EXHIBIT 8.16
SECOND AGREEMENT FOR EXTENSION OF PAYMENTS
AND OTHER CONSIDERATION
THIS AGREEMENT, entered into this 26th day of June, 1997, by and between
MILES X. XXXXXXX, doing business as XXXXX XXXXXXX COMPANY, of 000 Xxxx
Xxxxxxxxx, Xxxxx Xxxxx, Xxxxx, 00000, hereinafter referred to as "Xxxxxxx", and
THE O'BOISIE CORPORATION, an Illinois corporation, of 0000 X. 00xx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxx, 00000, hereinafter referred to as "O'Boisie",
WITNESSETH:
WHEREAS, Xxxxxxx and O'Boisie previously entered into an Assignment and
Assumption Agreement Dated January 24, 1996, whereby O'Boisie accepted the
assignment of and assumed the obligations of the Licensee under that certain
License Agreement dated March 1, 1985, as amended January 1, 1993, between
Xxxxxxx and Xxxxxxx Company, a Delaware corporation; and
WHEREAS, Xxxxxxx and O'Boisie subsequently executed an Agreement for
Extension of Payments and Other Consideration for the purpose of granting
O'Boisie further time within which to pay certain overdue payments, and
modifying the royalty payments due; and,
WHEREAS, O'Boisie is in default of its obligation to pay royalties to
Xxxxxxx under the License Agreement, as so modified and extended, and Xxxxxxx
has given O'Boisie written notice of its election to declare a default of the
License Agreement, accelerate all unpaid royalties, and cancel the License
Agreement; and,
WHEREAS, the parties desire to reach a further agreement to extend the time
within which O'Boisie shall pay such overdue royalties, and to otherwise modify
the royalty payments due and to become due under the License Agreement, and to
rescind Xxxxxxx'x election to declare a default, accelerate all royalties and
cancel the License Agreement;
NOW, THEREFORE, the parties mutually agree that the Notice of Default
issued to Xxxxxxx, dated May 13, 1997, is in all respects canceled and
rescinded, as if it had never been issued; and in consideration thereof, all of
the terms, covenants and conditions hereinafter set forth, the parties agree to
the following:
1. PAYMENT OF 1996 ROYALTIES.
In consideration of the mutual terms of this Agreement, O'Boisie shall pay
to Xxxxxxx the 1996 royalties due under the License Agreement, in the principal
amount of Two Hundred Thousand Dollars ($200,000.00) lawful money of the United
States of America, together with interest on the balance thereof remaining
unpaid from time to time at the rate of seven percent (7%) per annum commencing
January 1, 1997, in full on or before the earlier of: (1) the date seven (7)
business days after O'Boisie completes its Initial Public Offering of capital
stock, as described below; and, (2) September 30, 1997. The earlier of those
dates shall be referred to herein as the "closing date". O'Boisie shall have
the privilege of making prepayment, without penalty. All payments shall be
applied first to interest, and the balance to principal.
2. PAYMENT OF 1997 ROYALTIES.
The 1985 License Agreement, as amended, provides for royalties to be paid
on certain dates for the 1997 calendar year sales. O'Boisie and Xxxxxxx agree
that for each calendar quarter of 1997 ending before the closing date, O'Boisie
shall pay to Xxxxxxx the greater of the actual royalty due for that quarter
based on actual sales during the applicable quarter, or Fifty Thousand Dollars
($50,000.00) which is twenty-five percent (25%) of the annual minimum royalty
under the License Agreement, and such amounts, together with interest on the
balance thereof remaining unpaid from time to time at the rate of seven percent
(7%) per annum commencing on the royalty payment date
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for each such quarter under the License Agreement, shall be due and payable on
the closing date along with the 1996 royalties as described above.
The parties further agree that for each calendar quarter hereafter which
ends after the closing date, O'Boisie shall pay to Xxxxxxx a royalty calculated
under the License Agreement, as amended, but using a royalty percentage which
shall be fixed and equal to One Percent (1%) of Net Licensed Product Sales, and
a minimum royalty amount equal to Twenty Five Thousand Dollars ($25,000.00) per
Licensed Product per year.
3. DEFINITION OF INITIAL PUBLIC OFFERING OF STOCK.
O'Boisie anticipates implementing a public offering of its corporate stock
shares in the latter part of 1997. O'Boisie therefore agrees that for purposes
of this agreement, the "closing date" referred to above shall occur no later
than the date when O'Boisie receives, as a result of any public or private sale
of any substantial part of its corporate stock, either common or preferred, and
either treasury stock or previously unissued stock, proceeds of such sale in an
amount, net of brokers' commissions and other expenses of the offering,
sufficient to pay the obligations to xxxxxxx under this Agreement.
