that except by the filing of the Certificate of Determination, the Articles of Incorporation of Synbiotics have not been amended since the date of the last amendment referred to in the certificate delivered pursuant to clause 6.11.2 above; and (4) the -23- incumbency and specimen signature of each officer of Synbiotics executing this Agreement, the stock certificate or certificates representing the Preferred Stock and any certificate or instrument furnished pursuant hereto, and a certification by another officer of Synbiotics as to the incumbency and signature of the officer signing the certificate referred to in this Section 6.11.3; and 6.11.4 such additional supporting documents and other information with respect to the operations and affairs of Synbiotics as Redwood or its counsel may reasonably request. All such documents shall be satisfactory in form and substance to Redwood and its counsel. Section 6.12 Reasonable Satisfaction of Redwood and Counsel. ---------------------------------------------- All instruments applicable to the issuance and sale of the Preferred Stock and all proceedings taken in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory to Redwood (including, without limitation, the execution and delivery by all Synbiotics employees of Employee Retention Agreement amendments satisfactory to and as requested by Redwood). Section 6.13 Financing. --------- Prior to Closing, Comerica Bank shall have entered into the Third Amendment to Credit Agreement and Loan Documents and Waiver of Defaults attached as Exhibit 6.13 hereto. Section 6.14 Reconstitution of Board of Directors. ------------------------------------ Prior to the Closing, Patrick Owen Burns, James DeCesare, Donald Phillips, and Joseph Klein shall resign from the Board of Directors of Synbiotics effective upon the Closing and effective upon the Closing such Board shall be reconstituted to consist of Thomas Donelan, Christopher Hendy, Paul Rosinack, and Rigdon Currie. Immediately after Synbiotics complies with the requirements of Rule 14f-1 of the `34 Act, Rigdon Currie shall resign so that such Board will consist of three members including two Redwood Board Members and Paul Rosinack. These three members may after the Closing increase the size of the Board and appoint additional directors. Article 7. Miscellaneous Section 7.1 Severability. ------------ Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provisions shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. -24- Section 7.2 Parties in Interest. ------------------- All covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective legal representatives, successors and assigns of the parties hereto whether so expressed or not. Section 7.3 Notices. ------- Notices required under this Agreement shall be deemed to have been adequately given if delivered in person or sent by electronic transmission with evidence of sending and receipt at the addresses set forth below or such other address as such party may from time to time designate in writing. Redwood: 9468 Montgomery Road Cincinnati, Ohio 45242 Attention: Jerry L. Ruyan Tel: 513-984-9730 Fax: 513-984-8121 Email: ruyanj@redwoodventure.com with a required copy to: Gary P. Kreider, Esq. Keating, Muething & Klekamp, P.L.L. 1400 Provident Tower One East Fourth Street Cincinnati, Ohio 45202 Tel: 513-579-6411 Fax: 513-579-6956 Email: gkreider@kmklaw.com Synbiotics: 11011 Via Frontera San Diego, CA 92127 Attention: Chief Executive Officer Tel: 858-451-3771 Fax: 858-451-5719 Email: paul@synbiotics.com -25- with a required copy to: Hayden Trubitt, Esq. Brobeck, Phleger & Harrison, LLP 12390 El Camino Real San Diego, California 92130-2081 Tel: 858-720-2500 Fax: 858-720-2555 Email: htrubitt@brobeck.com Section 7.4 No Waiver. --------- No failure to exercise and no delay in exercising any right, power or privilege granted under this Agreement shall operate as a waiver of such right, power or privilege. No single or partial exercise of any right, power or privilege granted under this Agreement shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies provided in this Agreement are cumulative and are not exclusive of any rights or remedies provided by law. Section 7.5 Survival of Agreements, etc. --------------------------- All agreements, representations and warranties contained in this Agreement or made in writing by or on behalf of Synbiotics in connection with the transactions contemplated by this Agreement shall survive the execution and delivery of this Agreement, the Closing, and any investigation at any time made by or on behalf of Redwood. Notwithstanding the preceding sentence, however, all such representations (other than intentional misrepresentations) and warranties, but no such agreements, shall expire two years after the date of this Agreement. Section 7.6 Construction. ------------ This Agreement shall be governed by and construed in accordance with the procedural and substantive laws of Ohio without regard for its conflicts-of-laws rules. Synbiotics agrees that it may be served with process in Ohio and any action for breach of this Agreement prosecuted against it in the courts of that State. Section 7.7 Entire Understanding. -------------------- This Agreement expresses the entire understanding of the parties and supersedes all prior and contemporaneous agreements and undertakings of the parties with respect to the subject matter of this Agreement. Section 7.8 Counterparts. ------------ This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which taken together shall constitute one agreement. -26- Section 7.9 Assignment; No Third-Party Beneficiaries. ---------------------------------------- This Agreement and the rights hereunder shall not be assignable without the prior written consent of the parties hereto. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. Exhibits are incorporated by reference into this Agreement as though such exhibits were set forth at the point of such reference. Article 8. Termination Section 8.1 Termination. ----------- This Agreement may be terminated at any time prior to the Closing: 8.1.1 by mutual consent; 8.1.2 by either Synbiotics or Redwood if the other party materially breaches any provision of this Agreement; 8.1.3 by either Synbiotics or Redwood if the Closing shall not have occurred by January 11, 2002, provided that the failure to consummate the transactions contemplated hereby is not a result of the failure by the party so electing to terminate this Agreement to perform any of its obligations hereunder. Time shall be of the essence in this respect. Section 8.2 Termination Pursuant to Section 4.11 ------------------------------------ This Agreement may be terminated at any time prior to the Closing in accordance with Section 4.11. Section 8.3 Effect of Termination. --------------------- If this Agreement shall be terminated pursuant to Section 8.1, all obligations, representations and warranties of the parties hereto under the Agreement shall terminate, except as called for by Section 4.7, Section 4.11 and Section 7.6 hereof, and there shall be no other liability, except for any breach of this Agreement prior to such termination, of any party to another party. -27- IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal as of the date first above written. REDWOOD WEST COAST, LLC By: /s/ Christopher P.Hendy ------------------------------------------- Christopher P. Hendy, Managing Member SYNBIOTICS CORPORATION By: /s/ Paul A. Rosinack ------------------------------------------- Paul A. Rosinack, President -28- Exhibit 6.3 ----------- January 25, 2002 Brobeck, Phleger & Harrison LLP 12390 El Camino Real San Diego, California 92130-2081 PHONE 858.720.2500 FAX 858.720.2555 Redwood West Coast, LLC 9468 Montgomery Road Cincinnati, Ohio 45242 Ladies and Gentlemen: We have acted as counsel for Synbiotics Corporation, a California corporation ("Synbiotics" or the "Company"), in connection with the issuance and sale of shares of its Series B Preferred Stock ("Preferred Stock") pursuant to the Stock Purchase Agreement dated January 23, 2002 (the "Agreement") between the Company and you. This opinion letter is being rendered to you pursuant to Section 6.3 of the Agreement in connection with the Closing of the sale of the Preferred Stock. Capitalized terms not otherwise defined in this opinion letter have the meanings given them in the Agreement. In rendering this opinion, our inquiry has been limited to a review of the following documents: 1. Synbiotics' Restated Articles of Incorporation, as amended (the "Articles of Incorporation"), Amended and Restated Bylaws (the "Bylaws"), corporate records and proceedings; 2. The Agreement; 3. A Certificate of Determination filed with the California Secretary of State for the purpose of creating the Preferred Stock as called for by the Agreement, and an Amendment thereto filed with the California Secretary of State; 4. Amendments to certain retention plan agreements held by employees of Synbiotics and its subsidiaries; 5. Synbiotics' Amended and Restated 1995 Stock Option/Stock Issuance Plan (the "1995 Plan"); 6. A Registration Statement on Form S-8 for the purpose of registering shares to be issued under the 1995 Plan; 7. A Rights Agreement dated as of October 1, 1998 between Synbiotics and Mellon Investor Services LLC, a New Jersey limited liability company (formerly known as Redwood West Coast, LLC January 25, 2002 ChaseMellon Shareholder Services, LLC) and a proposed amendment to that Rights Agreement; and 8. Resolutions of the Board of Directors of Synbiotics. We have also made such examination of matters of California and Federal law and of fact as in our judgment was necessary or appropriate for the purposes of this opinion. As to matters of fact material to the opinions expressed herein, we have relied upon the representations and warranties as to factual matters contained in and made by Synbiotics pursuant to the Agreement and upon certificates and statements of government officials and of officers of the Company. In connection with this opinion, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of the documents submitted to us as originals, the conformity to the original documents of all documents submitted to us as certified, facsimile, conformed or photostatic copies and the authenticity of the originals of such copies. In rendering this opinion letter we have also assumed: (A) with respect to the Agreement and all other documents pertinent to the transactions contemplated by the Agreement, requisite limited liability company power, due authorization, execution and delivery by, and the validity and binding effect thereof on the part of Redwood; (B) that the representations and warranties made in the Agreement by you are true and correct; and (C) that any wire transfers, drafts or checks tendered by you will be honored. As used in this opinion letter, the expression "we are not aware" or the phrase "to our knowledge," or any similar expression or phrase with respect to our knowledge of matters of fact, means as to matters of fact that, based on the actual knowledge of individual attorneys within the firm principally responsible for handling current matters for the Company (and not including any constructive or imputed notice of any information), and after an examination of documents referred to herein and after inquiries of certain officers of the Company, no facts have been disclosed to us that have caused us to conclude that the opinions expressed are factually incorrect; but beyond that we have made no factual investigation for the purposes of rendering this opinion letter. Specifically, but without limitation, we have not searched the dockets of any courts and we have made no inquiries of securities holders or employees of the Company, other than such officers. No inference as to our knowledge of the existence or absence of any fact should be drawn from our representation of the Company or the rendering of the opinions set forth below. This opinion letter relates solely to the laws of the State of California and the federal law of the United States, and we express no opinion with respect to the effect or application of any other laws. Special rulings of authorities administering such laws or opinions of other counsel have not been sought or obtained. Based upon our examination of and reliance upon the foregoing and subject to the limitations, exceptions, qualifications and assumptions set forth below and except as set forth in 2 Redwood West Coast, LLC January 25, 2002 the Agreement or the Disclosure Letter furnished by the Company in connection therewith, we are of the opinion that as of the date hereof: 1. Synbiotics is a duly organized, legally incorporated and validly existing corporation in good standing under the laws of California; 2. The execution and delivery of the Agreement, the offering and issuance at the Closing of the Preferred Stock contemplated by the Agreement and the issuance of Common Stock upon conversion of that Preferred Stock in the fulfillment of and compliance with the respective terms and provisions of the Agreement and the Certificate of Determination (as amended) filed with the California Secretary of State creating the Preferred Stock have been duly and validly authorized by all necessary corporate action; 3. Compliance with the terms and provisions of the Agreement and the Preferred Stock do not and will not conflict with or result in a breach of any of the terms, conditions, provisions of or constitute a material default under any material agreement, instrument, order, judgment or decree to which Synbiotics is subject so far as is known to us after having made due inquiry with respect thereto or result in any violation of, or require any authorization, consent, approval, exemption or other action by or notice to any court or administrative or governmental body pursuant to the Articles of Incorporation or Bylaws of Synbiotics, or any applicable Federal or California law, statute, rule or regulation; 4. The issuance of Preferred Stock to be issued to Redwood pursuant to the Agreement will be exempt from registration under the Securities Act of 1933 and the issuance of those shares will be exempt from qualification under the California Corporations Code; 5. The shares of Common Stock of Synbiotics to be issued as a result of the consummation of the sale of Preferred Stock under the Agreement pursuant to certain employee retention agreements, as amended, have been registered under the Securities Act of 1933 and their issuance is exempt from qualification under the California Corporations Code; and 6. All capital stock of Synbiotics to be issued pursuant to the Agreement when issued will be duly and validly issued, fully paid, nonassessable and, to our knowledge, free from any claim of pre-emptive rights. Our opinions expressed above are specifically subject to the following limitations, exceptions, qualifications and assumptions: a. We express no opinion as to the Company's or this transaction's compliance or noncompliance with applicable federal or state antifraud or antitrust statutes, laws, rules and regulations or Section 3 Redwood West Coast, LLC January 25, 2002 721 (as amended by Section 5021 of the Omnibus Trade and Competitiveness Act of 1988: the so-called "Exon-Florio" provision) of the Defense Production Act of 1950 and the regulations thereunder. b. We express no opinion concerning the past, present or future fair market value of any securities. c. Our opinion in paragraph 3 is limited to laws and regulations normally applicable to transactions of the type contemplated in the Agreement and does not extend to licenses, permits and approvals necessary for the conduct of the Company's business. In addition and without limiting the previous sentence, we express no opinion herein with respect to the effect of any land use, safety, hazardous material, environmental or similar law, or any local or regional law. Further, we express no opinion as to the effect of or compliance with any state or federal laws or regulations applicable to the transactions contemplated by the Agreement because of the nature of your business. Also, we express no opinion with respect to any patent, copyright, trademark or other intellectual property matter, or as to the statutes, regulations, treaties or common laws of any nation, state or jurisdiction with regard thereto. d. In connection with our opinion in paragraph 3 relating to the Company's material agreements, we have not reviewed, and express no opinion on, (i) financial covenants or similar provisions requiring financial calculations or determinations to ascertain whether there is any such conflict or (ii) provisions relating to the occurrence of a "material adverse event" or words of similar import. In addition, our opinion relating to such material agreements is subject to the effect of judicial decisions which may permit the introduction of extrinsic evidence to interpret the terms of written contracts or allow non-written modifications of written contracts. Moreover, to the extent that any of such material agreements are governed by the laws of any jurisdiction other than the State of California, our opinion relating to those agreements is based solely upon the plain meaning of their language without regard to interpretation or construction that might be indicated by the laws governing those agreements. e. We express no opinion as to your compliance with any Federal or state law relating to your legal or regulatory status or the nature of your business. f. We express no opinion as to the effect of subsequent issuances of securities of the Company, to the extent that further issuances 4 Redwood West Coast, LLC January 25, 2002 which may be integrated with the Closing or with the Common Stock issuances under the amended employee retention agreements may include purchasers that do not meet the definition of "accredited investors" under Rule 501 of Regulation D and equivalent definitions under the California "blue sky" laws, to the extent that Section 4.15 of the Agreement might in some scenarios require the issuance of more shares of Preferred Stock than remain authorized but unissued, and to the extent that the outstanding shares of Preferred Stock are currently and may in the future be convertible for more shares of Common Stock than remain authorized but unissued at any time. g. We remind you that by its terms the Preferred Stock is not yet convertible into Common Stock and will not be so unless and until the Company's Articles of Incorporation are amended to increase the number of authorized shares of Common Stock; and indeed, the Company today does not have enough authorized and unissued Common Stock to enable full conversion of the Preferred Stock even if the Preferred Stock were convertible today. h. We express no opinion as to the effect on the liquidation provisions of the Articles of Incorporation of California law, Federal law or equitable principles restricting in certain circumstances distributions by a corporation to its shareholders, relating to dissenters' rights or relating to involuntary dissolution. This opinion letter is rendered as of the date first written above solely for your benefit in connection with the Agreement and may not be delivered to, quoted or relied upon by any person other than you, or for any other purpose, without our prior written consent. Our opinion is expressly limited to the matters set forth above and we render no opinion, whether by implication or otherwise, as to any other matters relating to the Company. We assume no obligation to advise you of facts, circumstances, events or developments which hereafter may be brought to our attention and which may alter, affect or modify the opinions expressed herein. We advise you that one of our lawyers is a beneficial shareholder of the Company. Very truly yours, BROBECK, PHLEGER & HARRISON LLP 5 EX-4.4.3 4 dex443.txt AMENDMENT TO CREDIT AGREEMENT Exhibit 4.4.3 ------------- THIRD AMENDMENT TO CREDIT AGREEMENT AND LOAN DOCUMENTS AND WAIVER OF DEFAULTS ----------------------------------------------------------------------------- This Third Amendment to Credit Agreement and Loan Documents and Waiver of Defaults (this "Agreement") is entered into as of January 25, 2002 by and between COMERICA BANK - CALIFORNIA, successor in interest to Imperial Bank, a California banking corporation, ("Bank") and SYNBIOTICS CORPORATION, a California corporation, ("Borrower"). This Agreement is made with reference to the following facts: RECITALS -------- A. Borrower is currently indebted to Bank pursuant to the Loan Documents (as defined below). Borrower acknowledges that it is in default under the Loan Documents as set forth in Section I.C. below, and Borrower desires, inter alia, that Bank restructure Borrower's payment obligations and waive the - ----- ---- specified defaults in exchange for certain financial accommodations to be provided to Borrower by Redwood West Coast, LLC ("Redwood") (as defined below). B. Bank is willing to waive such defaults and restructure Borrower's payment obligations only to the degree set forth herein, and only in accordance with the terms and conditions set forth in this Agreement. C. THIS AGREEMENT ADDRESSES THE DEBTS AND/OR OBLIGATIONS OF BORROWER TO BANK WHICH ARE FULLY DESCRIBED HEREIN. THIS AGREEMENT DOES NOT PERTAIN TO ANY OTHER INDEBTEDNESS AND/OR OBLIGATIONS OF BORROWER (OR ANY OTHER PARTIES) TO BANK NOT SPECIFICALLY ADDRESSED IN THIS AGREEMENT. ALL TERMS AND PROVISIONS OF ANY AGREEMENTS BETWEEN BORROWER AND BANK INCLUDING, BUT NOT LIMITED TO, THE LOAN DOCUMENTS, NOT SPECIFICALLY MODIFIED HEREIN, SHALL REMAIN IN FULL FORCE AND EFFECT IN ACCORDANCE WITH THEIR ORIGINAL TERMS. AGREEMENT --------- NOW, THEREFORE, in consideration of (i) the above recitals and the mutual promises contained in this Agreement; (ii) the execution of this Agreement and all documents, instruments and agreements required to be executed in accordance with this Agreement; (iii) the satisfaction of all Conditions Precedent set forth in Section VIII. below; and (iv) other and further valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is hereby agreed as follows: I. Acknowledgment Of The Existing Indebtedness And The Loan Documents. ------------------------------------------------------------------ A. The Credit Agreement and Other Loan Documents. --------------------------------------------- 1. On or about April 12, 2000, Borrower and Bank entered into that certain Credit Agreement (as amended, restated, modified, supplemented or revised from time to time, the "Credit Agreement"), pursuant to which Borrower promised to pay Bank the principal amount of up to Ten Million Dollars ($10,000,000.00), together with interest on the funds -1- disbursed thereunder at the rate provided for in the promissory notes described below. The Credit Agreement was amended pursuant to a First Amendment to Credit Agreement dated as of April 18, 2000 ("First Amendment"), and by a Second Amendment to Credit Agreement dated as of November 14, 2000 ("Second Amendment"). 