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EXHIBIT 10.16
STRATEGIC MARKETING AGREEMENT
THIS AGREEMENT is entered into as of the 2nd day of September, 1999
(the "Effective Date"), by and between The XxxXxx.xxx, Inc., a Florida
corporation (the "Company"), and Biomerica, Inc., a Delaware corporation
("Biomerica"), with reference to the following facts:
WHEREAS, the Company owns and operates a web site on the Internet at
xxx.xxxxxxxxx.xxx which, among other things, is an advanced portal and contains
a metasearch engine.
WHEREAS, Biomerica desires to leverage the traffic through the
Company's website;
NOW, THEREFORE, in consideration of the covenants, agreements and
considerations herein contained, the Company and Biomerica agree as follows:
1. SERVICES. The Company agrees that, during the Term (as defined below), it
shall provide strategic placement of advertising and marketing for Biomerica on
the Company's website, which shall include permanent, perpetual and continuous
advertising on the Company's website and continuous banners on and links from
its website to Biomerica' website (the "Services"). All advertising and banners
shall be pre-approved by Biomerica.
2. COMPENSATION. In consideration for the Services, Biomerica shall issue to the
Company a common stock warrant to purchase 250,000 shares of Biomerica's
restricted common stock with an exercise price equal to $5.00 per share. The
Company's right to exercise the warrant shall vest pro rata over a period of
three (3) years with one-third of the shares vesting on the first, second and
third anniversaries of the date of grant; provided, however, that it shall fully
vest immediately prior to a public offering of the Company's common stock. The
warrant shall have an exercise period of five (5) years commencing on the date
that the Company shall begin providing the Services to Biomerica. (A form of the
Warrant is attached hereto as Exhibit A).
3. REPRESENTATIONS AND WARRANTIES. Each party to this Agreement represents and
warrants to the other party that:
(a) such party has the full corporate right, power and authority to
enter into this Agreement and to perform the acts required of it hereunder;
(b) the execution of this Agreement by such party, and the performance
by such party of its obligations and duties hereunder, do not and will not
violate such party's charter documents or any agreement to which such party is a
party or by which it is otherwise bound; and
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(c) when executed and delivered by such party, this Agreement will
constitute the legal, valid and binding obligation of such party, enforceable
against such party in accordance with its terms.
4. TERM AND TERMINATION.
(a) The term of this Agreement shall commence on the date that the
Services start and shall, unless sooner terminated as provided below, remain
effective for an initial term of five (5) years (the "Initial Term"). After the
Initial Term, this Agreement shall automatically be extended for successive
additional five-year periods (each an "Extension Term"), unless otherwise
terminated by either party by giving written notice to the other party of its
intent not to extend not less than thirty (30) days prior to the end of the
Initial Term or any Extension Term then in effect. As used herein, the "Term"
shall mean the Initial Term and any Extension Term(s). Within 60 days of the
prior to the expiration of the Initial Term and each Extension Term, the parties
shall negotiate in good faith the compensation to be paid to the Company for
such year.
(b) Notwithstanding the foregoing, this Agreement may be terminated at
any time by either party, effective immediately upon notice, if the other party:
(i) becomes insolvent; (ii) files a petition in bankruptcy; (iii) makes an
assignment for the benefit of its creditors; or (iv) breaches its obligations of
confidentiality set forth in Section 5 below. Either party may terminate this
Agreement, effective upon thirty (30) days notice, in the event that the other
party breaches any of its representations, warranties, covenants or agreements
contained herein which breach is not remedied within thirty (30) days following
written notice to such party.
(c) Any termination pursuant to this Section 4 shall be without any
liability or obligation of the terminating party, other than with respect to any
breach of obligations under this Agreement prior to termination. The provisions
in Sections 5 and 6 shall survive any termination or expiration of this
Agreement.
Upon any termination of this Agreement, each party shall promptly
deliver to the other party all Confidential Information (defined below) and
property belonging to the other party that is in its possession or under its
control, and neither party shall retain copies or reproductions of such
Confidential Information.