4. GRANT OF STOCK WARRANTS.
Within twenty (20) business days after the execution of this Agreement by
the parties, O'Boisie shall issue to Xxxxxxx warrants for the purchase, at
Xxxxxxx'x option, of twelve thousand five hundred (12,500) shares of common
stock in O'Boisie at a price of One Dollar ($1.00) per share, which warrants and
shall be exercisable by Xxxxxxx at any time during the period beginning on the
date thirteen (13) months after the closing date, and ending on the date sixty
(60) months after the closing date. Such warrants shall contain appropriate
and reasonable terms for the exercise
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thereof, and such additional terms as shall protect Xxxxxxx against any dilution
of its interests as may occur by reason of any stock dividend, stock split,
merger, consolidation, recapitalization, combination, conversion, exchange of
shares, extraordinary or liquidating dividend, or any other change or changes in
the corporate or capital structure of O'Boisie that would have the effect of
diluting or changing a shareholder's proportionate share of ownership of the
capital stock, or of the voting rights thereof; provided, however, that any
issuance of common stock (or of shares of preferred stock convertible into
common stock) in the initial public offering described above, any conversion of
those shares, any exercise of currently outstanding warrants or options to
purchase stock in O'Boisie or the issuance or exercise of warrants or options to
purchase stock to be issued in connection with the initial public offering or on
or before the closing date, any future reduction in the exercise price of
currently outstanding warrants, any reduction in option or warrant prices or
reduction in conversion rates due to the operation of the anti-dilution
provisions of those instruments, any options which may be issued or exercised in
connection with the Company's stock option plan, or any issuance of any other
shares of capital stock of the Company for at least 90% of the then current
market value of the shares shall not constitute an event that would have any
dilutive effect on the warrants granted to Xxxxxxx.
5. ADDITIONAL INSTRUMENTS.
O'Boisie and Xxxxxxx shall take such further actions and execute and
deliver such additional documents and instruments as may be reasonably necessary
or appropriate to complete the transaction in accordance with the provisions of
this Agreement.
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6. DEFAULT.
Time and the strict and faithful performance of all the duties herein
created are of the essence of this Agreement. A default shall occur upon any of
the following events, among others:
A. If O'Boisie fails to pay any royalty payments at the times and in the
manner provided for in the License Agreement, as modified previously and as
further modified by this Agreement, and if O'Boisie does not remedy such failure
within ten (10) days after written notice is given by Xxxxxxx to O'Boisie, in
accordance with the provisions of this Agreement.
B. If O'Boisie shall at any time fail to perform any of the other
covenants, terms or conditions of this Agreement, or of the License Agreement,
as amended, and O'Boisie does not remedy such failure within thirty (30) days
after written notice is given to Xxxxxxx to O'Boisie in accordance with the
provisions of this Agreement, specifying the details of such failure and
demanding the specific payment or performance that will cure such failure.
C. If O'Boisie is adjudged bankrupt or files for bankruptcy or
reorganization under the bankruptcy law, makes an arrangement for the benefit of
creditors, or has a receiver appointed for it in any action, suit or proceeding.
If O'Boisie fails to cure any default, Xxxxxxx may declare the entire
remaining unpaid balance of the 1996, 1997, and any future accrued royalty
payments, both principal and interest, due and payable forthwith, and Xxxxxxx
may recover said balance from O'Boisie. In addition, Xxxxxxx may declare this
Agreement rescinded, and the same shall immediately be deemed to be null and
void, and all of the terms, covenants and conditions of the License Agreement,
the Amendment thereto, and the Agreement for Extension of Payments and Other
Consideration which were modified by this Agreement shall thereupon be
reinstated. The remedies set forth in this paragraph, or elsewhere in
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this Agreement, shall be considered optional and cumulative and not a waiver of
any right or remedy that Xxxxxxx would otherwise have at law or in equity to
enforce the performance of this Agreement, or the Agreement for Extension of
Payments and Other Consideration, or the License Agreement, as amended, or to
recover damages for breach of any them.
7. ATTORNEY FEES.
In the event of litigation between the parties hereto concerning the
subject matter hereof, the prevailing party in any suit or action shall have the
right to demand and collect as part of any judgment to be rendered a reasonable
sum as attorney's fees in addition to costs allowed by law.
8. NOTICE.
Any and all notices required under the terms of this Agreement shall be
given by the parties to each other by certified mail, return receipt requested,
postage prepaid, in care of the name and address of the party first set forth
above, or any other address subsequently furnished in writing by any party.
Notice shall be deemed given on its date of mailing, or upon written
acknowledgment of its receipt of personal delivery, whichever shall be earlier.
9. CONTROLLING LAW.
This Agreement is to be construed, governed and enforced in accordance with
the laws of the State of Idaho.
10. WAIVER.
Waiver by any party of any breach of any term, covenant or condition herein
contained shall not be deemed to be a waiver of such term, covenant or
condition, or of any subsequent breach of the same or of any other term,
covenant or condition herein contained.
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11. MODIFICATION AND BINDING EFFECT.
All of the terms, conditions and covenants of this Agreement shall be
binding upon and shall inure to the benefit of all successors and assigns of the
respective parties hereto. This Agreement may only be modified by written
agreement signed by all of the parties hereto or their duly authorized
representatives.
12. PREPARERS' IDENTITY.
O'Boisie acknowledges that this Agreement was prepared by the attorney for
Xxxxxxx and that said attorney did not and does not represent O'Boisie in
connection with this transaction or the preparation of this Agreement.
Executed this 26th day of June, 1997.
Xxxxx Xxxxxxx Company
__________________________________
Miles X. Xxxxxxx
The O'Boisie Corporation
__________________________________
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