2. Pursuant to the Credit Agreement, Borrower executed and delivered to Bank a (a) Promissory Note in the principal amount of Six Million Dollars ($6,000,000.00) (as amended, restated, modified, supplemented or revised from time to time, the "Term Note") and a (b) Revolving Note in the principal amount of Four Million Dollars ($4,000,000.00) (as amended, restated, modified, supplemented or revised from time to time, the "Revolving Note"). Pursuant to the Second Amendment, Borrower executed and delivered to Bank a new Term Note in the principal amount of Six Million Three Hundred Thousand Dollars ($6,300,000.00) (The Term Note and Revolving Note, as amended, restated, modified, supplemented or revised from time to time, are referred to herein collectively as the "Notes"). 3. Also pursuant to the Credit Agreement: (a) Borrower executed and delivered to Bank: (i) that certain Commercial Security Agreement dated as of April 12, 2000 (as amended, restated, modified, supplemented or revised from time to time, the "Commercial Security Agreement"); (ii) that certain Commercial Pledge and Security Agreement dated as of April 12, 2000 (as amended, restated, modified, supplemented or revised from time to time, the "Commercial Pledge Agreement"); (iii) that certain Patent Security Agreement dated as of April 12, 2000 (as amended, restated, modified, supplemented or revised from time to time, the "Patent Security Agreement"); and (iv) that certain Trademark Security Agreement dated as of April 12, 2000 (as amended, restated, modified, supplemented or revised from time to time, the "Trademark Security Agreement"); and (b) W3Commerce LLC, a Delaware limited liability company, executed and delivered to Bank a Commercial Security Agreement dated as of April 12, 2000 (as amended, restated, modified, supplemented or revised from time to time, the "W3C Commercial Security Agreement"). The Credit Agreement, Commercial Security Agreement, Commercial Pledge Agreement, Patent Security Agreement, Trademark Security Agreement and W3C Commercial Security Agreement each grant Bank a valid, perfected, first priority security interest in the property described therein as collateral (the "Collateral") securing the Borrower's obligations to Bank under the Loan Documents. 4. On or about April 12, 2000, Borrower executed and delivered to Bank two form UCC-1 financing statements. Bank filed the financing statements with the office of the Secretary of State of California. Bank has filed the Patent Security Agreement and the Trademark Security Agreement with the United States Patent and Trademark Office. 5. Borrower has delivered to Bank a warrant to purchase stock dated December 1, 2000 granting to Bank stock warrants in Borrower for a total of 250,000 shares of Borrower's Common Stock, on terms and conditions more fully set forth therein. 6. The documents referenced above and all documents, security agreements and written amendments, notes and so forth related thereto are hereinafter collectively referred to as "Loan Documents." Upon execution and delivery of the Amended Promissory Note (defined below), it shall be deemed one of the Loan Documents. All capitalized terms not defined herein shall have the meaning described in the Loan Documents. -2- 7. The Borrower acknowledges that the Loan Documents constitute duly authorized, valid, binding, fully perfected and continuing agreements and obligations of Borrower to Bank, enforceable in accordance with their respective terms; and that Borrower has no claims, cross-claims, counterclaims, setoffs or defenses of any kind or nature which would in any way reduce or offset its obligations to Bank under the Loan Documents as of the date of this Agreement. B. Existing Indebtedness. Borrower acknowledges and agrees that the --------------------- current outstanding principal balance owed to Bank under the Loan Documents is Seven Million One Hundred and Thirty-two Thousand Dollars ($7,132,000.00) (the "Existing Principal Amount"). The amount owed under the Loan Documents includes the Existing Principal Amount, plus interest accrued thereon from December 31, 2001 to January 25, 2002 in the amount of Thirty-Four Thousand Four Hundred Seventy-One and 33/100s Dollars ($34,471.33), together with the Bank's costs, expenses and reasonable attorneys' fees (collectively, the "Existing Indebtedness"). The Existing Principal Amount shall be evidenced by the Amended Promissory Note (defined below). All attorneys' fees and costs incurred by Bank through and including January 25, 2002, in an amount not exceeding One Hundred Sixty Thousand Dollars ($160,000.00), and all interest accrued to January 25, 2002, shall be paid by Borrower upon execution of this Agreement. C. Defaults Under Credit Agreement and Other Loan Documents; --------------------------------------------------------- Remedies. - -------- Borrower acknowledges and agrees that Borrower is in default under the terms and conditions of the Loan Documents in that, inter alia, Borrower failed to: ----- ---- maintain compliance with financial covenants and to eliminate over advances (collectively, the "Defaults"). Borrower acknowledges and agrees that but for this Agreement, the Bank is fully entitled to exercise all of its rights and remedies under the Loan Documents, including but not limited to foreclosing on its Collateral. Borrower has no defense at law or equity, including the right of setoff, to the Bank's claims for repayment of the Existing Indebtedness. II. Limited Scope of Agreement. Nothing contained in this Agreement -------------------------- shall be interpreted as or be deemed a release or a waiver by Bank of any of the terms and conditions of the Loan Documents, or any other documents, instruments and agreements between the parties hereto except as specifically provided in this Agreement. Unless specifically modified herein, all other terms and provisions of the Loan Documents shall remain in full force and effect in accordance with their original terms, and are hereby ratified and confirmed in all respects. This Agreement does not constitute a waiver or release by Bank of any obligations between Borrower and Bank, or a waiver by Bank of any defaults by Borrower under the Loan Documents, unless expressly so provided herein, nor between Bank and any other person or entity. The Bank has no duty to advance any funds under the Loan Documents. III. Waiver of Defaults. Subject to, and effective upon, satisfaction ------------------ of the Conditions Precedent set forth in section VIII. hereof: A. Bank hereby waives all past defaults, including without limitation those described in Section I.C. of this Agreement. B. Borrower acknowledges and agrees that Bank's waiver of Defaults set forth immediately above concerns only Borrower's Defaults identified in Section I.C. hereof as existing as of the date of execution of this Agreement ("Existing Defaults"), but not as to any defaults -3- which may arise in the future, or which are unknown to Bank, or which are not specified in Section I.C. hereof. IV. Amendments to Credit Agreement and Other Loan Documents. Subject ------------------------------------------------------- to, and effective upon, satisfaction of the Conditions Precedent set forth in section VIII. hereof: A. Section 1.01 of the Credit Agreement specifying the Term Loan Commitment is deleted and replaced with the following: 1.01 Term Loan Commitment. (a) Subject to the terms and conditions of this Agreement, Borrower's Existing Indebtedness shall be consolidated into, and evidenced by, an amended and restated Promissory Note in the form attached hereto as Exhibit A (the "Amended Promissory Note"). The principal amount of the Amended Promissory Note shall be equal to the Existing Principal Amount. The interest rate, maturity date and other terms of the Term Loan are set forth in the Amended Promissory Note. (b) Notwithstanding the foregoing, Borrower shall make the following principal reduction in addition to the principal payments specified in the Amended Promissory Note: Borrower shall pay an additional principal payment equal to one-half (50%) of the amount by which Borrower's EBITDA for the year 2002 exceeds the sum of Four Million Dollars ($4,000,000.00). Such additional principal payment shall be made by the earlier of March 31, 2003 or the date Borrower files its audited financial statements with the United States Securities and Exchange Commission. For purposes of this provision, "EBITDA" shall be calculated without inclusion of gains or losses occurring upon the sale of assets outside the ordinary course of business. B. Section 1.02 of the Credit Agreement specifying the Asset Based Line of Credit Commitment is hereby deleted in its entirety. C. Section 1.07 of the Credit Agreement concerning Applicable Margin is hereby deleted in its entirety and replaced with the following: 1.07 Financing Statements. Borrower hereby authorizes Bank to execute and file any financing statement Bank deems reasonably necessary for the perfection and/or preservation of Bank's security interests in the Collateral. D. Sections 4.05(i), 4.06, 4.07, 4.08 and 4.09 of the Credit Agreement concerning certain reporting requirements and financial covenants are hereby deleted in their entirety. E. Section 4.16 of the Credit Agreement concerning asset sales is amended by deleting the final sentence and replacing it with the following: Bank shall apply such net cash proceeds first toward the remaining principal reductions due under the Amended Promissory Note in inverse order of maturity; provided, however, that upon the occurrence of an Event of Default, Bank shall have the right to apply such net cash proceeds in its sole and absolute discretion. F. Section 5.05 of the Credit Agreement is amended by adding the following to the existing text: -4- Notwithstanding the foregoing, nothing in this Agreement shall prohibit, restrict or otherwise limit Borrower's right to issue Two Thousand Eight Hundred (2,800) shares of preferred stock to Redwood in exchange for cash consideration not less than Two Million Eight Hundred Thousand Dollars ($2,800,000.00). G. Section 5.06 of the Credit Agreement is amended by deleting "One Million Dollars ($1,000,000)" and inserting in lieu thereof "Five Hundred Thousand Dollars ($500,000.00)". H. Section 5.08 of the Credit Agreement is amended by adding the following to the existing text: Notwithstanding the foregoing, nothing in this Agreement shall prohibit Borrower from paying dividends on preferred stock held by Redwood; provided, however, that no such dividends shall be paid while there is an Event of Default under this Agreement or any condition, act or event which, with the passage of time or the giving of notice or both would constitute an Event of Default under this Agreement; and further provided, however, that the maximum amount of such dividends that may be paid in any calendar quarter shall not exceed the sum of $240,000.00. I. Section 7.11 of the Credit Agreement concerning the reference procedure is deleted in its entirety. J. All references in the Loan Documents to the "Note" or the "Promissory Note" (singular or plural), other than such references in this Agreement, shall include the Amended Promissory Note. All references in the Loan Documents to the "Loan Documents" shall mean the Loan Documents including this Agreement and the Amended Promissory Note. All references in the Loan Documents to the "Related Documents" shall mean the Related Documents including this Agreement and the Amended Promissory Note. All references in the Loan Documents to the "Indebtedness" shall include the indebtedness owing under the Amended Promissory Note. V. Other Covenants. ---------------- A. Borrower shall not make any payments or transfer any consideration to Redwood or any affiliate of Redwood not authorized by this Agreement or consented to by Bank, in writing, in its sole and absolute discretion. B. Borrower shall not make any payments or transfer any consideration to any affiliate of Redwood unless such affiliate has consented to this Agreement in the form attached hereto as Exhibit B. C. Subject to the foregoing, Borrower may pay Redwood and/or its affiliates fees for management services in a total amount not exceeding $15,000.00 (collectively) per month, or such greater amount as Bank shall agree in writing, in its sole and absolute discretion; provided, however, Borrower shall not pay any amounts to Redwood and/or its affiliates for management services while there is an Event of Default under this Agreement or any condition, act or event which, with the passage of time or the giving of notice or both would constitute an Event of Default under this Agreement. D. Borrower hereby authorizes Bank to collect all amounts due Bank under any of the Loan Documents by charging Borrower's accounts at Bank. -5- E. Borrower shall provide to Bank all documents, instruments and agreements that Bank may reasonably request. VI. Reimbursement of Bank's Fees and Costs. Contemporaneous with the -------------------------------------- execution of this Agreement, Borrower shall pay Bank a loan documentation fee of Two Thousand Five Hundred Dollars ($2,500.00). The loan documentation fee shall not be applied to or reduce the Existing Indebtedness or the Amended Promissory Note, or be credited to Bank's attorneys' fees and costs. The obligation specified in this paragraph shall not in any way be construed as a warranty or representation that Bank's attorneys' fees and other costs incurred in preparing this Agreement and related documentation did not exceed or approximate Two Thousand Five Hundred Dollars ($2,500.00). VII. Affirmative Covenants. --------------------- A. In addition to any covenants, which exist in the Loan Documents, Borrower shall immediately give written notice to Bank in reasonable detail of: 1. Any change in the name of Borrower, or any company or partnership in which Borrower is a principal or retains a majority interest. Borrower shall give Bank thirty days prior written notification of any such change; 2. Any change in the state of Borrower's incorporation, or relocation of Borrower's chief executive office. Borrower shall give Bank thirty days prior written notification of any such change or relocation; 3. Any change in the present location of the Collateral referred to herein; 4. The occurrence of any Event of Default (as defined in Section XI. below), or any condition, event or act which, with the giving of notice or the passage of time or both, would constitute an Event of Default under this Agreement; 5. Any termination or cancellation of any insurance policy which Borrower is required to maintain, or any uninsured or partially uninsured loss through liability or property damage, or through fire, theft or other cause affecting the Collateral in excess of an aggregate sum of $100,000.00; and 6. Any litigation initiated by or against Borrower for an amount in excess of $50,000.00. B. At any time and from time to time Borrower shall execute and deliver such further instruments and take such further action as may reasonably be requested by Bank to effect the purposes of this Agreement. VIII. Conditions Precedent. This Agreement shall not be binding upon -------------------- Bank (including Bank's waiver of defaults and the restructuring of Borrower's payment obligations) unless and until each of the following conditions precedent ("Conditions Precedent") are met, or are waived in writing by Bank: A. Borrower shall have timely complied with and performed all of the acts and/or conditions specifically identified as conditions precedent in this Agreement; -6- B. Redwood shall have purchased preferred shares from Borrower with a cash capital contribution of not less than Two Million Eight Hundred Thousand Dollars ($2,800,000.00) which funds shall be in Borrower's accounts at Bank; C. Borrower shall have paid all interest accrued under the Loan Documents as of the date hereof; D. Borrower shall have duly executed and delivered to Bank the Amended Promissory Note in the form attached hereto as Exhibit A; E. Borrower shall have paid Bank, in good and immediately available funds, all attorneys' fees and costs incurred by Bank through and including January 25, 2002, which Bank and Borrower hereby agree shall not exceed One Hundred Sixty Thousand Dollars ($160,000.00); F. Borrower shall have paid Bank the amount required under Section VI. above; G. Redwood shall have duly executed and delivered to Bank a consent in the form attached hereto as Exhibit B; H. Bank shall have received such other documents, instruments and agreements, and obtained all necessary internal approvals as Bank shall have requested prior to execution of this Agreement; and I. Borrower shall have executed and delivered to Bank certified copies of corporate resolutions authorizing the execution of this Agreement, certificates of incumbency, good standing, and such other matters as Bank in its sole and absolute discretion may require. IX. Release of Claims. ----------------- As additional consideration for Bank to enter into this Agreement, Borrower, for itself, its executors, administrators, general partners, limited partners, employees, representatives, shareholders, predecessors, subsidiaries and/or affiliates, parents, heirs, trustees, trustors, beneficiaries, successors-in-interest, transferees, assigns, officers, directors, managers, servants, employees, insurers, trustors, trustees, underwriters, successors, attorneys, and agents, now and in the future, and all persons acting by, through, under or in concert with Borrower, hereby releases and discharges Bank, and Bank's past, present and future administrators, affiliates, agents, assigns, attorneys, directors, employees, executors, heirs, officers, parents, partners, predecessors, representatives, parents shareholders, subsidiaries and successors, and each of them; and each of their respective administrators, affiliates, agents, assigns, attorneys, directors, employees, executors, heirs, officers, parents, partners, predecessors, representatives, shareholders, subsidiaries and successors, and each of them; and all persons acting by, through, under or in concert with one or more of them, from any liabilities or claims arising out of, related to or in any way connected any acts or omissions of Bank relating in any way to the Loan Documents, this Agreement (except for matters relating to the performance of this Agreement following the date of its execution) and Borrower's financial relationship with Bank and its predecessors-in-interest from the beginning of time through and including the date of execution of this Agreement (collectively, "Released Matters"). -7- X. Representations and Waivers Concerning Release Provisions. --------------------------------------------------------- Borrower understands and has been advised by its legal counsel of the provisions of Section 1542 of the California Civil Code, which provides as follows: A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. Borrower understands and hereby waives the provisions of California Civil Code Section 1542 and declares that it realizes it may have damages Borrower presently knows nothing about and that, as to them, Bank has been released pursuant to these release provisions. Borrower also declares that it understands that Bank would not agree to enter into this Agreement if the release provisions set forth above did not cover damages and their results which may not yet have manifested themselves or may be unknown to or not anticipated at the present time by Borrower. Borrower represents and warrants that Borrower is the owner of the claims hereby compromised and that Borrower has not heretofore assigned or transferred, nor purported to assign or transfer, to any person or entity ("Person") any of the Released Matters. Borrower further agrees to indemnify and hold harmless Bank from all liabilities, claims, demands, damages, costs, expenses, and attorneys' fees incurred by Bank as the result of any Person asserting any such assignment or transfer of any rights or claims. XI. Events of Default. In addition to any other Events of Default set ----------------- forth in this Agreement or the Loan Documents, an "Event of Default" shall exist under this Agreement and under the Loan Documents if any one or more of the following events occur: A. All of the Conditions Precedent set forth in Section VIII. hereof are not fully satisfied or waived, each in Bank's sole and absolute discretion, on or before January 25, 2002; or B. Borrower shall fail to pay any payment as provided herein within five (5) days of its due date; or C. Any representation or warranty made under or in connection with this Agreement, or any certificate or statement furnished or made to Bank pursuant thereto, shall prove to be untrue or misleading in any material respect as of the date on which such representation or warranty is made; or D. Borrower shall take any action to the effect that, or make any claim that any Loan Document, including without limitation this Agreement, is/are not legal, valid, binding agreements enforceable against any party executing same; or attempt in any way to terminate or declare ineffective or inoperative the same; or shall in any way whatsoever cease to give or provide the respective liens, security interests, rights, titles, interests, remedies, powers or privileges intended to be created thereby; or E. A default, other than the Existing Defaults, shall occur in the performance of any material