5. CONFIDENTIALITY AND NON-CIRCUMVENTION.
(a) Each party acknowledges and agrees that it will have access to or
be provided with confidential information of the other party during the term of
this Agreement. As used herein, the term "Confidential Information" shall mean
any and all proprietary or confidential information of a party, including,
without limitation such party's business plan, business presentation or related
proprietary and financial information as well as other
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confidential or proprietary information of such party regarding such party's
business, plans, financial results and statements, markets, projected
activities, customers and results of operations, requirements and sources,
contracts, means, methods and processes of providing services, copyrights,
patents, trademarks, trade secrets, and financial information.
(b) Each party agrees to keep the Confidential Information of the other
party in the strictest confidence, and agrees that it will not, directly or
indirectly, publish or disclose, or authorize the publication or disclosure of,
or assist any third party in publishing or disclosing, any Confidential
Information to anyone other than its employees or consultants, but only to the
extent necessary for the fulfillment of its obligations under this Agreement and
subject in each such case to the such party using its best efforts to ensure
that the persons to whom Confidential Information is disclosed keep such
information confidential and do not use such Confidential Information except for
the purposes for which the disclosure is made. Each party agrees to comply with
the other party's policies and regulations, as may be reasonably established
from time to time, for the protection of its Confidential Information.
(c) Each party's confidentiality obligations shall continue with
respect to each item of Confidential Information, including after the
termination of this Agreement, until such time as such party can show that any
such item of Confidential Information (i) has legally and properly entered the
public domain through a source other than its own and through no fault of its
own, (ii) has legally and properly been received from an unrelated third party
through no breach of any agreement with the other party and without an
obligation to keep it confidential, (iii) was known to such party or was in such
party's possession prior to the receipt of such item of Confidential Information
from the other party, (vi) was independently developed by one party without
reference to the Confidential Information received hereunder.
(d) Each party acknowledges that the other party's Confidential
Information is of a special, unique and extraordinary character and for that
reason the other party will be irreparably damaged in the event that the
confidentiality or non-circumvention obligations imposed upon it, as set forth
herein, are not specifically enforced. Accordingly, each party agrees that the
other party shall be entitled, at its election, to institute and prosecute
proceedings against it, as set forth herein, in any court of competent
jurisdiction, either at law or equity, to: (a) obtain damages for breach of the
obligations hereunder; (b) enforce specific performance of said obligations, or
both. Such remedies are cumulative and not exclusive and shall be in addition to
any and all other remedies which the other party may have, at law or in equity,
in the event the a party breaches any of its obligations hereunder. The parties
hereto confirm that the covenants in this Agreement are expressly deemed to
cover acts of negligence and any inadvertent disclosure or violation of the
terms herein.
6. INDEPENDENT CONTRACTOR RELATIONSHIP. This Agreement shall in no way be
construed to constitute either party as a partner, joint venturer, agent, or
employee of the other party, and neither party shall act or attempt to act or
represent itself, directly or by implication, as
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a partner, joint venturer, agent or employee of the other party. Neither party
nor any of its respective employees shall have any authority to enter into
contracts, make commitments or otherwise bind the other party to any obligations
without the other party's prior written consent.
7. MISCELLANEOUS.
(a) This Agreement contains the complete and exclusive agreement
between the parties with respect to the subject matter hereof, superseding and
replacing any and all prior agreements, communications, and understandings, both
written and oral, regarding such subject matter. This Agreement may only be
modified, or any rights under it waived, by a written document executed by both
parties.
(b) Neither this Agreement nor any of its provisions are assignable by
either of the contracting parties. This Agreement shall inure to the benefit of
and be binding upon their respective successors in interest and shall extend to
their controlled corporations, partnerships, trusts, proprietorships,
affiliates, and agents.
(c) This Agreement will be governed by and construed in accordance with
the laws of the State of California, without reference to conflicts of laws
rules, and without regard to its location of execution or performance.
(d) If any provision of this Agreement is found invalid or
unenforceable, that provision will be enforced to the maximum extent
permissible, and the other provisions of this Agreement will remain in force.
