Exhibit 10.10
BIOMERICA, INC.
STOCK PURCHASE AGREEMENT
350,000 SHARES
OF
COMMON STOCK
TABLE OF CONTENTS
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1. PURCHASE AND SALE OF SHARES
1.1 Transfer of Shares
1.2 Purchase Price
2. CLOSING
2.1 Time
2.2 Deliveries at and Following the Closing
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Organization, Standing and Power
3.2 Capitalization
3.3 Authorization
3.4 Valid Issuance of Common Stock
3.5 Litigation
3.6 Employment; No Conflicting Agreements
3.7 SEC Documents; the Company's Financial Statements
3.8 Disclosure
3.9 Regulatory Compliance
3.10 Regulatory Proceedings, Investigations and Inquiries
4. REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Authority
4.2 No Violation of Agreements
4.3 Purchase Entirely for Own Account
4.4 Disclosure of Information
4.5 Accredited Investor
4.6 Investment Experience
4.7 Restricted Securities
4.8 Legends
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
5.1 Purchase Price
5.2 Accuracy of Representations and Warranties
5.3 Performance of Agreements
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
6.1 Accuracy of Representations and Warranties
6.2 Performance of Agreements
6.3 No Adverse Events
7. PIGGYBACK REGISTRATION RIGHTS
7.1 Piggyback Registration
7.2 Sales Commissions and Other Charges
8. CONDITION SUBSEQUENT
9. MISCELLANEOUS
9.1 Expenses and Taxes
9.2 Entire Agreement; Modifications; Waiver
9.3 Survival of Representations, Warranties and Covenants
9.4 Further Assurances
9.5 Captions
9.6 Section References
9.7 Counterparts
9.8 Successors and Assigns
9.9 Parties in Interest
9.10 Notices
9.11 Law Governing
INDEX OF SCHEDULES AND EXHIBITS
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Schedule 3.2 Capitalization
Schedule 3.5 Litigation
Exhibit A Form of Investor Questionnaire
STOCK PURCHASE AGREEMENT
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This Stock Purchase Agreement (this "Agreement") is made and entered into
as of June 11, 1999, by and between Biomerica, Inc., a Delaware corporation (the
"Company"), RidgeRose Capital Partners, LLC, ("Buyer"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇ (collectively the "Shareholders").
RECITALS
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WHEREAS, the Company desires to sell and issue 350,000 shares of the
Company's common stock (the "Shares") to Buyer upon the terms and conditions
hereinafter set forth; and
WHEREAS, Buyer desires to purchase the Shares from the Company upon the
terms and conditions hereinafter set forth;
WHEREAS, the Buyer and the Shareholders desire to set forth certain
agreements with respect to the voting of their respective shares of the
Company's common stock.
NOW, THEREFORE, in consideration of the covenants, agreements and
considerations herein contained, the Company and Buyer agree as follows:
1. PURCHASE AND SALE OF SHARES
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1.1 Transfer of Shares. Subject to the terms and conditions hereof,
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the Company agrees to sell to Buyer, and Buyer agrees to purchase from the
Company, the Shares. At the "Closing" (as hereinafter defined) the Company
shall deliver to Buyer the stock certificate(s), in the name of Buyer or its
nominee, representing the Shares free and clear of any claims, liens,
restrictions on transfer (except as provided in Section 4.7 below) or voting or
encumbrances with respect thereto.
1.2 Purchase Price. As full consideration for the sale of the Shares
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to Buyer, Buyer has agreed to pay Five Dollars ($5.00) per share and shall
deliver to the Company at the Closing by wire transfer of immediately available
funds to such account as the Company shall designate the sum of One Million
Seven Hundred Fifty Thousand Dollars ($1,750,000) (the "Purchase Price").
2. CLOSING
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2.1 Time. The purchase and sale of the Shares shall take place on June
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11, 1999 (the "Closing") at the offices of Jeffers, Wilson, ▇▇▇▇▇ & ▇▇▇▇, LLP
located at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or
such other location as the parties may individually agree.
2.2 Deliveries at and Following the Closing. At the Closing, the
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parties hereto shall deliver all share certificates, consents, funds,
assignments and other instruments and documents provided for in this Agreement.
In addition, the Company agrees to execute and deliver all instruments and
documents and perform all other acts which may be reasonably required or
appropriate in order to further effect or perfect the sale and transfer of the
Shares and the consummation of the transactions contemplated by this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
Except as set forth below, the Company makes no representations or
warranties of any nature or kind.
3.1 Organization, Standing and Power. The Company is a corporation
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duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Company has the corporate power to own its properties
and to carry on its business as now being conducted and is duly qualified to do
business and is in good standing in each jurisdiction in which the failure to be
so qualified would have a material adverse effect on the business, assets or
condition (financial or otherwise) of the Company and its subsidiaries, taken as
a whole.