term, condition, covenant or agreement contained in the Loan Documents, in this Agreement, or in connection with any other obligation owing by Borrower to Bank; or -8- F. Borrower shall do any of the following acts, or violate any other term or provision of this Agreement: (i) apply for or consent to the appointment of a receiver, trustee, custodian, intervenor or liquidator of all or a substantial part of its assets; (ii) file a voluntary petition in bankruptcy court or admit in writing that it is unable to pay its debts as they become due; (iii) make a general assignment for the benefit of creditors; (iv) file a petition or answer seeking reorganization or take advantage of any bankruptcy or insolvency laws; (v) file an answer admitting any of the material allegations of, or consent to, or default in answering a petition filed against it, in any bankruptcy, reorganization or insolvency proceeding; or (vi) take any action for the purpose of effecting any of the foregoing; or G. Any of the following acts or events occur: (i) an order for relief, judgment or decree shall be entered by any court of competent jurisdiction or other competent authority approving a petition seeking reorganization of Borrower; (ii) an order shall be entered by any court of competent jurisdiction or other competent authority appointing a receiver, custodian, trustee, intervenor or liquidator for Borrower as to all or substantially all of its assets, and such order, judgment or decree shall continue un-stayed and in effect for a period of sixty (60) days; or (iii) an involuntary petition seeking bankruptcy, reorganization or receivership shall be filed against Borrower which is not dismissed within sixty (60) days of the filing thereof; or (iv) an event of default under any of Borrower's obligations to the Bank; or H. Any change should occur which, in the opinion of Bank, has resulted or could result in a Material Adverse Change. XII. Remedies. -------- A. If an Event of Default shall occur under this Agreement, any other Loan Document, or any other agreement referenced herein or executed in connection herewith, Bank may exercise, at its election, and without notice, demand, protest or presentment (which notice, demand, protest and presentment are expressly waived) in addition to all rights and remedies granted to it in the Loan Documents, any or all of the following (failure to specify any remedy herein shall not limit Bank's remedies, nor be deemed to create a conflict or contradiction with the Loan Documents): 1. Bank may exercise all of its rights and remedies and may declare all amounts owed under the Loan Documents immediately due and payable; 2. Bank may proceed to enforce the Loan Documents and this Agreement and exercise any or all of the rights and remedies afforded to Bank by the California Commercial Code, the California Civil Code, the California Code of Civil Procedure or otherwise possessed by Bank; 3. Bank may, to the fullest extent permitted by law: (1) sell its Collateral or any interest therein at public or private sale for cash or upon credit and for immediate or future delivery and for such price and on such terms as Bank shall deem appropriate, and negotiate, endorse, assign, transfer and deliver to the purchaser or purchasers thereof (which may be Bank) the Collateral so sold, and each purchaser at any sale shall hold the property sold absolutely free from any claim or right on the part of Borrower (and Borrower hereby waives, to the extent permitted by law, all rights of redemption, stay and/or appraisal which Borrower now has or may at any time in the future have); and/or -9- (2) obtain specific performance by Borrower of any covenant or undertaking of Borrower in the Loan Documents herein; and/or (3) without notice to Borrower, proceed by suit or suits at law or in equity to foreclose its security interest and sell its Collateral or any portion thereof pursuant to judgment or decree of a court, courts or referee having competent jurisdiction; and/or (4) without notice to Borrower, exercise any of its rights under, or foreclose its Collateral thereunder; 4. Without regard to the adequacy of Bank's Collateral, or to the solvency of Borrower, Bank may institute legal proceedings for the appointment of a receiver or receivers with respect to any or all of its Collateral pending foreclosure hereunder or for the sale of any or all of its Collateral under the order of a court of competent jurisdiction or under other legal process; 5. Either personally, or by means of a court-appointed receiver, Bank may enter onto the premises where its Collateral is located and take possession of all or any of its Collateral and exclude therefrom Borrower and all others claiming under Borrower, and perform any acts necessary or appropriate to care for, maintain, preserve and protect its Collateral. In the event Bank demands or attempts to take possession of its Collateral in the exercise of any rights hereunder, Borrower promises and agrees to turn over promptly and to deliver complete possession thereof to Bank; 6. Without notice to or demand upon Borrower, Bank may make such payments and do such acts as Bank may deem necessary to protect its security interest in its Collateral including, without limitation, paying, purchasing, contesting or compromising any encumbrance, charge or lien which is prior to or superior to the security interests granted in the Loan Documents and, in exercising any such powers or authority, to pay all expenses incurred in connection therewith; and/or 7. Enforce any of the rights and remedies available to it under the Loan Documents or this Agreement, or according to applicable law. B. All rights and remedies granted to Bank hereunder are cumulative, and Bank shall have the right to exercise any one or more of such rights and remedies alternatively, successively or concurrently as Bank may, in its sole and absolute discretion, deem advisable. XIII. Revival Clause; Solvency. ------------------------ If the incurring of any debt or the payment of money or transfer of property made to Bank by or on behalf of Borrower should for any reason subsequently be declared to be "fraudulent" or "preferential" within the meaning of any state or federal law relating to creditor's rights, including, without limitation, fraudulent conveyances, preferences or otherwise voidable or recoverable payments of money or transfers of property, in whole or in part, for any reason (collectively, "Voidable Transfers") under the Bankruptcy Code or any other federal or state law, and Bank is required to repay or restore any such Voidable Transfer or the amount or any portion thereof, or upon the advice of its in-house counsel or outside counsel is advised to do so, then, as to such Voidable Transfer or the amount repaid or restored (including all reasonable costs, expenses and attorneys' fees of Bank related thereto), the liability of Borrower under the Credit Agreement and Loan Documents, and all of Bank's rights and remedies under the Credit -10- Agreement and Loan Documents, shall automatically be revived, reinstated and restored and shall exist as though such Voidable Transfer had never been made to the extent of any harm to Bank. Borrower represents and warrants that the execution, delivery and performance of this Agreement will not (i) render Borrower insolvent as that term is defined below; (ii) leave Borrower with remaining assets which constitute unreasonably small capital given the nature of Borrower's business; or (iii) result in the incurrence of Debts (as defined below) beyond Borrower's ability to pay them when and as they mature and become due and payable. For the purposes of this paragraph, "Insolvent" means that the present fair salable value of assets is less than the amount that will be required to pay the probable liability on existing Debts as they become absolute and matured. For the purposes of this paragraph, "Debts" includes any legal liability for indebtedness, whether matured or unmatured, liquidated or unliquidated, absolute, fixed or contingent. Borrower hereby acknowledges and warrants that it has derived or expects to derive a financial or other benefit or advantage from this Agreement. XIV. Notices. ------- All notices required to or permitted to be given to Bank under this Agreement shall be addressed as follows: To: Thomas G. Kinzel Vice President Comerica Bank - California 9920 South La Cienega Boulevard, Suite 623 Inglewood, CA 90301 Fax No. (310) 338-6160 Copy: Pillsbury Winthrop LLP 101 West Broadway, Suite 1800 San Diego, California 92101 Attn: Daniel C. Minteer, Esq. Fax No. (619) 236-1995 All notices required to or permitted to be given to Borrower under this Agreement shall be addressed as follows: -11- To: Mr. Paul A. Rosinack President and Chief Executive Officer Synbiotics Corporation 11011 Via Frontera San Diego, CA 92127 Fax No.: (858) 451-5719 Copy: Brobeck, Phleger & Harrison LLP 12390 El Camino Real San Diego, CA 92130 Attn: Hayden J. Trubitt, Esq. Fax No.: (858) 720-2555 Copy: Mr. Christopher P. Hendy, Member Redwood West Coast, LLC 9468 Montgomery Road Cincinnati, OH 45242 Fax No.: (513) 984-8121 Copy: Keating, Muething & Klekamp PLL 1400 Provident Tower One East Fourth Street Cincinnati, OH 45202 Attn: Gary P. Kreider, Esq. Fax No.: (513) 579-6457 The above addresses may be changed effective upon receipt of a new address. Any notice required herein or permitted to be given shall be in writing and be personally served or sent by facsimile (upon confirmation of receipt) and overnight United States mail and shall be deemed given when sent or, if mailed, when deposited in the United States mail so long as it is properly addressed. XV. Representations and Warranties. Borrower hereby represents and ------------------------------ warrants that: A. Representations and Warranties. All Representations and Warranties ------------------------------ contained in the Credit Agreement are true and correct as of the date of this Agreement. Except for Events of Default waived in this Agreement, no Event of Default has occurred and/or is continuing. B. Further Representations. No representation or warranty of Borrower ----------------------- contained in this Agreement or in any documents provided to Bank in connection herewith (including any financial statements and/or financial information) misstates any material fact or omits to state a material fact, the absence of which makes such representation, warranty or statement misleading. XVI. Authority. Each party hereto represents and warrants to each other --------- party that (i) it has authority to execute this Agreement; (ii) the execution, delivery and performance of this Agreement does not require the consent or approval of any person, entity, governmental body, trust, trustor or other authority; (iii) this Agreement is a valid, binding and legal obligation of the undersigned enforceable in accordance with its terms, and does not contravene or conflict with any other agreement, indenture or undertaking to which any party hereto is a party; and (iv) each -12- party hereto is the sole and lawful owner of all right, title, and interest in and to every claim and other matter which the party purports to settle or compromise herein. XVII. Payment of Expenses. In the event any action (whether or not in a ------------------- court proceeding) shall be required to interpret, implement, modify, or enforce the terms and provisions of this Agreement, or to declare rights under same, the prevailing party in such action shall recover from the losing party all of its fees and costs, including, but not limited to, the reasonable attorneys' fees and costs (if applicable) of Bank's outside and in-house counsel. XVIII. Governing Law. This Agreement shall be construed and interpreted in ------------- accordance with and shall be governed by the laws of the state of California. The parties also hereby agree to submit to the jurisdiction of the California courts with respect to all matters relating to this Agreement. XIX. Successors, Assigns. This Agreement shall be binding on and inure to ------------------- the benefit of all of the parties hereto, and upon the heirs, executors, administrators, legal representatives, successors and assigns of the parties hereto, and each of them. The terms and provisions of this Agreement are for the exclusive benefit of Borrower and Bank, and may not be transferred, assigned, pledged, set over or negotiated to any person or entity without the prior express written consent of Bank. Notwithstanding any other provisions contained herein, Bank may sell, transfer, negotiate, assign or grant participations in all or a portion of its rights in any of the Loan Documents, in this Agreement, to any person or entity without prior notice to Borrower, provided, however, that any such assignee shall be bound by the terms and provisions of the Loan Documents and this Agreement. XX. Jury Trial Waiver ----------------- BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. XXI. Complete Agreement of Parties. This Agreement constitutes the entire ----------------------------- agreement between Bank and Borrower arising out of, related to or connected with the subject matter of this Agreement. Any supplements, modifications, waivers or terminations of this Agreement shall not be binding unless executed in writing by the parties to be bound thereby. No waiver of any provision of this Agreement shall constitute a waiver of any other provisions of this Agreement (whether similar or not), nor shall such waiver constitute a continuing waiver unless otherwise expressly so provided. However, this Agreement does not alter or amend any provision of any of the Loan Documents except to the extent of the provisions expressly set forth herein. -13- XXII. Execution In Counterparts. This Agreement may be executed in any ------------------------- number of counterparts each of which, when so executed and delivered, shall be deemed an original, and all of which together shall constitute but one and the same agreement. XXIII. Contradictory Terms/Severability. In the event that any term or -------------------------------- provision of this Agreement contradicts any term or provision of any other document, instrument or agreement between the parties including, but not limited to, any of the Loan Documents, the terms of this Agreement shall control. If any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, such provision shall be severable from all other provisions of this Agreement, and the validity, legality and enforceability of the remaining provisions of this Agreement shall not be adversely affected or impaired, and shall thereby remain in full force and effect. XXIV. Headings. All headings contained herein are for convenience purposes -------- only, and shall not be considered when interpreting this Agreement. XXV. Continuing Cooperation. The parties hereto shall cooperate with each ---------------------- other in carrying out the terms and intent of this Agreement, and shall execute such other documents, instruments and agreements as are reasonably required to effectuate the terms and intent of this Agreement. XXVI. Consultation With Counsel. Each party hereto acknowledges that (i) ------------------------- it has been represented by counsel of its own choice at each stage in the negotiation of this Agreement; (ii) it has relied on such counsel's advice throughout all of the negotiations which preceded the execution of this Agreement, and in connection with the preparation and execution of this Agreement; (iii) such counsel has read this Agreement; (iv) such counsel has advised such party concerning the validity and effectiveness of this Agreement, and the transactions to be consummated in accordance therewith and/or each party has had the opportunity to consult with counsel and has voluntarily waived doing so; and (v) each party hereto is freely and voluntarily entering into this Agreement. AGREED AND ACCEPTED: - ------------------- COMERICA BANK - CALIFORNIA, a California banking corporation By: /s/ Thomas G. Kinzel Dated: January 25, 2002 -------------------- Thomas G. Kinzel Vice President SYNBIOTICS CORPORATION, a California corporation By: /s/ Paul A. Rosinack Dated: January 25, 2002 -------------------- Paul A. Rosinack President -14- EXHIBIT A --------- Incorporated herein by reference to Exhibit 4.4.4 to this Current Report on Form 8-K. -15- EXHIBIT B --------- (Form of Consent) Consent of Redwood West Coast, LLC ---------------------------------- REDWOOD WEST COAST, LLC ("Redwood") hereby consents to the execution and delivery of the foregoing Third Amendment to Credit Agreement and Loan Documents and Waiver of Defaults ("Agreement") dated as of January 25, 2002 by SYNBIOTICS CORPORATION ("Borrower") to and between COMERICA BANK - CALIFORNIA, successor in interest to Imperial Bank, a California banking corporation, ("Bank"). All capitalized terms not defined herein shall have the meaning attributed to them in the Agreement. Redwood acknowledges the amount and validity of Borrower's loan obligations to Bank as described in Sections I.A. and I.B. of the Agreement, and the existence, validity, perfection and priority of bank's liens in the Collateral as described in Section I.A.3. of the Agreement. Redwood acknowledges that Borrower is in default under the Loan Documents, subject to Bank's agreement to waive defaults upon the satisfaction or waiver of Conditions Precedent, as more fully specified in the Agreement. Redwood agrees that is rights to receive compensation for services, dividends and/or any other payment or consideration from Borrower are subject to the limitations set forth in Sections 5.08 of the Credit Agreement, as modified by the Agreement, and Sections V.A. and V.C. of the Agreement, and Redwood's agreements with the Borrower are deemed modified accordingly. REDWOOD WEST COAST, LLC a Delaware limited liability company By: __________________________________ Dated: January 25, 2002 _____________________ Its: ________________ -16- EX-4.4.4 5 dex444.txt PROMISSORY NOTE TO COMERCIA BANK Exhibit 4.4.4 ------------- PROMISSORY NOTE --------------- $7,132,000.00 San Diego, California January 25, 2002 PROMISE TO PAY. SYNBIOTICS CORPORATION, a California corporation, ("Borrower") promises to pay to COMERICA BANK-CALIFORNIA ("Lender"), or order, in lawful money of the United States of America, the principal amount of Seven Million One Hundred Thirty-Two Thousand Dollars ($7,132,000.00) together with interest accrued on the outstanding principal balance of this Promissory Note (this "Note") from the date of this Note at the rate specified below. PRINCIPAL PAYMENT. Borrower will pay the principal amount of this Note as follows: (a) Payments of One Hundred Thousand Dollars ($100,000.00) each due on the 1/st/ day of each month commencing February 1, 2002 and continuing to January 1, 2003. (b) Payments of One Hundred Twenty Five Thousand Dollars ($125,000.00) each due on the 1/st/ day of each month commencing on February 1, 2003 and continuing to January 1, 2004. (c) All unpaid principal and interest shall be due and payable in full on January 25, 2004. PAYMENT OF INTEREST. Borrower will pay regular monthly payments of all accrued and unpaid interest beginning February 1, 2002, and all subsequent interest payments are due on the same day of each month after that. The annual interest rate for this Note is computed on a 365/360 basis; that is, by applying the ratio of the annual interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. Borrower will pay Lender at Lender's address shown below or at such other place as Lender may designate in writing. Unless otherwise agreed or required by applicable law, payments will be applied first to any unpaid collection costs and any late charges, then to any unpaid interest, and any remaining amount to principal. VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an index which is the Comerica Bank-California Prime Rate (the "Index"). The Prime Rate is the rate announced by Lender as its Prime Rate of interest 1 of 4 from time to time. Lender will tell Borrower the current Index rate upon Borrower's request. Borrower understands that Lender may make loans based on other rates as well. The interest rate change will not occur more often than each day. The Index currently is 4.75%. The interest rate to be applied to the unpaid principal balance of this Note will be at a rate of 2.0 percentage points over the Index, resulting in an initial rate of 6.75%. NOTICE: Under no circumstances will the interest rate on this Note be more than the maximum rate allowed by applicable law. PREPAYMENT. A. Optional Prepayment. Borrower may pay without penalty all or a portion -------------------- of the amount owed earlier than it is due. B. Mandatory Prepayment. Borrower shall make such mandatory prepayments as --------------------- shall be required under the Credit Agreement dated as of April 12, 2000, as amended from time to time ("Credit Agreement"), including the payments specified in Sections 1.01(b) and 4.16 of the Credit Agreement, as modified by the Third Amendment to Credit Agreement and Loan Documents and Waiver of Defaults dated as of January 25, 2002. C. Application of Prepayments. Optional and Mandatory prepayments will --------------------------- not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments of accrued unpaid interest. Rather, all prepayments will reduce the principal payments required under this Note in the inverse order that such payments are due hereunder. LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment. DEFAULT. Borrower will be in default if any of the following happens: (a) Borrower fails to make any payment when due; and/or (b) An Event of Default occurs or is existing under the Credit Agreement. LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance on this Note and all accrued unpaid interest immediately due, without notice, and then Borrower will immediately pay that amount. Upon Borrower's failure to pay all amounts declared due pursuant to this section, Lender may (a) increase the variable interest rate on this Note to 7.00 percentage points over the Index, and (b) add any unpaid accrued interest to principal and such sum will bear interest therefrom until paid at the rate provided in this Note (including any increased rate). Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower also will pay Lender that amount. This includes, subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services, and further including the allocated cost of Lender's in-house counsel. Borrower also will pay any court costs, in addition to all other sums provided by law. This Note has been delivered to Lender and accepted by Lender in the State of California. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of San Diego County, the State of California. This Note shall be governed by and construed in accordance with the laws of the State of California. 2 of 4 DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $25.00 if Borrower makes a payment on this Note and the check or preauthorized charge with which Borrower pays is later dishonored. RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in, and hereby assigns, conveys, delivers, pledges, and transfers to Lender all Borrower's right, title and interest in and to, Borrower's accounts with Lender (whether checking, savings, or some other account), including without limitation all accounts held jointly with someone else and all accounts Borrower may open in the future, excluding however all IRA and Keogh accounts, and all trust accounts for which the grant of a security interest would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on this Note against any and all such accounts. GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive any applicable statute of limitations, presentment, demand for payment, protest and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan, or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. JURY TRIAL WAIVER. LENDER AND BORROWER EACH ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH OF THEM, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT, WITH COUNSEL OF THEIR CHOICE, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF 3 of 4 THIS NOTE OR ANY RELATED INSTRUMENT OR LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS NOTE OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTION OF ANY OF THEM. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY LENDER OR BORROWER, EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM. PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISION. BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE. Synbiotics Corporation, a California corporation By: /s/ Paul A. Rosinack -------------------- Paul A. Rosinack President and Chief Executive Officer Borrower's Address: 11011 Via Frontera San Diego, CA 92127 Lender's Address: Comerica Bank - California 9920 South La Cienega Blvd. Suite 623 Inglewood, CA 90301 4 of 4 EX-4.5 6 dex45.txt CERTIFICATE OF DETERMINATION Exhibit 4.5 ----------- CERTIFICATE OF DETERMINATION OF PREFERENCES OF SERIES B PREFERRED STOCK OF SYNBIOTICS CORPORATION a California corporation Paul A. Rosinack and Michael K. Green hereby certify that: A. They are the President and Secretary, respectively, of Synbiotics Corporation, a California corporation (the "Corporation"). B. Pursuant to the authority given by the Corporation's Articles of Incorporation, as amended to date, the Board of Directors of the Corporation has duly adopted the resolution attached as Exhibit "A." C. The authorized number of shares of Preferred Stock of the Corporation is 25,000,000, none of which has been issued. The authorized number of shares of Series B Preferred Stock of the Corporation is 4,000, none of which has been issued. IN WITNESS WHEREOF, the undersigned certify under penalty of perjury that they have read the foregoing Certificate of Determination and know the contents thereof, and that the statements therein are true and correct of their own knowledge. Executed in San Diego, California on January 3, 2002. /s/ Paul A. Rosinack -------------------- Paul A. Rosinack President /s/ Michael K. Green -------------------- Michael K. Green Secretary Exhibit A --------- NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide for the issue of a series of Preferred Stock of the Corporation consisting of Four Thousand (4,000) shares designated as "Series B Preferred Stock," and does hereby fix the rights, preferences, privileges, and restrictions and other matters relating to said Series B Preferred Stock as follows: Series B Preferred Stock ------------------------ Article 1. Number of Shares; Designation The series of Preferred Stock established hereby shall be designated the "Series B Preferred Stock" and the authorized number of shares of Series B Preferred Stock shall be 4,000. Article 2. Dividends --------- Section 2.1 The holders of the shares of the Series B Preferred Stock shall be entitled to receive, out of the assets of the Corporation legally available therefor and as and when declared by the Board of Directors, cash dividends at the rate of $75.00 per share per year (subject to appropriate adjustments in the event of any stock dividend, stock split, combination or other similar recapitalization affecting such shares), payable quarterly on the last day of the months of January, April, July and October in each year. Such dividends shall accrue and be cumulative (whether or not in any quarterly dividends period there shall be funds of the Corporation legally available for the payment of such dividends), from the date of the last quarterly dividend date to which dividends were declared and paid on the Series B Preferred Stock of the Corporation. Each such dividend shall be paid to the holders of record of shares of Series B Preferred Stock as they appear on the stock register of the Corporation on the 15th day of the month next preceding the payment date thereof. Dividends on account of arrears for any past dividend periods may be declared and paid at any time, without reference to any regular dividend payment date, to holders on such date, not exceeding 45 days preceding the payment date thereof, as may be fixed by the Board of Directors. Section 2.2 Dividends payable on the Series B Preferred Stock for each full quarterly dividends period shall be computed by dividing the annual rate by four. Dividends payable on the Series B Preferred Stock for any period less than a full quarterly dividend period and for the initial dividend period, shall be computed on the basis of a 360-day year of four 90-day quarters and the actual number of days elapsed on the period for which payable, including the date of payment. Article 3. Liquidation, Dissolution or Winding Up -------------------------------------- Section 3.1 In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of shares of Series B Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its shareholders, after and subject to the payment in full of all amounts required to be distributed to the holders of any other class or series of stock of the Corporation ranking on liquidation prior -2- and in preference to the Series B Preferred Stock, but before any payment shall be made to the holders of any other class or series of stock of the Corporation ranking junior on liquidation to the Series B Preferred Stock by reason of their ownership thereof, an amount equal to $1,000 per share of Series B Preferred Stock plus any accrued but unpaid dividends (whether or not declared), and no more. If upon any such liquidation, dissolution or winding up of the Corporation the remaining assets of the Corporation available for distribution to its shareholders shall be insufficient to pay the holders of shares of Series B Preferred Stock the full amount to which they shall be entitled, the holders of shares of Series B Preferred Stock and any class or series of stock ranking on liquidation on a parity with the Series B Preferred Stock shall share ratably in any distribution of the remaining assets and funds of the Corporation in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full. Section 3.2 The merger or consolidation of the Corporation into or with another corporation which results in the exchange of outstanding shares of the Corporation for securities or other consideration issued or paid or caused to be issued or paid by such other corporation or an affiliate thereof (except if such merger or consolidation does not result in the transfer of more than 50 percent of the voting securities of the Corporation), or the sale of all or substantially all the assets of the Corporation, shall be deemed to be a liquidation, dissolution or winding up of the Corporation for purposes of this Article 3, unless the holders of sixty-six and two-thirds percent of the Series B Preferred Stock then outstanding vote otherwise. The amount deemed distributed to the holders of Series B Preferred Stock upon any such merger or consolidation shall be the cash or the value of the property, rights and/or securities distributed to such holders by the acquiring person, firm or other entity. The value of such property, rights or other securities shall be determined in good faith by the Board of Directors of the Corporation. Article 4. Voting ------ Section 4.1 Each holder of outstanding shares of Series B Preferred Stock shall be entitled to the number of votes equal to the number of whole shares of Common Stock into which the shares of Series B Preferred Stock held by such holder are convertible (as adjusted from time to time pursuant to Article 5 below), at each meeting of shareholders of the Corporation (and written actions of shareholders in lieu of meetings) with respect to any and all matters presented to the shareholders of the Corporation for their action or consideration. The voting rights granted in the immediately preceding sentence to the holders of Series B Preferred Stock shall apply even if, at the record date, meeting date and/or effective date of such action, the Corporation does not have sufficient authorized but unissued shares of Common Stock to permit the conversion in full, as of any such date, of the Series B Preferred Stock into Common Stock (as provided in Article 5 below). Except as provided by law, with respect to votes to be taken exclusively by the holders of Series B Preferred Stock as provided herein, by the provisions of Section 4.1, Section 4.2 or Section 4.3 below, or by the provisions establishing any other series of Preferred Stock, holders of Series B Preferred Stock and of any other outstanding series of Preferred Stock shall vote together with the holders of Common Stock as a single class. Section 4.2 The Corporation shall not amend, alter or repeal preferences, rights, powers or other terms of the Series B Preferred Stock so as to affect adversely the Series B Preferred Stock, without the written consent or affirmative vote of the holders of at least sixty-six -3- and two-thirds percent of the then outstanding shares of Series B Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class. For this purpose, without limiting the generality of the foregoing, the authorization or issuance of any series of Preferred Stock which is on a parity with or has preference or priority over the Series B Preferred Stock as to the right to receive either dividends or amounts distributable upon liquidation, dissolution or winding up of the Corporation shall be deemed to affect adversely the Series B Preferred Stock. Section 4.3 Unless the consent of the holders of not less than sixty-six and two-thirds percent of the outstanding Series B Preferred Stock, voting separately as a single class, in person or by proxy, either in writing without a meeting or at a special or annual meeting of shareholders called for the purpose, is obtained: (A) the Corporation shall not sell all or substantially all of the Corporation's assets or effect a merger or consolidation or any other transaction resulting in the acquisition of a majority of the then outstanding voting stock of the Corporation by another corporation or entity; (B) except as set forth in Article 6, neither the Corporation nor any of its subsidiaries or affiliates shall declare, agree to declare, pay or agree to pay dividends or make any other distribution on (other than 100% to the Corporation), or redeem, any shares of any class or series of its equity securities other than with respect to the Series B Preferred Stock, unless all dividends accrued on shares of the Series B Preferred Stock shall have been declared and paid; (C) no amendment to the terms of the Series B Preferred Stock as set forth herein shall be effected; and (D) the Corporation shall not, by amendment of its Articles of Incorporation or Bylaws or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, take any action which adversely affects (directly or indirectly) the rights of the holders of the Series B Preferred Stock. Article 5. Conversion ---------- The holders of the Series B Preferred Stock shall have conversion rights as follows (the "Conversion Rights"): Section 5.1 Each share of Series B Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the Common Increase Date (as defined below) and from time to time thereafter, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing $1,000.00 by the Conversion Price (as defined below) in effect at the time of conversion. The Conversion Price at which shares of Common Stock shall be deliverable upon conversion of Series B Preferred Stock without the payment of additional consideration by the holder thereof (the "Conversion Price") shall initially be $0.139. Such initial Conversion Price, and the rate at which shares of Series B Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below. The "Common Increase Date" is the day the Corporation's Articles of Incorporation are amended to increase the authorized number of shares of Common Stock to at least 70,000,000. -4- The Corporation covenants to use its best efforts to cause the Common Increase Date to occur by no later than July 31, 2002. In the event of a liquidation of the Corporation, the Conversion Rights shall terminate at the close of business on the first full day preceding the date fixed for the payment of any amounts distributable on liquidation to the holders of Series B Preferred Stock. Section 5.2 No fractional shares of Common Stock shall be issued upon conversion of the Series B Preferred Stock. In lieu of fractional shares, the Corporation shall pay cash equal to such fraction multiplied by the then effective Conversion Price. Section 5.3 Mechanics of Conversion. ----------------------- (A) In order to convert shares of Series B Preferred Stock into shares of Common Stock after the Common Increase Date, the holder shall surrender the certificate or certificates for such shares of Series B Preferred Stock at the office of the transfer agent (or at the principal office of the Corporation if the Corporation serves as its own transfer agent), together with written notice that such holder elects to convert all or any number of the shares represented by such certificate or certificates. Such notice shall state such holder's name or the names of the nominees in which such holder wishes the certificate or certificates for shares of Common Stock to be issued. If required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his or its attorney duly authorized in writing. The date of receipt of such certificates and notice by the transfer agent or the Corporation shall be the conversion date ("Conversion Date"). The Corporation shall, as soon as practicable after the Conversion Date, issue and deliver at such office to such holder, or to his nominees, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled, together with cash in lieu of any fraction of a share. (B) The Corporation shall at all times after the Common Increase Date during which the Series B Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued stock, for the purpose of effecting the conversion of the Series B Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Series B Preferred Stock. (C) Upon any such conversion, no adjustment to the Conversion Price shall be made for any accrued and unpaid dividends on the Series B Preferred Stock surrendered for conversion or on the Common Stock delivered upon conversion. All accrued but unpaid dividends through the Conversion Date will be paid by the Corporation to the holder at the same time that certificates representing the Common Stock are delivered upon conversion. (D) All shares of Series B Preferred Stock, which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares, including the rights, if any, to receive dividends -5- (except for accrued but unpaid dividends through the Conversion Date), notices and to vote, shall immediately cease and terminate on the Conversion Date, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor and accrued but unpaid dividends through the Conversion Date. Any shares of Series B Preferred Stock so converted shall be retired and cancelled and shall not be reissued, and the Corporation may from time to time take such appropriate action as may be necessary to reduce the number of shares of authorized Series B Preferred Stock accordingly. (E) If the conversion is in connection with an underwritten offer of securities registered pursuant to the Securities Act of 1933, the conversion may, at the option of any holder tendering Series B Preferred Stock for conversion, be conditioned upon the closing with the underwriter of the sale of securities pursuant to such offering, in which event the person(s) entitled to receive the Common Stock issuable upon such conversion of the Series B Preferred Stock shall not be deemed to have converted such Series B Preferred Stock until immediately prior to the closing of the sale of securities. Section 5.4 Adjustments to Conversion Price. ------------------------------- (A) Special Definitions. For purposes of this Section 5.4, the following definitions shall apply: (1) "Option" shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities, excluding rights or options granted to employees, directors or consultants of the Corporation pursuant to an option plan adopted by the Board of Directors to acquire up to that number of shares of Common Stock as is equal to ten (10%) percent of the Common Stock outstanding (provided that, for purposes of this Section 5.4(A)(1), all shares of Common Stock issuable upon (1) exercise of options granted or available for grant under plans approved by the Board of Directors or (2) conversion of shares of Preferred Stock shall be deemed to be outstanding). (2) "Original Issue Date" shall mean the date on which the first share of Series B Preferred Stock is first issued. (3) "Convertible Securities" shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock. (4) "Additional Shares of Common Stock" shall mean all shares of Common Stock issued (or, pursuant to Section 5.4(C) below, deemed to be issued) by the Corporation after the Original Issue Date and other than shares of Common Stock issued or issuable: (i) as a dividend or distribution on Series B Preferred Stock; (ii) by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock, subject to Section Section 5.5 or -6- Section 5.6 or excluded from the definition of Additional Shares of Common Stock by the foregoing clause (i); (iii) upon the exercise of options excluded from the definition of "Option" in Section 5.4(A)(1); (iv) upon exercise of Options which were outstanding on the Original Issue Date, the conversion of Convertible Securities which were outstanding on the Original Issue Date, or in lieu of cash stay bonuses which were granted before 2001; (v) in connection with equipment leases, loans, acquisitions of businesses, strategic alliances, or licenses or acquisitions of technology or marketing rights; or (vi) upon conversion of shares of Preferred Stock. (5) "Rights to Acquire Common Stock" (or "Rights") shall mean all rights issued by the Corporation to acquire common stock whatever by exercise of a warrant, option or similar call or conversion of any existing instruments, in either case for consideration fixed, in amount or by formula, as of the date of issuance. (B) No Adjustment of Conversion Price. No adjustment in the number of --------------------------------- shares of Common Stock into which the Series B Preferred Stock is convertible shall be made, by adjustment in the applicable Conversion Price thereof: (a) unless the consideration per share (determined pursuant to Section 5.4(E)) below for an Additional Share of Common Stock issued or deemed to be issued by the Corporation is less than the applicable Conversion Price in effect on the date of, and immediately prior to, the issue of such additional shares, or (b) if prior to such issuance, the Corporation receives written notice from the holders of at least sixty-six and two-thirds percent of the then outstanding shares of Series B Preferred Stock agreeing that no such adjustment shall be made as the result of the issuance of Additional Shares of Common Stock. (C) Issue of Securities Deemed Issue of Additional Shares of Common Stock. --------------------------------------------------------------------- If the Corporation at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or other Rights to Acquire Common Stock, then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options, Rights or, in the case of Convertible Securities, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue, provided that Additional Shares of Common Stock shall not be deemed to have been issued unless the consideration per share (determined pursuant to Section 5.4(E) hereof) of such Additional Shares of Common Stock would be less than the applicable Conversion Price in effect on the date of and immediately prior to such -7- issue, or such record date, as the case may be, and provided further that in any such case in which Additional Shares of Common Stock are deemed to be issued: (1) No further adjustment in the Conversion Price shall be made upon the subsequent issue of shares of Common Stock upon the exercise of such Options or Rights or conversion or exchange of such Convertible Securities; (2) Upon the expiration or termination of any unexercised Option or Right, the Conversion Price shall be readjusted as if such Option or Right had never been issued; and (3) In the event of any change in the number of shares of Common Stock issuable upon the exercise, conversion or exchange of any Option, Right or Convertible