(e) All notices, requests and other communications called for by this
Agreement shall be deemed to have given upon receipt if made by mail, courier or
personal delivery, or immediately if made by telecopy or electronic (confirmed
by concurrent written notice sent first-class U.S. mail, postage prepaid):
The XxxXxx.xxx, Inc.: Biomerica, Inc.:
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2939 Xxxx Rock 0000 Xxxxxxxx Xxxxxx
Xxxxx 000 Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Xxx Xxxxxxx, Xxxxx 00000 Facsimile: (000) 000-0000
Facsimile: (000) 000-0000 Attn: Xxxxxxx Xxxxx, President/CEO
Attn: Xxxxxxx X. XxXxxxx, President/CEO
or to such other addresses as either party shall specify to the other. Notice by
any other means shall be deemed made when actually received by the party to
which notice is provided.
(f) Except for matters covered by Section 5 above, all
disputes arising out of
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or in connection with this Agreement shall be finally settled under the Rules of
American Arbitration Association ("AAA") by one or more arbitrators appointed in
accordance with said Rules. The place of arbitration shall be Orange County,
California. The parties hereby renounce any right of recourse which they may
have before the court of any jurisdiction except to obtain preliminary or
injunctive relief or enforce an award of the arbitrator.
If any award rendered by AAA in accordance with this arbitration clause
would not be capable of being executed in the jurisdiction of a party against
whom a claim for payment is made or where that party resides or carries on
business, neither the award nor the said arbitration clause shall bar a party
hereto from taking action before the courts that have jurisdiction over such
other party.
(g) In the event that any party shall bring an action or arbitration in
connection with the performance, breach or interpretation hereof, then the
prevailing party in such action, as determined by the court or other body having
jurisdiction, shall be entitled to recover from the losing party in such action,
as determined by the court or other body having jurisdiction, all reasonable
costs and expenses of litigation or arbitration, including reasonable attorneys'
fees, court costs, costs of investigation and other costs reasonably related to
such proceeding, in such amounts as may be determined in the discretion of the
court or other body having jurisdiction.
(h) The various section headings are inserted for purposes of
convenience only and shall not affect the meaning or interpretation of this
Agreement or any section hereof.
(i) No failure of either party to exercise or enforce any of its rights
under this Agreement will act as a waiver of such rights.
(j) This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute a single instrument. Execution and
delivery of this Agreement may be evidenced by facsimile transmission.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date first written
above.
THE XXXXXX.XXX, INC. BIOMERICA, INC.
By: By:
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Xxxxxxx X. XxXxxxx Xxxxxxx Xxxxx
President and CEO President and CEO
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EXHIBIT A
COMMON STOCK WARRANT
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THESE SECURITIES AND THE SECURITIES ISSUABLE UPON THEIR EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED UNLESS
COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, A "NO ACTION"
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH
TRANSFER, A TRANSFER MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES AND
EXCHANGE COMMISSION, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
BIOMERICA, INC.
COMMON STOCK PURCHASE WARRANT
1. Issuance; Certain Definitions. In consideration of good and valuable
consideration, the receipt of which is hereby acknowledged by BIOMERICA, INC., a
Delaware corporation (the "Company"), THE XXXXXX.XXX, INC. or registered assigns
(the "Holder") is hereby granted the right to purchase at any time until 5:00
P.M., California time, on June 10, 2004, Two Hundred Fifty Thousand (250,000)
fully paid and nonassessable shares of the Company's Common Stock, par value
$0.08 per share (the "Common Stock") at an initial exercise price per share (the
"Exercise Price") of $5.00 per share, subject to further adjustment as set forth
in Section 6 hereof. This Warrant is being issued to the Holder in consideration
for the services to be rendered by the Holder to the Company pursuant to the
terms of that certain Strategic Marketing Agreement dated ____________, 1999.
2. Exercise of Warrants. The Holder's right to exercise this Warrant
shall vest in equal increments at the first, second and third anniversaries of
the date of issuance of this Warrant; provided, however, that the Holder's right
to exercise the Warrant shall fully vest immediately prior to a public offering
of the Company's common stock. This Warrant is exercisable in whole or in part
at the Exercise Price per share of Common Stock payable hereunder, payable in
cash or by certified or official bank check. The only condition to vesting of
the Holder's right to exercise this Warrant shall be the passage of time and
Holder's right to exercise the Option shall not be terminated for any reason,
including (without limitation) by reason of death, disability, incapacity or
termination of employment. Upon surrender of this Warrant Certificate with the
annexed Notice of Exercise Form duly executed (which Notice of Exercise Form may
be submitted either by delivery to the Company or by facsimile transmission as
provided in Section 8 hereof), together with payment of the Exercise Price for
the shares of Common Stock purchased, the Holder shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased. For the
purposes of this Section 2, "Market Value" shall be an amount equal to the
average closing bid price of a share of Common Stock, as reported by Bloomberg,
LP or, if not so reported, as reported on the over-the-counter market for the
five (5) trading days preceding the Company's receipt of the Notice of Exercise
Form duly executed, multiplied by the number of shares of Common Stock to be
issued upon surrender of this Warrant Certificate. UPON EXERCISE OF THE WARRANT
AND ISSUANCE OF THE UNDERLYING SHARES OF COMMON STOCK, THE HOLDER AND/OR ANY
AFFILIATE (AS DEFINED BY THE SECURITIES AND EXCHANGE ACT OF 1934) TO WHOM SOME
OR ALL OF THE WARRANT SHALL HAVE BEEN TRANSFERRED OR ASSIGNED SHALL GRANT TO
XXXXXXX XXXXX, IN ANY CAPACITY, CURRENTLY AS PRESIDENT AND CHIEF
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EXECUTIVE OFFICER OF THE COMPANY, AN IRREVOCABLE PROXY TO VOTE THE SHARES OF
COMMON STOCK UNDERLYING THE WARRANT, WHICH PROXY SHALL EXPIRE FIVE (5) YEARS
FROM THE DATE OF GRANT.
3. Reservation of Shares. The Company hereby agrees that at all times
during the term of this Warrant there shall be reserved for issuance upon
exercise of this Warrant such number of shares of its Common Stock as shall be
required for issuance upon exercise of this Warrant (the "Warrant Shares").
4. Mutilation or Loss of Warrant. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant and
are not enforceable against the Company except to the extent set forth herein.
6. Protection Against Dilution.
6.1 Adjustment Mechanism. If an adjustment of the Exercise
Price is required pursuant to this Section 6, the Holder shall be entitled to
purchase such number of additional shares of Common Stock as will cause (i) the
total number of shares of Common Stock Holder is entitled to purchase pursuant
to this Warrant, multiplied by (ii) the adjusted purchase price per share, to
equal (iii) the dollar amount of the total number of shares of Common Stock
Holder is entitled to purchase before adjustment multiplied by the total
purchase price before adjustment.
6.2 Capital Adjustments. In case of any stock split or reverse
stock split, stock dividend, reclassification of the Common Stock,
recapitalization, merger or consolidation, or like capital adjustment affecting
the Common Stock of the Company, the provisions of this Section 6 shall be
applied as if such capital adjustment event had occurred immediately prior to
the date of this Warrant and the original purchase price had been fairly
allocated to the stock resulting from such capital adjustment; and in other
respects the provisions of this Section shall be applied in a fair, equitable
and reasonable manner so as to give effect, as nearly as may be, to the purposes
hereof. A rights offering to stockholders shall be deemed a stock dividend to
the extent of the bargain purchase element of the rights.
6.3 Adjustment for Spin Off. If, for any reason, prior to the
exercise of this Warrant in full, the Company spins off or otherwise divests
itself of a part of its business or operations or disposes all or of a part of
its assets in a transaction (the "Spin Off") in which the Company does not
receive compensation for such business, operations or assets, but causes
securities of another entity (the "Spin Off Securities") to be issued to
security holders of the Company, then
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(a) the Company shall cause (i) to be reserved Spin
Off Securities equal to the number thereof which would have
been issued to the Holder had all of the Holder's unexercised
Warrants outstanding on the record date (the "Record Date")
for determining the amount and number of Spin Off Securities
to be issued to security holders of the Company (the
"Outstanding Warrants") been exercised as of the close of
business on the trading day immediately before the Record Date
(the "Reserved Spin Off Shares"), and (ii) to be issued to the
Holder on the exercise of all or any of the Outstanding
Warrants, such amount of the Reserved Spin Off Shares equal to
(x) the Reserved Spin Off Shares multiplied by (y) a fraction,
of which (I) the numerator is the amount of the Outstanding
Warrants then being exercised, and (II) the denominator is the
amount of the Outstanding Warrants; and
(b) the Exercise Price on the Outstanding Warrants
shall be adjusted immediately after consummation of the Spin
Off by multiplying the Exercise Price by a fraction (if, but
only if, such fraction is less than 1.0), the numerator of
which is the Average Market Price of the Common Stock for the
five (5) trading days immediately following the fifth trading
day after the Record Date, and the denominator of which is the
Average Market Price of the Common Stock on the five (5)
trading days immediately preceding the Record Date; and such
adjusted Exercise Price shall be deemed to be the Exercise
Price with respect to the Outstanding Warrants after the
Record Date.