Security, including, but not limited to, a change resulting from the anti-dilution provisions thereof, the Conversion Price then in effect shall forthwith be readjusted to such Conversion Price as would have obtained had the adjustment that was made upon the issuance of such Option, Right or Convertible Security not exercised or converted prior to such change been made upon the basis of such change, but no further adjustment shall be made for the actual issuance of Common Stock upon the exercise or conversion of any such Option, Right or Convertible Security. (D) Adjustment of Conversion Price upon Issuance of Additional Shares ----------------------------------------------------------------- of Common Stock. If the Corporation shall at any time after the Original --------------- Issue Date issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 5.4(C), but excluding shares issued as a dividend or distribution as provided in Section 5.6 or upon a stock split or combination as provided in Section 5.5), without consideration or for a consideration per share less than the applicable Conversion Price in effect on the date of and immediately prior to such issue, then and in such event, such Conversion Price shall be reduced, concurrently with such issue to a price (calculated to the nearest cent) determined by multiplying such Conversion Price by a fraction, (a) the numerator of which shall be (1) the number of shares of Common Stock outstanding immediately prior to such issue plus (2) the number of shares of Common Stock which the aggregate consideration received by the Corporation for the total number of Additional Shares of Common Stock so issued would purchase at such Conversion Price; and (b) the denominator of which shall be (1) the number of shares of Common Stock outstanding immediately prior to such issue plus (2) the number of such Additional Shares of Common Stock so issued. Notwithstanding the foregoing, the applicable Conversion Price shall not be reduced if the amount of such reduction would be an amount less than $.005, but any such amount shall be carried forward and reduction with respect thereto made at the time of and together with any subsequent reduction which, together with such amount and any other amount or amounts so carried forward, shall aggregate $.005 or more. For purposes of this Section 5.4(D), all shares of Common Stock issuable upon conversion of Preferred Stock shall be deemed to be outstanding. -8- (E) Determination of Consideration. For purposes of this ------------------------------ Section 5.4, the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows: (1) Cash and Property: Such consideration shall: (i) insofar as it consists of cash, be computed at the aggregate of cash received by the Corporation, without reduction for amounts paid or payable for accrued interest or accrued dividends; (ii) insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board of Directors; and (iii) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (i) and (ii) above, as determined in good faith by the Board of Directors. (2) Options, Rights and Convertible Securities. The ------------------------------------------ consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Section 5.4(C), relating to Options, Rights and Convertible Securities, shall be determined by dividing (i) the total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options, Rights or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or Rights or the conversion or exchange of such Convertible Securities, by (ii) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or Rights or the conversion or exchange of such Convertible Securities. Section 5.5 Adjustment for Stock Splits and Combinations. If the -------------------------------------------- Corporation shall at any time or from time to time after the Original Issue Date effect a subdivision of the outstanding Common Stock, the Conversion Price then in effect immediately before that subdivision shall be proportionately decreased. If the Corporation shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock, the Conversion Price then in effect immediately before the combination shall be proportionately increased. Any adjustment under this paragraph shall become effective at the close of business on the record date for the subdivision or combination. -9- Section 5.6 Adjustment for Certain Dividends and Distributions. In the -------------------------------------------------- event the Corporation at any time, or from time to time after the Original Issue Date shall make or issue, a dividend or other distribution payable in Additional Shares of Common Stock, then and in each such event the Conversion Price shall be decreased as of the time of such issuance, by multiplying the Conversion Price by a fraction: (A) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance, and (B) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance plus the number of shares of Common Stock issuable in payment of such dividend or distribution. Section 5.7 Adjustments for Other Dividends and Distributions. In the ------------------------------------------------- event the Corporation at any time or from time to time after the Original Issue Date shall make or issue a dividend or other distribution payable in securities of the Corporation other than shares of Common Stock, then and in each such event provision shall be made so that the holders of shares of the Series B Preferred Stock shall receive upon conversion thereof in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Corporation that they would have received had their Series B Preferred Stock been converted into Common Stock on the date of such event and had thereafter, during the period from the date of such event to and including the conversion date, retained such securities receivable by them as aforesaid during such period giving application to all adjustments called for during such period, under this paragraph with respect to the rights of the holders of the Series B Preferred Stock. Section 5.8 Adjustment for Reclassification, Exchange, or Substitution. If ---------------------------------------------------------- the Common Stock issuable upon the conversion of the Series B Preferred Stock shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets provided for below), then and in each such event the holder of each share of Series B Preferred Stock shall have the right thereafter to convert such share into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, or other change, by holders of the number of shares of Common Stock into which such shares of Series B Preferred Stock might have been converted immediately prior to such reorganization, reclassification, or change, all subject to further adjustment as provided herein. Section 5.9 Adjustment for Merger or Reorganization, etc. In case of any -------------------------------------------- consolidation or merger of the Corporation (except mergers not involving any change in or any issuance of securities of the Corporation) with or into another corporation or the sale of all or substantially all of the assets of the Corporation to another corporation (other than a consolidation, merger or sale which is treated as a liquidation pursuant to Article 3), (A) if the surviving entity shall consent in writing to the following provisions, then each share of Series B Preferred Stock shall thereafter be convertible into the kind and amount of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the Corporation deliverable upon conversion of -10- such Series B Preferred Stock would have been entitled upon such consolidation, merger or sale; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions in this Article 5 set forth with respect to the rights and interest thereafter of the holders of the Series B Preferred Stock, to the end that the provisions set forth in this Article 5 (including provisions with respect to changes in and other adjustments of the Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the conversion of the Series B Preferred Stock; or (B) if the surviving entity shall not so consent, then each holder of Series B Preferred Stock may, after receipt of notice specified in Section 5.12, elect to convert such Stock into Common Stock as provided in this Article 5 or to accept the distributions to which he would have been entitled under Article 3 if such consolidation, merger or sale had been treated as a liquidation pursuant to such Article 3. Section 5.10 No Impairment. The Corporation will not, by amendment of its ------------- Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Article 5 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Series B Preferred Stock against impairment. Section 5.11 Certificate as to Adjustments. Upon the occurrence of each ----------------------------- adjustment or readjustment of the Conversion Price pursuant to this Article 5, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder, if any, of Series B Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based and shall file a copy of such certificate with its corporate records. The Corporation shall, upon the written request at any time of any holder of Series B Preferred Stock, furnish or cause to be furnished to such holder a similar certificate setting forth (1) such adjustments and readjustments, (2) the Conversion Price then in effect, and (3) the number of shares of Common Stock and the amount, if any, of other property which then would be received upon the conversion of Series B Preferred Stock. Despite such adjustment or readjustment, the form of each or all Series B Preferred Stock Certificates, if the same shall reflect the initial or any subsequent conversion price, need not be changed in order for the adjustments or readjustments to be valued in accordance with the provisions hereof, which shall control. Section 5.12 Notice of Record Date. In the event: --------------------- (A) that the Corporation declares a dividend (or any other distribution) on its Common Stock payable in Common Stock or other securities of the Corporation; (B) that the Corporation subdivides or combines its outstanding shares of Common Stock; -11- (C) of any reclassification of the Common Stock of the Corporation (other than a subdivision or combination of its outstanding shares of Common Stock or a stock dividend or stock distribution thereon), or of any consolidation or merger of the Corporation into or with another corporation (except mergers not involving any change in or any issuance of securities of the Corporation), or of the sale of all or substantially all of the assets of the Corporation; or (D) of the involuntary or voluntary dissolution, liquidation or winding up of the Corporation; then the Corporation shall cause to be filed at its principal office or at the office of the transfer agent of the Series B Preferred Stock, and shall cause to be mailed to the holders of the Series B Preferred Stock at their last addresses as shown on the records of the Corporation or such transfer agent, at least ten days prior to the record date specified in (1) below or twenty days before the date specified in (2) below, a notice stating: (1) the record date of such dividend, distribution, subdivision or combination, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, subdivision or combination are to be determined, or (2) the date on which such reclassification, consolidation, merger, sale, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, dissolution or winding up. Article 6. Repurchase of Shares. -------------------- Each holder of any outstanding shares of Series B Preferred Stock shall be deemed to have consented, for purposes of Sections 502, 503 and 506 of the California Corporations Code, to distributions made by the Corporation in connection with the repurchase of shares of Common Stock issued to or held by the employees, officers, directors, consultants or other persons performing services for the Corporation upon termination of their employment or services pursuant to agreements between the Corporation and such persons providing for the Corporation's right of such repurchase. -12- EX-4.5.1 7 dex451.txt AMENDMENT TO CERTIFICATE OF DETERMINATION Exhibit 4.5.1 ------------- CERTIFICATE OF AMENDMENT TO CERTIFICATE OF DETERMINATION OF PREFERENCES OF SERIES B PREFERRED STOCK OF SYNBIOTICS CORPORATION a California corporation The undersigned, Paul A. Rosinack and Michael K. Green, hereby certify that: A. Mr. Rosinack is the duly elected and acting President and Mr. Green is the duly elected and acting Secretary of Synbiotics Corporation, a California corporation (the "Corporation"). B. Pursuant to the authority given by the Corporation's Articles of Incorporation, as amended to date, the Board of Directors of the Corporation has duly adopted the resolution attached as Exhibit A. --------- C. The authorized number of shares of Preferred Stock of the Corporation is 25,000,000, none of which has been issued. The authorized number of shares of Series B Preferred Stock of the Corporation is 4,000, none of which has been issued. IN WITNESS WHEREOF, the undersigned certify under penalty of perjury that they have read the foregoing Certificate of Amendment to Certificate of Determination and know the contents thereof, and that the statements therein are true and correct of their own knowledge. Executed in San Diego, California on January 18, 2002. /s/ Paul A. Rosinack -------------------- Paul A. Rosinack President /s/ Michael K. Green Michael K. Green Secretary Exhibit A --------- NOW, THEREFORE, BE IT RESOLVED, that Article 5, Section 5.1 of the Certificate of Determination of Preferences of Series B Preferred Stock filed by the Corporation with the Secretary of State of the State of California on January 4, 2002 is hereby amended and restated to read as follows: "Section 5.1 Each share of Series B Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the Common Increase Date (as defined below) and from time to time thereafter, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing $1,000.00 by the Conversion Price (as defined below) in effect at the time of conversion. The Conversion Price at which shares of Common Stock shall be deliverable upon conversion of Series B Preferred Stock without the payment of additional consideration by the holder thereof (the "Conversion Price") shall initially be $0.12846. Such initial Conversion Price, and the rate at which shares of Series B Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below. The "Common Increase Date" is the day the Corporation's Articles of Incorporation are amended to increase the authorized number of shares of Common Stock to at least 70,000,000. The Corporation covenants to use its best efforts to cause the Common Increase Date to occur by no later than July 31, 2002. In the event of a liquidation of the Corporation, the Conversion Rights shall terminate at the close of business on the first full day preceding the date fixed for the payment of any amounts distributable on liquidation to the holders of Series B Preferred Stock." EX-10.79 8 dex1079.txt MANAGEMENT RETENTION PLAN Exhibit 10.79 ------------- MANAGEMENT RETENTION PLAN Synbiotics Corporation is implementing a "management retention plan" designed to encourage you to remain an employee of the Company between now and the potential sale of the Animal Health Business. The Management Retention Plan consists of a cash or stock bonus and special treatment of outstanding stock options and restricted stock. This Management Retention Plan does not alter or affect existing Synbiotics employee benefit plans, the Special Payment Plan or existing employee agreements. To qualify for the Management Retention Plan, you must be an active employee, who is employed on the day of the sale of the Animal Health Business, provided that you have not notified the Company of your intent to resign your employment with Synbiotics. This Management Retention Plan does not apply to: --- 1) Employees who voluntarily leave the Company prior to the sale of the Animal Health Business 2) Employees whose employment is terminated prior to the sale of the Animal Health Business 3) Employees of W3COMMERCE 4) Active employees who are offered and accept continued employment with the Company following the sale of the Animal Health Business. Cash Bonus A cash bonus payment (or you can elect to receive the cash bonus in stock - see below) will be made on the day following the sale of the Animal Health Business. The bonus payment will depend on the ultimate sales price of the Animal Health Business and will be paid as a percentage of annual base salary ("the Percentage"). In no event will the Percentage payment be less than 25% of an employee's annual base salary and there is no maximum percentage. The Percentage will be calculated as 1.6666 times the sales price of the Animal Health Business. Examples: If the sales price of the Animal Health Business were $35 million, then 35 times 1.6666 would yield a Percentage of 58.88%. You would receive a cash bonus of 58.33% of your annual salary. If the sales price of the Animal Health Business were $60 million then 60 times 1.6666 would yield a Percentage of 100%. You would receive a cash bonus of 100(degrees) of your annual salary. Stock Bonus In-lieu of Cash Bonus You may elect to receive all or a part of the aforementioned cash bonus in stock. Such election must be made within 30 days of the execution date of this agreement. If you choose to receive part of your cash bonus in stock, then the number of shares to be received will be determined by dividing the cash bonus by $3. Example: If your cash bonus were $100,000 and you elected to receive $60,000 of it in Stock, you would receive $40,000 in cash and 20,000 ($60,000/$3) shares of Synbiotics stock. Restricted Stock and Stock Options All of your unvested restricted stock and stock options will become fully vested on the day following the sale of the Animal Health Business and you will receive two years following the sale of the Animal Health Business to exercise any unexercised stock options. /s/ Kenneth Cohen - ---------------------- Kenneth Cohen President and CEO Synbiotics Corporation I have read the above Management Retention Plan. Acknowledged and accepted: Paul A. Rosinack /s/ Paul A. Rosinack - ---------------- -------------------------- Print Name Employee Signature June 16, 2000 - ------------- Date EX-10.79.1 9 dex10791.txt AMENDED MANAGEMENT RETENTION PLAN Exhibit 10.79.1 --------------- AMENDED MANAGEMENT RETENTION PLAN Synbiotics Corporation is implementing a "management retention plan" designed to encourage you to remain am employee of the Company between now and the potential sale of the Animal Health Business. The Management Retention Plan consists of a cash or stock bonus and special treatment of outstanding stock options and restricted stock. This Management Retention Plan does not alter or affect existing Synbiotics employee benefit plans, the Special Payment Plan or existing employee agreements. To qualify for the Management Retention Plan, you must be an active employee, who is employed on the day of the sale of the Animal Health Business, provided that you have not notified the Company of your intent to resign your employment with Synbiotics. This Management Retention Plan does not apply to: 1) Employees who voluntarily leave the Company prior to the sale of the Animal Health Business 2) Employees whose employment is terminated prior to the sale of the Animal Health Business 3) Employees of W3COMMERCE 4) Active employees who are offered and accept continued employment with the Company following the sale of the Animal Health Business. Cash Bonus A cash bonus payment (or you can elect to receive the cash bonus in stock - see below) will be made on the day following the sale of the Animal Health Business. The bonus payment will depend on the ultimate sales price of the Animal Health Business and will be paid as a percentage of annual base salary ("the Percentage"). In no event will the Percentage payment be less than 50% of an employee's annual base salary and there is no maximum percentage. The Percentage will be calculated as 1.666 times the sales price of the Animal Health Business. Examples: If the sales price of the Animal Health Business were $35 million, then 35 times 1.666 would yield a Percentage of 58.33%. You would receive a cash bonus of 58.33% of your annual salary. If the sales price of the Animal Health Business were $60 million then 60 times 1.666 would yield a Percentage of 100%. You would receive a cash bonus of 100% of your annual salary. Restricted Stock and Stock Options All of your unvested restricted stock and stock options will become fully vested on the day following the sale of the Animal Health Business and you will receive two years following the sale of the Animal Health Business to exercise any unexercised stock options. /s/ Kenneth M. Cohen - --------------------------------- Kenneth M. Cohen President and CEO Synbiotics Corporation I have read the above Management Retention Plan. Acknowledged and accepted: /s/ Paul A. Rosinack - ---------------------- Paul A. Rosinack January 24, 2001 - ---------------- Date EX-10.79.2 10 dex10792.txt INCREASED RETENTION PLAN Exhibit 10.79.2 --------------- DATE: March 15, 2001 TO: Paul Rosinack FR: Kenneth M. Cohen RE: Increased Retention Plan Cash Bonus Opportunity - -------------------------------------------------------------------------------- As you know, under the Company's retention plan you have been entitled to receive a cash retention bonus if the Company or its animal health business is sold and you remain employed by the company at the time of the sale. At its February 14, 2001 meeting, the Board of Directors decided to increase your potential cash bonus benefit from the retention plan by doubling the amount you would receive, including a doubling of the minimum payment from 50% to 100%. This recognizes your contributions to date, the value you are expected to create for the shareholders in continuing to work toward a sale, and the diminution in the expected value of the stock option component of the retention plan. Whether or not you have a written employment agreement, please note that (except to the extent expressly provided in a written employment agreement) the Company and you each retain the right to unilaterally terminate the employment relationship at any time, for any reason or for no reason; neither the original retention plan nor this augmentation of it changes that. EX-10.79.3 11 dex10793.txt AMENDMENT TO RETENTION PLAN Exhibit 10.79.3 --------------- AMENDMENT TO RETENTION PLAN AGREEMENT This Amendment (the "Amendment") is entered into as of January 4, 2002 between Synbiotics Corporation ("Synbiotics") and the undersigned employee of Synbiotics or its subsidiary ("Employee"). A. Synbiotics and Employee are parties to a written retention plan agreement, as amended (the "Retention Plan Agreement"), under which Synbiotics promised, on the day following the sale of Synbiotics' animal heath business, to (i) make a cash bonus payment to Employee and (ii) accelerate the vesting and provide a fixed exercisability period of all stock options issued to Employee. B. Synbiotics is working toward entering into a Stock Purchase Agreement with Redwood West Coast, LLC ("Redwood"), under which Redwood would make an investment in Synbiotics stock (the "Stock Purchase Agreement"). Synbiotics has determined that a closing under the Stock Purchase Agreement would constitute the sale of Synbiotics' animal health business and entitle the Employee to a cash payment of $233,128.44 (the "Retention Plan Cash Amount") under the Retention Plan Agreement. C. Redwood requires Employee and Synbiotics to enter into this Amendment before Redwood will enter into the Stock Purchase Agreement. D. Synbiotics and Employee desire to amend the Retention Plan Agreement to provide that Synbiotics will issue to Employee 1,295,268 fully vested, fully paid and nonassessable shares of common stock of Synbiotics (the "New Shares") pursuant to the Synbiotics 1995 Stock Option/Stock Issuance Plan, as amended (the "1995 Plan") instead of paying the Retention Plan Cash Amount. E. Employee is willing separately to agree to forfeit any and all of Employee's options to purchase stock of Synbiotics, in exchange for Synbiotics making (and not seeking reimbursement from Employee for) certain tax withholding amounts for and on behalf of Employee. NOW, THEREFORE: 1. Synbiotics and Employee hereby agree that if and only if Synbiotics and Redwood enter into the Stock Purchase Agreement, the Retention Plan Agreement is hereby amended (as of immediately before the closing under the Stock Purchase Agreement (the "Stock Purchase Closing")) by: 1.1 deleting the paragraph captioned "Cash Bonus" in its entirety and replacing such paragraph with the following: "The Company will issue to you on or before May 15, 2002, 1,295,268 fully vested, fully paid and nonassessable shares of common stock of the Company pursuant to the Company's 1995 Stock Option/Stock Issuance Plan, as amended." 