For the purposes of this Section 6.3, the "Average Market Price of the Common
Stock" shall mean, for the relevant period, (x) the average closing bid price of
a share of Common Stock, as reported by Bloomberg, LP or, if not so reported, as
reported on the over-the-counter market or (y) if the Common Stock is listed on
a stock exchange, the closing price on such exchange on the date indicated in
the relevant provision hereof, as reported in The Wall Street Journal.
6.4 No Adjustment for Dividends. Except as provided in Section
6.2 hereof, no adjustment in respect of any dividends or distributions out of
earnings shall be made during the term of a Warrant or upon the conversion of a
Warrant.
7. Transfer to Comply with the Securities Act; Registration Rights.
(a) This Warrant has not been registered under the Securities
Act of 1933, as amended, (the "Act") and has been issued to the Holder for
investment and not with a view to the distribution of either the Warrant or the
Warrant Shares. Neither this Warrant nor any of the Warrant Shares or any other
security issued or issuable upon exercise of this Warrant may be sold,
transferred, pledged or hypothecated in the absence of an effective registration
statement under the Act relating to such security or an opinion of counsel
satisfactory to the Company that registration is not required under the Act.
Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend on the
face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.
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(b) The Company hereby grants to the Holder piggyback
registration rights with respect to the Warrant Shares. In the event the Company
is filing a Registration Statement for itself or on behalf of any of its
shareholders, the Company shall notify the Holder in writing reasonably in
advance of such filing (but at least five business days) and give the Holder the
opportunity to include all or any party of the Warrant Shares (whether or not
previously issued), to the extent permissible under the Act or any regulation
promulgated thereunder. Upon the Holder's notification that the Holder desires
to have all or any portion of the Warrant Shares included in such registration,
the Company shall, at no cost or expense to the Holder, include or cause to be
included in such registration statement the Warrant Shares so identified by the
Holder. Notwithstanding any other provision of this Section 7(b), in the case of
an underwritten public offering, if the managing underwriter determines that
market factors require a limitation of the number of shares to be underwritten,
the managing underwriter may limit, or exclude, the number of shares (including
those of Holder) to be included in such Piggyback Registration. If limited,
Holder's shares will be registered pro rata with any other holders of Common
Stock or Common Stock equivalents having Registration Rights.
8. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage pre-paid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission,
or, if mailed, two days after the date of deposit in the United States mails, as
follows:
(i) if to the Company, to:
Biomerica, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, President
Facsimile: (000) 000-0000
(ii) if to the Holder, to:
The XxxXxx.xxx, Inc.
0000 Xxx Xxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Chief Executive Officer
Facsimile: (000) 000-0000
Any party may be notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
9. Supplements and Amendments; Whole Agreement. This Warrant may be
amended or supplemented only by an instrument in writing signed by the parties
hereto. This Warrant of even date herewith contain the full understanding of the
parties hereto with respect to
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the subject matter hereof and thereof and there are no representations,
warranties, agreements or understandings other than expressly contained herein
and therein.
10. Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of California and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State.
11. Counterparts. This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
12. Descriptive Headings. Descriptive headings of the several Sections
of this Warrant are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the ____ day of July, 1999.
Biomerica, Inc.
By:
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Name: Xxxxxxx X. Xxxxx
----------------------------------
Its: President
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Attest:
-----------------------------------------
Name:
----------------------------------
Title:
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NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of July ___, 1999, to purchase
shares of the Common Stock, par value $0.08 per share, of BIOMERICA, INC., and
tenders herewith payment in accordance with Section 1 of said Common Stock
Purchase Warrant.
Please deliver the stock certificate to:
Dated:
-----------------------------
[Name of Holder]
By:
CASH: $
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CASHLESS EXERCISE
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