1.2 deleting the paragraph captioned "Restricted Stock and Stock Options" in its entirety. 2. Employee represents and warrants to Synbiotics as follows: 2.1 Employee is acquiring the New Shares for Employee's own account and not with a view to or for sale in connection with any distribution of the New Shares. 2.2 Employee acknowledges that Employee has received a copy of the Prospectus of Synbiotics dated as of January 4, 2002. Employee has received all the information Employee considers necessary or appropriate for deciding whether to sign this Amendment and acquire the New Shares. 3. The value of the New Shares will be taxable income to Employee. Withholding taxes must be paid to Federal and State tax authorities. Synbiotics agrees to pay any and all tax withholding amounts required to be paid by Synbiotics and/or by Employee arising out of or in connection with the issuance of the New Shares (except for "secondary" employee-side withholdings, if any, associated with the "primary" employee-side withholding payments made by Synbiotics on behalf of Employee), and without any requirement for Employee to repay Synbiotics for the withholding. Withholdings paid by Synbiotics on behalf of Employee count as "taxes paid" on Employee's 2002 Federal and State income tax returns. In exchange for this tax withholding benefit, Employee agrees to and hereby does (effective immediately before the Stock Purchase Closing) terminate and forfeit, without the need for further action by any party, any and all of Employee's options to purchase capital stock of Synbiotics. Synbiotics has no obligation with regard to any further or other taxes of Employee. 4. Even if Employee's employment is terminated for any reason prior to May 15, 2002, Employee will still be entitled to receive the New Shares on May 15, 2002. 5. All of the terms and provisions of the Retention Plan Agreement as amended hereby remain in full force and effect. However, Employee confirms that upon Redwood's January 2002 investment under the Stock Purchase Agreement, the Retention Plan Agreement (as amended hereby) is terminated except for Synbiotics' obligations arising from such January 2002 Redwood investment. EMPLOYEE /s/ Paul A. Rosinack ------------------------------------- Name: Paul A. Rosinack ------------------------------------- SYNBIOTICS CORPORATION By: /s/ Michael K. Green --------------------------------- Michael K. Green, Senior Vice President & C.F.O. EX-10.80 12 dex1080.txt MANAGEMENT RETENTION PLAN Exhibit 10.80 ------------- MANAGEMENT RETENTION PLAN Synbiotics Corporation is implementing a "management retention plan" designed to encourage you to remain an employee of the Company between now and the potential sale of the Animal Health Business. The Management Retention Plan consists of a cash or stock bonus and special treatment of outstanding stock options and restricted stock. This Management Retention Plan does not alter or affect existing Synbiotics employee benefit plans, the Special Payment Plan or existing employee agreements. To qualify for the Management Retention Plan, you must be an active employee, who is employed on the day of the sale of the Animal Health Business, provided that you have not notified the Company of your intent to resign your employment with Synbiotics. This Management Retention Plan does not apply to: --- 1) Employees who voluntarily leave the Company prior to the sale of the Animal Health Business 2) Employees whose employment is terminated prior to the sale of the Animal Health Business 3) Employees of W3COMMERCE 4) Active employees who are offered and accept continued employment with the Company following the sale of the Animal Health Business. Cash Bonus A cash bonus payment (or you can elect to receive the cash bonus in stock - see below) will be made on the day following the sale of the Animal Health Business. The bonus payment will depend on the ultimate sales price of the Animal Health Business and will be paid as a percentage of annual base salary ("the Percentage"). In no event will the Percentage payment be less than 25% of an employee's annual base salary and there is no maximum percentage. The Percentage will be calculated as 1.25 times the sales price of the Animal Health Business. Examples: If the sales price of the Animal Health Business were $35 million, then 35 times 1.25 would yield a Percentage of 43.75%. You would receive a cash bonus of 43.75% of your annual salary. If the sales price of the Animal Health Business were $60 million then 60 times 1.25 would yield a Percentage of 75%. You would receive a cash bonus of 75% of your annual salary. Stock Bonus In-lieu of Cash Bonus You may elect to receive all or a part of the aforementioned cash bonus in stock. Such election must be made within 30 days from the execution date of this agreement. If you choose to receive part of your cash bonus in stock, then the number of shares to be received will be determined by dividing the cash bonus by $3. Example: If your cash bonus were $100, 000 and you elected to receive $60, 000 of it in Stock, you would receive $40,000 in cash and 20,000 ($60.000/$3) shares of Synbiotics stock. Notwithstanding paragraph 4 above, if you are offered and accept employment with the Company following the sale of the Animal Health Business you will receive the equivalent of the cash bonus in "Synbiotics restricted stock" calculated by dividing the cash bonus by $3. Restricted Stock and Stock Options All of your unvested restricted stock and stock options will become fully vested on the day following the sale of the Animal Health Business and you will receive two years following the sale of the Animal Health Business to exercise any unexercised stock options. /s/ Kenneth Cohen - ---------------------- Kenneth Cohen President and CEO Synbiotics Corporation I have read the above Management Retention Plan. Acknowledged and accepted: Michael Green /s/ Michael Green - ------------- ----------------- Print Name Employee Signature July 12, 2000 - ------------- Date EX-10.80.1 13 dex10801.txt AMENDED MANAGEMENT RETENTION PLAN Exhibit 10.80.1 --------------- AMENDED MANAGEMENT RETENTION PLAN Synbiotics Corporation is implementing a "management retention plan" designed to encourage you to remain am employee of the Company between now and the potential sale of the Animal Health Business. The Management Retention Plan consists of a cash or stock bonus and special treatment of outstanding stock options and restricted stock. This Management Retention Plan does not alter or affect existing Synbiotics employee benefit plans, the Special Payment Plan or existing employee agreements. To qualify for the Management Retention Plan, you must be an active employee, who is employed on the day of the sale of the Animal Health Business, provided that you have not notified the Company of your intent to resign your employment with Synbiotics. This Management Retention Plan does not apply to: 1) Employees who voluntarily leave the Company prior to the sale of the Animal Health Business 2) Employees whose employment is terminated prior to the sale of the Animal Health Business 3) Employees of W3COMMERCE 4) Active employees who are offered and accept continued employment with the Company following the sale of the Animal Health Business. Cash Bonus A cash bonus payment (or you can elect to receive the cash bonus in stock - see below) will be made on the day following the sale of the Animal Health Business. The bonus payment will depend on the ultimate sales price of the Animal Health Business and will be paid as a percentage of annual base salary ("the Percentage"). In no event will the Percentage payment be less than 50.0% of an employee's annual base salary and there is no maximum percentage. The Percentage will be calculated as 1.25 times the sales price of the Animal Health Business. Examples: If the sales price of the Animal Health Business were $35 million, then 35 times 1.25 would yield a Percentage of 43.75%. You would receive a cash bonus of 43.75% of your annual salary. If the sales price of the Animal Health Business were $60 million then 60 times 1.25 would yield a Percentage of 75%. You would receive a cash bonus of 75% of your annual salary. Restricted Stock and Stock Options All of your unvested restricted stock and stock options will become fully vested on the day following the sale of the Animal Health Business and you will receive two years following the sale of the Animal Health Business to exercise any unexercised stock options. /s/ Kenneth M. Cohen - --------------------------- Kenneth M. Cohen President and CEO Synbiotics Corporation I have read the above Management Retention Plan. Acknowledged and accepted: /s/ Michael K. Green - --------------------------- Michael K. Green January 18, 2001 - --------------------------- Date EX-10.80.2 14 dex10802.txt INCREASED RETENTION PLAN Exhibit 10.80.2 --------------- DATE: March 15, 2001 TO: Mike Green FR: Kenneth M. Cohen RE: Increased Retention Plan Cash Bonus Opportunity - -------------------------------------------------------------------------------- As you know, under the Company's retention plan you have been entitled to receive a cash retention bonus if the Company or its animal health business is sold and you remain employed by the company at the time of the sale. At its February 14, 2001 meeting, the Board of Directors decided to increase your potential cash bonus benefit from the retention plan by doubling the amount you would receive, including a doubling of the minimum payment from 50% to 100%. This recognizes your contributions to date, the value you are expected to create for the shareholders in continuing to work toward a sale, and the diminution in the expected value of the stock option component of the retention plan. Whether or not you have a written employment agreement, please note that (except to the extent expressly provided in a written employment agreement) the Company and you each retain the right to unilaterally terminate the employment relationship at any time, for any reason or for no reason; neither the original retention plan nor this augmentation of it changes that. EX-10.80.3 15 dex10803.txt AMENDMENT TO RETENTION PLAN AGREEMENT Exhibit 10.80.3 --------------- AMENDMENT TO RETENTION PLAN AGREEMENT This Amendment (the "Amendment") is entered into as of January 4, 2002 between Synbiotics Corporation ("Synbiotics") and the undersigned employee of Synbiotics or its subsidiary ("Employee"). A. Synbiotics and Employee are parties to a written retention plan agreement, as amended (the "Retention Plan Agreement"), under which Synbiotics promised, on the day following the sale of Synbiotics' animal heath business, to (i) make a cash bonus payment to Employee and (ii) accelerate the vesting and provide a fixed exercisability period of all stock options issued to Employee. B. Synbiotics is working toward entering into a Stock Purchase Agreement with Redwood West Coast, LLC ("Redwood"), under which Redwood would make an investment in Synbiotics stock (the "Stock Purchase Agreement"). Synbiotics has determined that a closing under the Stock Purchase Agreement would constitute the sale of Synbiotics' animal health business and entitle the Employee to a cash payment of $188,124.00 (the "Retention Plan Cash Amount") under the Retention Plan Agreement. C. Redwood requires Employee and Synbiotics to enter into this Amendment before Redwood will enter into the Stock Purchase Agreement. D. Synbiotics and Employee desire to amend the Retention Plan Agreement to provide that Synbiotics will issue to Employee 1,045,133 fully vested, fully paid and nonassessable shares of common stock of Synbiotics (the "New Shares") pursuant to the Synbiotics 1995 Stock Option/Stock Issuance Plan, as amended (the "1995 Plan") instead of paying the Retention Plan Cash Amount. E. Employee is willing separately to agree to forfeit any and all of Employee's options to purchase stock of Synbiotics, in exchange for Synbiotics making (and not seeking reimbursement from Employee for) certain tax withholding amounts for and on behalf of Employee. NOW, THEREFORE: 1. Synbiotics and Employee hereby agree that if and only if Synbiotics and Redwood enter into the Stock Purchase Agreement, the Retention Plan Agreement is hereby amended (as of immediately before the closing under the Stock Purchase Agreement (the "Stock Purchase Closing")) by: 1.1 deleting the paragraph captioned "Cash Bonus" in its entirety and replacing such paragraph with the following: "The Company will issue to you on or before May 15, 2002, 1,045,133 fully vested, fully paid and nonassessable shares of common stock of the Company pursuant to the Company's 1995 Stock Option/Stock Issuance Plan, as amended." 1.2 deleting the paragraph captioned "Restricted Stock and Stock Options" in its entirety. 2. Employee represents and warrants to Synbiotics as follows: 2.1 Employee is acquiring the New Shares for Employee's own account and not with a view to or for sale in connection with any distribution of the New Shares. 2.2 Employee acknowledges that Employee has received a copy of the Prospectus of Synbiotics dated as of January 4, 2002. Employee has received all the information Employee considers necessary or appropriate for deciding whether to sign this Amendment and acquire the New Shares. 3. The value of the New Shares will be taxable income to Employee. Withholding taxes must be paid to Federal and State tax authorities. Synbiotics agrees to pay any and all tax withholding amounts required to be paid by Synbiotics and/or by Employee arising out of or in connection with the issuance of the New Shares (except for "secondary" employee-side withholdings, if any, associated with the "primary" employee-side withholding payments made by Synbiotics on behalf of Employee), and without any requirement for Employee to repay Synbiotics for the withholding. Withholdings paid by Synbiotics on behalf of Employee count as "taxes paid" on Employee's 2002 Federal and State income tax returns. In exchange for this tax withholding benefit, Employee agrees to and hereby does (effective immediately before the Stock Purchase Closing) terminate and forfeit, without the need for further action by any party, any and all of Employee's options to purchase capital stock of Synbiotics. Synbiotics has no obligation with regard to any further or other taxes of Employee. 4. Even if Employee's employment is terminated for any reason prior to May 15, 2002, Employee will still be entitled to receive the New Shares on May 15, 2002. 5. All of the terms and provisions of the Retention Plan Agreement as amended hereby remain in full force and effect. However, Employee confirms that upon Redwood's January 2002 investment under the Stock Purchase Agreement, the Retention Plan Agreement (as amended hereby) is terminated except for Synbiotics' obligations arising from such January 2002 Redwood investment. EMPLOYEE /s/ Michael K. Green ---------------------------------------- Name: Michael K. Green ---------------------------------- SYNBIOTICS CORPORATION By: /s/ Paul A. Rosinack ------------------------------------ Paul A. Rosinack, President & C.E.O. EX-10.81 16 dex1081.txt MANAGEMENT RETENTION PLAN Exhibit 10.81 ------------- MANAGEMENT RETENTION PLAN Synbiotics Corporation is implementing a "management retention plan" designed to encourage you to remain an employee of the Company between now and the potential sale of the Animal Health Business. The Management Retention Plan consists of a cash or stock bonus and special treatment of outstanding stock options and restricted stock. This Management Retention Plan does not alter or affect existing Synbiotics employee benefit plans, the Special Payment Plan or existing employee agreements. To qualify for the Management Retention Plan, you must be an active employee, who is employed on the day of the sale of the Animal Health Business, provided that you have not notified the Company of your intent to resign your employment with Synbiotics. This Management Retention Plan does not apply to: --- 1) Employees who voluntarily leave the Company prior to the sale of the Animal Health Business 2) Employees whose employment is terminated prior to the sale of the Animal Health Business 3) Employees of W3COMMERCE 4) Active employees who are offered and accept continued employment with the Company following the sale of the Animal Health Business. Cash Bonus A cash bonus payment (or you can elect to receive the cash bonus in stock - see below) will be made on the day following the sale of the Animal Health Business. The bonus payment will depend on the ultimate sales price of the Animal Health Business and will be paid as a percentage of annual base salary ("the Percentage"). In no event will the Percentage payment be less than 25% of an employee's annual base salary and there is no maximum percentage. The Percentage will be calculated as 1.25 times the sales price of the Animal Health Business. Examples: If the sales price of the Animal Health Business were $35 million, then 35 times 1.25 would yield a Percentage of 43.75%. You would receive a cash bonus of 43.75% of your annual salary. If the sales price of the Animal Health Business were $60 million then 60 times 1.25 would yield a Percentage of 75%. You would receive a cash bonus of 75% of your annual salary. Stock Bonus In-lieu of Cash Bonus You may elect to receive all or a part of the aforementioned cash bonus in stock. Such election must be made within 30 days from the execution date of this agreement. If you choose to receive part of your cash bonus in stock, then the number of shares to be received will be determined by dividing the cash bonus by $3. Example: If your cash bonus were $100, 000 and you elected to receive $60, 000 of it in Stock, you would receive $40,000 in cash and 20,000 ($60.000/$3) shares of Synbiotics stock. Notwithstanding paragraph 4 above, if you are offered and accept employment with the Company following the sale of the Animal Health Business you will receive the equivalent of the cash bonus in "Synbiotics restricted stock" calculated by dividing the cash bonus by $3. Restricted Stock and Stock Options All of your unvested restricted stock and stock options will become fully vested on the day following the sale of the Animal Health Business and you will receive two years following the sale of the Animal Health Business to exercise any unexercised stock options. /s/ Kenneth Cohen - ---------------------- Kenneth Cohen President and CEO Synbiotics Corporation I have read the above Management Retention Plan. Acknowledged and accepted: Francois Guillemin /s/ Francois Guillemin - ------------------ ---------------------- Print Name Employee Signature June 26, 2000 - ------------- Date EX-10.81.1 17 dex10811.txt AMENDED MANAGEMENT RETENTION PLAN Exhibit 10.81.1 --------------- AMENDED MANAGEMENT RETENTION PLAN Synbiotics Corporation is implementing a "management retention plan" designed to encourage you to remain am employee of the Company between now and the potential sale of the Animal Health Business. The Management Retention Plan consists of a cash or stock bonus and special treatment of outstanding stock options and restricted stock. This Management Retention Plan does not alter or affect existing Synbiotics employee benefit plans, the Special Payment Plan or existing employee agreements. To qualify for the Management Retention Plan, you must be an active employee, who is employed on the day of the sale of the Animal Health Business, provided that you have not notified the Company of your intent to resign your employment with Synbiotics. This Management Retention Plan does not apply to: 1) Employees who voluntarily leave the Company prior to the sale of the Animal Health Business 2) Employees whose employment is terminated prior to the sale of the Animal Health Business 3) Employees of W3COMMERCE 4) Active employees who are offered and accept continued employment with the Company following the sale of the Animal Health Business. Cash Bonus A cash bonus payment (or you can elect to receive the cash bonus in stock - see below) will be made on the day following the sale of the Animal Health Business. The bonus payment will depend on the ultimate sales price of the Animal Health Business and will be paid as a percentage of annual base salary ("the Percentage"). In no event will the Percentage payment be less than 37.5% of an employee's annual base salary and there is no maximum percentage. The Percentage will be calculated as 1.25 times the sales price of the Animal Health Business. Examples: If the sales price of the Animal Health Business were $35 million, then 35 times 1.25 would yield a Percentage of 43.75%. You would receive a cash bonus of 43.75% of your annual salary. If the sales price of the Animal Health Business were $60 million then 60 times 1.25 would yield a Percentage of 75%. You would receive a cash bonus of 75% of your annual salary. Restricted Stock and Stock Options All of your unvested restricted stock and stock options will become fully vested on the day following the sale of the Animal Health Business and you will receive two years following the sale of the Animal Health Business to exercise any unexercised stock options. /s/ Kenneth M. Cohen - ---------------------------- Kenneth M. Cohen President and CEO Synbiotics Corporation I have read the above Management Retention Plan. Acknowledged and accepted: /s/ Francois Guillemin - ------------------------- Francois Guillemin February 2, 2001 - ------------------------- Date EX-10.81.2 18 dex10812.txt INCREASED RETENTION PLAN Exhibit 10.81.2 --------------- DATE: March 15, 2001 TO: Francois Guillemin FR: Kenneth M. Cohen RE: Increased Retention Plan Cash Bonus Opportunity ________________________________________________________________________________ As you know, under the Company's retention plan you have been entitled to receive a cash retention bonus if the Company or its animal health business is sold and you remain employed by the company at the time of the sale. At its February 14, 2001 meeting, the Board of Directors decided to increase your potential cash bonus benefit from the retention plan by doubling the amount you would receive, including a doubling of the minimum payment from 37.5% to 75%. This recognizes your contributions to date, the value you are expected to create for the shareholders in continuing to work toward a sale, and the diminution in the expected value of the stock option component of the retention plan. Whether or not you have a written employment agreement, please note that (except to the extent expressly provided in a written employment agreement) the Company and you each retain the right to unilaterally terminate the employment relationship at any time, for any reason or for no reason; neither the original retention plan nor this augmentation of it changes that. EX-10.81.3 19 dex10813.txt AMENDMENT TO RETENTION PLAN AGREEMENT Exhibit 10.81.3 --------------- AMENDMENT TO RETENTION PLAN AGREEMENT This Amendment (the "Amendment") is entered into as of January 4, 2002 between Synbiotics Corporation ("Synbiotics") and the undersigned employee of Synbiotics or its subsidiary ("Employee"). A. Synbiotics and Employee are parties to a written retention plan agreement, as amended (the "Retention Plan Agreement"), under which Synbiotics promised, on the day following the sale of Synbiotics' animal heath business, to (i) make a cash bonus payment to Employee and (ii) accelerate the vesting and provide a fixed exercisability period of all stock options issued to Employee. B. Synbiotics is working toward entering into a Stock Purchase Agreement with Redwood West Coast, LLC ("Redwood"), under which Redwood would make an investment in Synbiotics stock (the "Stock Purchase Agreement"). Synbiotics has determined that a closing under the Stock Purchase Agreement would constitute the sale of Synbiotics' animal health business and entitle the Employee to a cash payment of $102,909.51 (the "Retention Plan Cash Amount") under the Retention Plan Agreement. C. Redwood requires Employee and Synbiotics to enter into this Amendment before Redwood will enter into the Stock Purchase Agreement. D. Synbiotics and Employee desire 0to amend the Retention Plan Agreement to provide that Synbiotics will issue to Employee 571,720 fully vested, fully paid and nonassessable shares of common stock of Synbiotics (the "New Shares") pursuant to the Synbiotics 1995 Stock Option/Stock Issuance Plan, as amended (the "1995 Plan") instead of paying the Retention Plan Cash Amount. E. Employee is willing separately to agree to forfeit any and all of Employee's options to purchase stock of Synbiotics, in exchange for Synbiotics making (and not seeking reimbursement from Employee for) certain tax withholding amounts for and on behalf of Employee. NOW, THEREFORE: 1. Synbiotics and Employee hereby agree that if and only if Synbiotics and Redwood enter into the Stock Purchase Agreement, the Retention Plan Agreement is hereby amended (as of immediately before the closing under the Stock Purchase Agreement (the "Stock Purchase Closing")) by: 1.1 deleting the paragraph captioned "Cash Bonus" in its entirety and replacing such paragraph with the following: "The Company will issue to you on or before May 15, 2002, 571,720 fully vested, fully paid and nonassessable shares of common stock of the Company pursuant to the Company's 1995 Stock Option/Stock Issuance Plan, as amended." 1.2 deleting the paragraph captioned "Restricted Stock and Stock Options" in its entirety. 2. Employee represents and warrants to Synbiotics as follows: 2.1 Employee is acquiring the New Shares for Employee's own account and not with a view to or for sale in connection with any distribution of the New Shares. 2.2 Employee acknowledges that Employee has received a copy of the Prospectus of Synbiotics dated as of January 4, 2002. Employee has received all the information Employee considers necessary or appropriate for deciding whether to sign this Amendment and acquire the New Shares. 3. The value of the New Shares will be taxable income to Employee. Withholding taxes must be paid to Federal and State tax authorities. Synbiotics agrees to pay any and all tax withholding amounts required to be paid by Synbiotics and/or by Employee arising out of or in connection with the issuance of the New Shares (except for "secondary" employee-side withholdings, if any, associated with the "primary" employee-side withholding payments made by Synbiotics on behalf of Employee), and without any requirement for Employee to repay Synbiotics for the withholding. Withholdings paid by Synbiotics on behalf of Employee count as "taxes paid" on Employee's 2002 Federal and State income tax returns. In exchange for this tax withholding benefit, Employee agrees to and hereby does (effective immediately before the Stock Purchase Closing) terminate and forfeit, without the need for further action by any party, any and all of Employee's options to purchase capital stock of Synbiotics. Synbiotics has no obligation with regard to any further or other taxes of Employee. 4. Even if Employee's employment is terminated for any reason prior to May 15, 2002, Employee will still be entitled to receive the New Shares on May 15, 2002. 5. All of the terms and provisions of the Retention Plan Agreement as amended hereby remain in full force and effect. However, Employee confirms that upon Redwood's January 2002 investment under the Stock Purchase Agreement, the Retention Plan Agreement (as amended hereby) is terminated except for Synbiotics' obligations arising from such January 2002 Redwood investment. EMPLOYEE /s/ Francois Guillemin ------------------------------------------- Name: Francois Guillemin ------------------------------------ SYNBIOTICS CORPORATION By: /s/ Paul A. Rosinack -------------------------------------- Paul A. Rosinack, President & C.E.O. EX-10.82 20 dex1082.txt MANAGEMENT RETENTION PLAN Exhibit 10.82 ------------- MANAGEMENT RETENTION PLAN Synbiotics Corporation is implementing a "management retention plan" designed to encourage you to remain an employee of the Company between now and the potential sale of the Animal Health Business. The Management Retention Plan consists of a cash or stock bonus and special treatment of outstanding stock options and restricted stock. This Management Retention Plan does not alter or affect existing Synbiotics employee benefit plans, the Special Payment Plan or existing employee agreements. To qualify for the Management Retention Plan, you must be an active employee, who is employed on the day of the sale of the Animal Health Business, provided that you have not notified the Company of your intent to resign your employment with Synbiotics. This Management Retention Plan does not apply to: --- 1) Employees who voluntarily leave the Company prior to the sale of the Animal Health Business 2) Employees whose employment is terminated prior to the sale of the Animal Health Business 3) Employees of W3COMMERCE 4) Active employees who are offered and accept continued employment with the Company following the sale of the Animal Health Business. Cash Bonus A cash bonus payment (or you can elect to receive the cash bonus in stock - see below) will be made on the day following the sale of the Animal Health Business. The bonus payment will depend on the ultimate sales price of the Animal Health Business and will be paid as a percentage of annual base salary ("the Percentage"). In no event will the Percentage payment be less than 25% of an employee's annual base salary and there is no maximum percentage. The Percentage will be calculated as 1.25 times the sales price of the Animal Health Business. Examples: If the sales price of the Animal Health Business were $35 million, then 35 times 1.25 would yield a Percentage of 43.75%. You would receive a cash bonus of 43.75% of your annual salary. If the sales price of the Animal Health Business were $60 million then 60 times 1.25 would yield a Percentage of 75%. You would receive a cash bonus of 75% of your annual salary. Stock Bonus In-lieu of Cash Bonus You may elect to receive all or a part of the aforementioned cash bonus in stock. Such election must be made within 30 days from the execution date of this agreement. If you choose to receive part of your cash bonus in stock, then the number of shares to be received will be determined by dividing the cash bonus by $3. Example: If your cash bonus were $100, 000 and you elected to receive $60, 000 of it in Stock, you would receive $40,000 in cash and 20,000 ($60.000/$3) shares of Synbiotics stock. Notwithstanding paragraph 4 above, if you are offered and accept employment with the Company following the sale of the Animal Health Business you will receive the equivalent of the cash bonus in "Synbiotics restricted stock" calculated by dividing the cash bonus by $3. Restricted Stock and Stock Options All of your unvested restricted stock and stock options will become fully vested on the day following the sale of the Animal Health Business and you will receive two years following the sale of the Animal Health Business to exercise any unexercised stock options. /s/ Kenneth Cohen - ---------------------- Kenneth Cohen President and CEO Synbiotics Corporation I have read the above Management Retention Plan. Acknowledged and accepted: Serge Leterme /s/ Serge Leterme - ---------------------- -------------------------- Print Name Employee Signature July 7, 2000 - ------------ Date EX-10.82.1 21 dex10821.txt AMENDED MANAGEMENT RETENTION PLAN Exhibit 10.82.1 --------------- AMENDED MANAGEMENT RETENTION PLAN Synbiotics Corporation is implementing a "management retention plan" designed to encourage you to remain am employee of the Company between now and the potential sale of the Animal Health Business. The Management Retention Plan consists of a cash or stock bonus and special treatment of outstanding stock options and restricted stock. This Management Retention Plan does not alter or affect existing Synbiotics employee benefit plans, the Special Payment Plan or existing employee agreements. To qualify for the Management Retention Plan, you must be an active employee, who is employed on the day of the sale of the Animal Health Business, provided that you have not notified the Company of your intent to resign your employment with Synbiotics. This Management Retention Plan does not apply to: 1) Employees who voluntarily leave the Company prior to the sale of the Animal Health Business 2) Employees whose employment is terminated prior to the sale of the Animal Health Business 3) Employees of W3COMMERCE 4) Active employees who are offered and accept continued employment with the Company following the sale of the Animal Health Business. Cash Bonus A cash bonus payment (or you can elect to receive the cash bonus in stock - see below) will be made on the day following the sale of the Animal Health Business. The bonus payment will depend on the ultimate sales price of the Animal Health Business and will be paid as a percentage of annual base salary ("the Percentage"). In no event will the Percentage payment be less than 37.5% of an employee's annual base salary and there is no maximum percentage. The Percentage will be calculated as 1.25 times the sales price of the Animal Health Business. Examples: If the sales price of the Animal Health Business were $35 million, then 35 times 1.25 would yield a Percentage of 43.75%. You would receive a cash bonus of 43.75% of your annual salary. If the sales price of the Animal Health Business were $60 million then 60 times 1.25 would yield a Percentage of 75%. You would receive a cash bonus of 75% of your annual salary. Restricted Stock and Stock Options All of your unvested restricted stock and stock options will become fully vested on the day following the sale of the Animal Health Business and you will receive two years following the sale of the Animal Health Business to exercise any unexercised stock options. /s/ Kenneth M. Cohen - ---------------------------- Kenneth M. Cohen President and CEO Synbiotics Corporation I have read the above Management Retention Plan. Acknowledged and accepted: /s/ Serge Leterme - ----------------------------- Serge Leterme January 29, 2001 - ----------------------------- Date EX-10.82.2 22 dex10822.txt INCREASED RETENTION PLAN Exhibit 10.82.2 --------------- DATE: March 15, 2001 TO: Serge Leterme FR: Kenneth M. Cohen RE: Increased Retention Plan Cash Bonus Opportunity - -------------------------------------------------------------------------------- As you know, under the Company's retention plan you have been entitled to receive a cash retention bonus if the Company or its animal health business is sold and you remain employed by the company at the time of the sale. At its February 14, 2001 meeting, the Board of Directors decided to increase your potential cash bonus benefit from the retention plan by doubling the amount you would receive, including a doubling of the minimum payment from 37.5% to 75%. This recognizes your contributions to date, the value you are expected to create for the shareholders in continuing to work toward a sale, and the diminution in the expected value of the stock option component of the retention plan. Whether or not you have a written employment agreement, please note that (except to the extent expressly provided in a written employment agreement) the Company and you each retain the right to unilaterally terminate the employment relationship at any time, for any reason or for no reason; neither the original retention plan nor this augmentation of it changes that. EX-10.82.3 23 dex10823.txt AMENDMENT TO RETENTION PLAN AGREEMENT Exhibit 10.82.3 --------------- AMENDMENT TO RETENTION PLAN AGREEMENT This Amendment (the "Amendment") is entered into as of January 4, 2002 between Synbiotics Corporation ("Synbiotics") and the undersigned employee of Synbiotics or its subsidiary ("Employee"). A. Synbiotics and Employee are parties to a written retention plan agreement, as amended (the "Retention Plan Agreement"), under which Synbiotics promised, on the day following the sale of Synbiotics' animal heath business, to (i) make a cash bonus payment to Employee and (ii) accelerate the vesting and provide a fixed exercisability period of all stock options issued to Employee. B. Synbiotics is working toward entering into a Stock Purchase Agreement with Redwood West Coast, LLC ("Redwood"), under which Redwood would make an investment in Synbiotics stock (the "Stock Purchase Agreement"). Synbiotics has determined that a closing under the Stock Purchase Agreement would constitute the sale of Synbiotics' animal health business and entitle the Employee to a cash payment of $114,345.00 (the "Retention Plan Cash Amount") under the Retention Plan Agreement. C. Redwood requires Employee and Synbiotics to enter into this Amendment before Redwood will enter into the Stock Purchase Agreement. D. Synbiotics and Employee desire to amend the Retention Plan Agreement to provide that Synbiotics will issue to Employee 635,250 fully vested, fully paid and nonassessable shares of common stock of Synbiotics (the "New Shares") pursuant to the Synbiotics 1995 Stock Option/Stock Issuance Plan, as amended (the "1995 Plan") instead of paying the Retention Plan Cash Amount. E. Employee is willing separately to agree to forfeit any and all of Employee's options to purchase stock of Synbiotics, in exchange for Synbiotics making (and not seeking reimbursement from Employee for) certain tax withholding amounts for and on behalf of Employee. NOW, THEREFORE: 1. Synbiotics and Employee hereby agree that if and only if Synbiotics and Redwood enter into the Stock Purchase Agreement, the Retention Plan Agreement is hereby amended (as of immediately before the closing under the Stock Purchase Agreement (the "Stock Purchase Closing")) by: 1.1 deleting the paragraph captioned "Cash Bonus" in its entirety and replacing such paragraph with the following: "The Company will issue to you on or before May 15, 2002, 635,250 fully vested, fully paid and nonassessable shares of common stock of the Company pursuant to the Company's 1995 Stock Option/Stock Issuance Plan, as amended." 1.2 deleting the paragraph captioned "Restricted Stock and Stock Options" in its entirety. 2. Employee represents and warrants to Synbiotics as follows: 2.1 Employee is acquiring the New Shares for Employee's own account and not with a view to or for sale in connection with any distribution of the New Shares. 2.2 Employee acknowledges that Employee has received a copy of the Prospectus of Synbiotics dated as of January 4, 2002. Employee has received all the information Employee considers necessary or appropriate for deciding whether to sign this Amendment and acquire the New Shares. 3. The value of the New Shares will be taxable income to Employee. Withholding taxes must be paid to Federal and State tax authorities. Synbiotics agrees to pay any and all tax withholding amounts required to be paid by Synbiotics and/or by Employee arising out of or in connection with the issuance of the New Shares (except for "secondary" employee-side withholdings, if any, associated with the "primary" employee-side withholding payments made by Synbiotics on behalf of Employee), and without any requirement for Employee to repay Synbiotics for the withholding. Withholdings paid by Synbiotics on behalf of Employee count as "taxes paid" on Employee's 2002 Federal and State income tax returns. In exchange for this tax withholding benefit, Employee agrees to and hereby does (effective immediately before the Stock Purchase Closing) terminate and forfeit, without the need for further action by any party, any and all of Employee's options to purchase capital stock of Synbiotics. Synbiotics has no obligation with regard to any further or other taxes of Employee. 4. Even if Employee's employment is terminated for any reason prior to May 15, 2002, Employee will still be entitled to receive the New Shares on May 15, 2002. 5. All of the terms and provisions of the Retention Plan Agreement as amended hereby remain in full force and effect. However, Employee confirms that upon Redwood's January 2002 investment under the Stock Purchase Agreement, the Retention Plan Agreement (as amended hereby) is terminated except for Synbiotics' obligations arising from such January 2002 Redwood investment. EMPLOYEE /s/ Serge Leterme ---------------------------------------- Name: Serge Leterme ---------------------------------- SYNBIOTICS CORPORATION By: /s/ Paul A. Rosinack ------------------------------------ Paul A. Rosinack, President & C.E.O. EX-10.83 24 dex1083.txt MANAGEMENT RETENTION PLAN Exhibit 10.83 ------------- MANAGEMENT RETENTION PLAN Synbiotics Corporation is implementing a "management retention plan" designed to encourage you to remain an employee of the Company between now and the potential sale of the Animal Health Business. The Management Retention Plan consists of a cash or stock bonus and special treatment of outstanding stock options and restricted stock. This Management Retention Plan does not alter or affect existing Synbiotics employee benefit plans, the Special Payment Plan or existing employee agreements. To qualify for the Management Retention Plan, you must be an active employee, who is employed on the day of the sale of the Animal Health Business, provided that you have not notified the Company of your intent to resign your employment with Synbiotics. This Management Retention Plan does not apply to: --- 1) Employees who voluntarily leave the Company prior to the sale of the Animal Health Business 2) Employees whose employment is terminated prior to the sale of the Animal Health Business 3) Employees of W3COMMERCE 4) Active employees who are offered and accept continued employment with the Company following the sale of the Animal Health Business. Cash Bonus A cash bonus payment (or you can elect to receive the cash bonus in stock - see below) will be made on the day following the sale of the Animal Health Business. The bonus payment will depend on the ultimate sales price of the Animal Health Business and will be paid as a percentage of annual base salary ("the Percentage"). In no event will the Percentage payment be less than 25% of an employee's annual base salary and there is no maximum percentage. The Percentage will be calculated as 1.25 times the sales price of the Animal Health Business. Examples: If the sales price of the Animal Health Business were $35 million, then 35 times 1.25 would yield a Percentage of 43.75%. You would receive a cash bonus of 43.75% of your annual salary. If the sales price of the Animal Health Business were $60 million then 60 times 1.25 would yield a Percentage of 75%. You would receive a cash bonus of 75% of your annual salary. Stock Bonus In-lieu of Cash Bonus You may elect to receive all or a part of the aforementioned cash bonus in stock. Such election must be made within 30 days from the execution date of this agreement. If you choose to receive part of your cash bonus in stock, then the number of shares to be received will be determined by dividing the cash bonus by $3. Example: If your cash bonus were $100, 000 and you elected to receive $60, 000 of it in Stock, you would receive $40,000 in cash and 20,000 ($60.000/$3) shares of Synbiotics stock. Notwithstanding paragraph 4 above, if you are offered and accept employment with the Company following the sale of the Animal Health Business you will receive the equivalent of the cash bonus in "Synbiotics restricted stock" calculated by dividing the cash bonus by $3. Restricted Stock and Stock Options All of your unvested restricted stock and stock options will become fully vested on the day following the sale of the Animal Health Business and you will receive two years following the sale of the Animal Health Business to exercise any unexercised stock options. /s/ Kenneth Cohen - ----------------- Kenneth Cohen President and CEO Synbiotics Corporation I have read the above Management Retention Plan. Acknowledged and accepted: Robert D. Buchanan /s/ Robert D. Buchanan - ------------------ ---------------------- Print Name Employee Signature July 15, 2000 - ------------- Date EX-10.83.1 25 dex10831.txt AMENDED MANAGEMENT RETENTION PLAN Exhibit 10.83.1 --------------- AMENDED MANAGEMENT RETENTION PLAN Synbiotics Corporation is implementing a "management retention plan" designed to encourage you to remain am employee of the Company between now and the potential sale of the Animal Health Business. The Management Retention Plan consists of a cash or stock bonus and special treatment of outstanding stock options and restricted stock. This Management Retention Plan does not alter or affect existing Synbiotics employee benefit plans, the Special Payment Plan or existing employee agreements. To qualify for the Management Retention Plan, you must be an active employee, who is employed on the day of the sale of the Animal Health Business, provided that you have not notified the Company of your intent to resign your employment with Synbiotics. This Management Retention Plan does not apply to: 1) Employees who voluntarily leave the Company prior to the sale of the Animal Health Business 2) Employees whose employment is terminated prior to the sale of the Animal Health Business 3) Employees of W3COMMERCE 4) Active employees who are offered and accept continued employment with the Company following the sale of the Animal Health Business. Cash Bonus A cash bonus payment (or you can elect to receive the cash bonus in stock - see below) will be made on the day following the sale of the Animal Health Business. The bonus payment will depend on the ultimate sales price of the Animal Health Business and will be paid as a percentage of annual base salary ("the Percentage"). In no event will the Percentage payment be less than 37.5% of an employee's annual base salary and there is no maximum percentage. The Percentage will be calculated as 1.25 times the sales price of the Animal Health Business. Examples: If the sales price of the Animal Health Business were $35 million, then 35 times 1.25 would yield a Percentage of 43.75%. You would receive a cash bonus of 43.75% of your annual salary. If the sales price of the Animal Health Business were $60 million then 60 times 1.25 would yield a Percentage of 75%. You would receive a cash bonus of 75% of your annual salary. Restricted Stock and Stock Options All of your unvested restricted stock and stock options will become fully vested on the day following the sale of the Animal Health Business and you will receive two years following the sale of the Animal Health Business to exercise any unexercised stock options. /s/ Kenneth M. Cohen - ---------------------- Kenneth M. Cohen President and CEO Synbiotics Corporation I have read the above Management Retention Plan. Acknowledged and accepted: /s/ Robert D. Buchanan - ---------------------- Robert D. Buchanan January 24, 2001 - ---------------------- Date EX-10.83.2 26 dex10832.txt INCREASED RETENTION PLAN Exhibit 10.83.2 --------------- DATE: March 15, 2001 TO: Bob Buchanan FR: Kenneth M. Cohen RE: Increased Retention Plan Cash Bonus Opportunity - -------------------------------------------------------------------------------- As you know, under the Company's retention plan you have been entitled to receive a cash retention bonus if the Company or its animal health business is sold and you remain employed by the company at the time of the sale. At its February 14, 2001 meeting, the Board of Directors decided to increase your potential cash bonus benefit from the retention plan by doubling the amount you would receive, including a doubling of the minimum payment from 37.5% to 75%. This recognizes your contributions to date, the value you are expected to create for the shareholders in continuing to work toward a sale, and the diminution in the expected value of the stock option component of the retention plan. Whether or not you have a written employment agreement, please note that (except to the extent expressly provided in a written employment agreement) the Company and you each retain the right to unilaterally terminate the employment relationship at any time, for any reason or for no reason; neither the original retention plan nor this augmentation of it changes that. EX-10.83.3 27 dex10833.txt AMENDMENT TO RETENTION PLAN AGREEMENT Exhibit 10.83.3 --------------- AMENDMENT TO RETENTION PLAN AGREEMENT This Amendment (the "Amendment") is entered into as of January 4, 2002 between Synbiotics Corporation ("Synbiotics") and the undersigned employee of Synbiotics or its subsidiary ("Employee"). A. Synbiotics and Employee are parties to a written retention plan agreement, as amended (the "Retention Plan Agreement"), under which Synbiotics promised, on the day following the sale of Synbiotics' animal heath business, to (i) make a cash bonus payment to Employee and (ii) accelerate the vesting and provide a fixed exercisability period of all stock options issued to Employee. B. Synbiotics is working toward entering into a Stock Purchase Agreement with Redwood West Coast, LLC ("Redwood"), under which Redwood would make an investment in Synbiotics stock (the "Stock Purchase Agreement"). Synbiotics has determined that a closing under the Stock Purchase Agreement would constitute the sale of Synbiotics' animal health business and entitle the Employee to a cash payment of $102,749.94 (the "Retention Plan Cash Amount") under the Retention Plan Agreement. C. Redwood requires Employee and Synbiotics to enter into this Amendment before Redwood will enter into the Stock Purchase Agreement. D. Synbiotics and Employee desire to amend the Retention Plan Agreement to provide that Synbiotics will issue to Employee 570,833 fully vested, fully paid and nonassessable shares of common stock of Synbiotics (the "New Shares") pursuant to the Synbiotics 1995 Stock Option/Stock Issuance Plan, as amended (the "1995 Plan") instead of paying the Retention Plan Cash Amount. E. Employee is willing separately to agree to forfeit any and all of Employee's options to purchase stock of Synbiotics, in exchange for Synbiotics making (and not seeking reimbursement from Employee for) certain tax withholding amounts for and on behalf of Employee. NOW, THEREFORE: 1. Synbiotics and Employee hereby agree that if and only if Synbiotics and Redwood enter into the Stock Purchase Agreement, the Retention Plan Agreement is hereby amended (as of immediately before the closing under the Stock Purchase Agreement (the "Stock Purchase Closing")) by: 1.1 deleting the paragraph captioned "Cash Bonus" in its entirety and replacing such paragraph with the following: "The Company will issue to you on or before May 15, 2002, 570,833 fully vested, fully paid and nonassessable shares of common stock of the Company pursuant to the Company's 1995 Stock Option/Stock Issuance Plan, as amended." 1.2 deleting the paragraph captioned "Restricted Stock and Stock Options" in its entirety. 2. Employee represents and warrants to Synbiotics as follows: 2.1 Employee is acquiring the New Shares for Employee's own account and not with a view to or for sale in connection with any distribution of the New Shares. 2.2 Employee acknowledges that Employee has received a copy of the Prospectus of Synbiotics dated as of January 4, 2002. Employee has received all the information Employee considers necessary or appropriate for deciding whether to sign this Amendment and acquire the New Shares. 3. The value of the New Shares will be taxable income to Employee. Withholding taxes must be paid to Federal and State tax authorities. Synbiotics agrees to pay any and all tax withholding amounts required to be paid by Synbiotics and/or by Employee arising out of or in connection with the issuance of the New Shares (except for "secondary" employee-side withholdings, if any, associated with the "primary" employee-side withholding payments made by Synbiotics on behalf of Employee), and without any requirement for Employee to repay Synbiotics for the withholding. Withholdings paid by Synbiotics on behalf of Employee count as "taxes paid" on Employee's 2002 Federal and State income tax returns. In exchange for this tax withholding benefit, Employee agrees to and hereby does (effective immediately before the Stock Purchase Closing) terminate and forfeit, without the need for further action by any party, any and all of Employee's options to purchase capital stock of Synbiotics. Synbiotics has no obligation with regard to any further or other taxes of Employee. 4. Even if Employee's employment is terminated for any reason prior to May 15, 2002, Employee will still be entitled to receive the New Shares on May 15, 2002. 5. All of the terms and provisions of the Retention Plan Agreement as amended hereby remain in full force and effect. However, Employee confirms that upon Redwood's January 2002 investment under the Stock Purchase Agreement, the Retention Plan Agreement (as amended hereby) is terminated except for Synbiotics' obligations arising from such January 2002 Redwood investment. EMPLOYEE /s/ Robert D. Buchanan ---------------------------------------- Name: Robert D. Buchanan --------------------------------- SYNBIOTICS CORPORATION By: /s/ Paul A. Rosinack ------------------------------------ Paul A. Rosinack, President & C.E.O. EX-10.84 28 dex1084.txt AMENDMENT TO RETENTION PLAN AGREEMENT Exhibit 10.84 ------------- AMENDMENT TO RETENTION PLAN AGREEMENT This Amendment (the "Amendment") is entered into as of January 4, 2002 between Synbiotics Corporation ("Synbiotics") and the undersigned employee of Synbiotics or its subsidiary ("Employee"). A. Synbiotics and Employee are parties to a written retention plan agreement, as amended (the "Retention Plan Agreement"), under which Synbiotics promised, on the day following the sale of Synbiotics' animal heath business, to (i) make a cash bonus payment to Employee and (ii) accelerate the vesting and provide a fixed exercisability period of all stock options issued to Employee. B. Synbiotics is working toward entering into a Stock Purchase Agreement with Redwood West Coast, LLC ("Redwood"), under which Redwood would make an investment in Synbiotics stock (the "Stock Purchase Agreement"). Synbiotics has determined that a closing under the Stock Purchase Agreement would constitute the sale of Synbiotics' animal health business and entitle the Employee to a cash payment of $_________ under the Retention Plan Agreement. C. Redwood requires Employee and Synbiotics to enter into this Amendment before Redwood will enter into the Stock Purchase Agreement. Employee and Synbiotics wish to induce and facilitate the Stock Purchase Agreement transaction. NOW, THEREFORE: 1. Synbiotics and Employee hereby agree that if and only if Synbiotics and Redwood enter into the Stock Purchase Agreement, the Retention Plan Agreement is hereby amended (as of immediately before the closing under the Stock Purchase Agreement) by deleting the paragraph captioned "Cash Bonus" in its entirety and replacing such paragraph with the following: "A cash bonus payment of $________ will be made to you on the earlier of (i) January 1, 2003 or (ii) any date on which Synbiotics terminates your employment without cause." 2. All of the terms and provisions of the Retention Plan Agreement as amended hereby remain in full force and effect. However, Employee confirms that upon Redwood's January 2002 investment under the Stock Purchase Agreement, the Retention Plan Agreement (as amended hereby) is terminated except for Synbiotics' obligations arising from such January 2002 Redwood investment. EMPLOYEE: _____________________________________________ Name: ______________________________ SYNBIOTICS CORPORATION By: _________________________________________ Paul A. Rosinack, President & C.E.O. EX-10.85 29 dex1085.txt AMENDMENT TO RETENTION PLAN AGREEMENT Exhibit 10.85 ------------- AMENDMENT TO RETENTION PLAN AGREEMENT This Amendment (the "Amendment") is entered into as of January 4, 2002 between Synbiotics Corporation ("Synbiotics") and the undersigned employee of Synbiotics or its subsidiary ("Employee"). A. Synbiotics and Employee are parties to a written retention plan agreement, as amended (the "Retention Plan Agreement"), under which Synbiotics promised, on the day following the sale of Synbiotics' animal heath business, to (i) make a cash bonus payment to Employee and (ii) accelerate the vesting and provide a fixed exercisability period of all stock options issued to Employee. B. Synbiotics is working toward entering into a Stock Purchase Agreement with Redwood West Coast, LLC ("Redwood"), under which Redwood would make an investment in Synbiotics stock (the "Stock Purchase Agreement"). Synbiotics has determined that a closing under the Stock Purchase Agreement would constitute the sale of Synbiotics' animal health business and entitle the Employee to a cash payment of $_________ (the "Retention Plan Cash Amount") under the Retention Plan Agreement. C. Redwood requires Employee and Synbiotics to enter into this Amendment before Redwood will enter into the Stock Purchase Agreement. D. Synbiotics and Employee desire to amend the Retention Plan Agreement to provide that Synbiotics will issue to Employee _______________ fully vested, fully paid and nonassessable shares of common stock of Synbiotics (the "New Shares") pursuant to the Synbiotics 1995 Stock Option/Stock Issuance Plan, as amended (the "1995 Plan") instead of paying the Retention Plan Cash Amount. E. Employee is willing separately to agree to forfeit any and all of Employee's options to purchase stock of Synbiotics, in exchange for Synbiotics making (and not seeking reimbursement from Employee for) certain tax withholding amounts for and on behalf of Employee. NOW, THEREFORE: 1. Synbiotics and Employee hereby agree that if and only if Synbiotics and Redwood enter into the Stock Purchase Agreement, the Retention Plan Agreement is hereby amended (as of immediately before the closing under the Stock Purchase Agreement (the "Stock Purchase Closing")) by: 1.1 deleting the paragraph captioned "Cash Bonus" in its entirety and replacing such paragraph with the following: "The Company will issue to you on or before May 15, 2002, _____________ fully vested, fully paid and nonassessable shares of common stock of the Company pursuant to the Company's 1995 Stock Option/Stock Issuance Plan, as amended." 1.2 deleting the paragraph captioned "Restricted Stock and Stock Options" in its entirety. 2. Employee represents and warrants to Synbiotics as follows: 2.1 Employee is acquiring the New Shares for Employee's own account and not with a view to or for sale in connection with any distribution of the New Shares. 2.2 Employee acknowledges that Employee has received a copy of the Prospectus of Synbiotics dated as of January __, 2002. Employee has received all the information Employee considers necessary or appropriate for deciding whether to sign this Amendment and acquire the New Shares. 3. The value of the New Shares will be taxable income to Employee. Withholding taxes must be paid to Federal and State tax authorities. Synbiotics agrees to pay any and all tax withholding amounts required to be paid by Synbiotics and/or by Employee arising out of or in connection with the issuance of the New Shares (except for "secondary" employee-side withholdings, if any, associated with the "primary" employee-side withholding payments made by Synbiotics on behalf of Employee), and without any requirement for Employee to repay Synbiotics for the withholding. Withholdings paid by Synbiotics on behalf of Employee count as "taxes paid" on Employee's 2002 Federal and State income tax returns. In exchange for this tax withholding benefit, Employee agrees to and hereby does (effective immediately before the Stock Purchase Closing) terminate and forfeit, without the need for further action by any party, any and all of Employee's options to purchase capital stock of Synbiotics. Synbiotics has no obligation with regard to any further or other taxes of Employee. 4. Even if Employee's employment is terminated for any reason prior to May 15, 2002, Employee will still be entitled to receive the New Shares on May 15, 2002. 5. All of the terms and provisions of the Retention Plan Agreement as amended hereby remain in full force and effect. However, Employee confirms that upon Redwood's January 2002 investment under the Stock Purchase Agreement, the Retention Plan Agreement (as amended hereby) is terminated except for Synbiotics' obligations arising from such January 2002 Redwood investment. EMPLOYEE ________________________________________ Name: ___________________________ SYNBIOTICS CORPORATION By: ____________________________________ Paul A. Rosinack, President & C.E.O. EX-99 30 dex99.txt PRESS RELEASE Exhibit 99 ---------- ================================================================================ Paul A. Rosinack Michael K. Green President and CEO Sr. Vice President and CFO 858-451-3771 x1401 858-451-3771 x1407 paul@synbiotics.com mikeg@synbiotics.com - ------------------- -------------------- ================================================================================ Synbiotics Corporation Receives $2.8 Million in Equity Financing and Restructures Bank Debt San Diego, California: January 25, 2002 -- Synbiotics Corporation (OTCBB: SBIO) today announced that it has completed a $2.8 million convertible preferred equity financing with Redwood West Coast, LLC, a private investment firm based in Cincinnati, Ohio. In conjunction with the equity financing, forty-one Synbiotics employees converted approximately $1.5 million of contractual stay-bonus payments due them into shares of Synbiotics common stock. Following the financing, Redwood will own approximately 54 percent and the employees will own approximately 21 percent, on an as converted basis, of the outstanding shares of Synbiotics common stock. Synbiotics also announced that it has restructured the terms of its debt with Comerica Bank. Under the amended Comerica Agreement, the prior line of credit and term debt totaling $7.1 million due in March, 2002 has been consolidated into a single $7.1 million term loan. The new term loan will involve minimal financial covenants and is due in January, 2004. Paul A. Rosinack, President and CEO of Synbiotics, said, "The Redwood and Comerica transactions complete the restructuring program begun in 2000 and will enable the Company to return its focus to day-to-day business issues. These transactions, coupled with cash flow from business operations, should enable Synbiotics to be self-sustaining, profitable and to return to a growth track." Rosinack also noted that Synbiotics was no longer seeking opportunities to be acquired. Synbiotics Corporation develops, manufactures and markets veterinary diagnostics, instrumentation and related products for the companion animal, large animal and poultry markets worldwide. Headquartered in San Diego, California, Synbiotics manufactures and distributes its products through its operations in San Diego, CA, Rome, NY, and Lyon, France. For information on Synbiotics and its products, visit the Company's website at www.synbiotics.com. With the exception of historical matters, the issues discussed in this press release are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. These risks and uncertainties include competition from larger companies, reliance on third-party manufacturers and distributors, possible technology improvements by others, the seasonality of major portions of the Company's business and other risks set forth in Synbiotics Corporation's filings with the Securities and Exchange Commission, particularly Form 10-K filed for the year ended December 31, 2000 and subsequent Form 10-Q filings. These forward-looking statements represent Synbiotics Corporation's judgment as of the date of the release. Synbiotics Corporation disclaims, however, any intent or obligation to update these forward-looking statements. -----END PRIVACY-ENHANCED MESSAGE-----