3.2 Capitalization. The authorized capital stock of the Company
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consists of 10,000,000 shares of common stock, of which, as of the date
indicated on the capitalization table included on Schedule 3.2 hereto, there are
4,110,195 shares of common stock issued and outstanding. As of the date hereof,
there are no warrants, options, calls, commitments, or other rights to subscribe
for or to purchase from the Company any capital stock of the Company or any
securities convertible into or exchangeable for any shares of the Company, or
any other securities or agreements pursuant to which the Company is or may
become obligated to sell, transfer or deliver any capital stock except as set
forth in Schedule 3.2 hereto. The Company is not a party to any voting trust
agreements or understandings with respect to the voting common stock of the
Company.
3.3 Authorization.
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3.3.1 The Company has full legal right, power and capacity to
enter into, execute, deliver and perform this Agreement and all attendant
documents and instruments contemplated hereby.
3.3.2 This Agreement has been duly executed and delivered and
constitutes the legal, valid and binding obligation of the Company and is
enforceable with respect to the Company in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, priority or other laws or
court decisions relating to or affecting generally the enforcement of creditors'
rights or affecting generally the availability of equitable remedies.
3.3.3 The execution and delivery of this Agreement by the Company,
and the consummation of the transactions contemplated hereby by the Company in
accordance with the terms hereof shall not conflict with or result in a breach
of, violation of, or default under, (or constitute an event that with notice,
lapse of time, or both, would constitute a breach or default under) or result in
the termination of, or accelerate the performance required by, or result in the
creation of any liens or other encumbrances upon any of the properties or assets
of the Company under any of the terms, conditions or provisions of the
Certificate of Incorporation or Bylaws, any provision of the laws of the State
of California or the State of Incorporation, or any note, bond, mortgage,
indenture, deed of trust, license, lease, credit agreement or other agreement,
document, instrument or obligation to which the Company is a party or by which
any of its assets or properties are bound.
3.3.4 Neither the execution and delivery of this Agreement by the
Company, nor the consummation of the transactions, contemplated hereunder by the
Company will violate or conflict with any judgment, order, decree, statute, rule
or regulation applicable to the Company or its assets or properties.
3.3.5 Except as referenced in Section 4.7 of this Agreement, no
consent, approval, authorization, order, registration, qualification or filing
of or with any court or any regulatory authority or any other governmental body
is required for the consummation by the Company of the transactions contemplated
by this Agreement.
3.4 Valid Issuance of Common Stock.
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3.4.1 The Shares being purchased by the Buyer hereunder, when
issued, sold and delivered in accordance with the terms hereof for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable and will be issued in compliance with all applicable federal and
state securities laws.
3.4.2 The outstanding shares of the Company's common stock are all
duly and validly authorized and issued, fully paid and nonassessable, and were
issued in compliance with all applicable federal and state securities laws.
3.4.3. The Company has full power, right and authority to transfer,
convey and sell to Buyer at the Closing the Shares and upon consummation of the
transactions contemplated by this Agreement, Buyer will have acquired good and
marketable title to the Shares, free and clear of claims, liens, restrictions on
transfer (except as provided in Section 4.7 below) or voting or encumbrances.
3.5 Litigation. Except as referred to in the SEC Documents, or as
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disclosed in Schedule 3.5, there are no claims, suits, actions or proceedings
pending or, to the knowledge of the Company, threatened against, relating to or
affecting the Company or any of its subsidiaries, before any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator
that would reasonably be expected, either alone or in the aggregate with all
such claims, actions or proceedings, to have a material adverse effect on the
Company's business or financial condition or the transactions contemplated
hereunder. Except as referred to in the Company's SEC Documents, neither the
Company nor any of its subsidiaries is subject to any judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or authority, or any arbitrator which prohibits or
restricts the consummation of the transactions contemplated hereby or would have
a material adverse effect on the Company's business or financial condition or
the transactions contemplated hereunder.
3.6 Employment; No Conflicting Agreements.
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3.6.1 None of the officers of the Company is obligated under any
contract (including licenses, covenants or commitments of any nature) or other
oral or written agreement, or subject to any judgment, decree or order of any
court, administrative or governmental agency, that would conflict with his or
her obligation to use his or her best efforts to promote the Company's business
as currently conducted and proposed to be conducted.
3.6.2 Neither the execution and delivery of this Agreement, nor
the carrying on of the Company's business as employees by such persons as such
business is currently conducted and proposed to be conducted, will conflict with
or result in the breach of the terms, conditions or provisions of, or constitute
a default under, any contract, covenant, agreement or instrument under which any
of the officers or directors of the Company is now obligated.
3.7 SEC Documents; the Company's Financial Statements. The Company is
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a reporting company under the Securities Exchange Act of 1934 (the "Exchange
Act"), and files annual and periodic reports (the "SEC Documents") with the
Securities and Exchange Commission (the "SEC"). As of their respective filing
dates, the SEC Documents complied in all material respects with the requirements
of the Securities Exchange Act of 1934, as amended, applicable to the Company
and to the knowledge of the Company none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances in which they were made, not misleading, except to the
extent corrected by a subsequently filed document with the SEC. The SEC
Documents contain an audited consolidated balance sheet of the Company as of the
end of the last completed fiscal year, (the "Balance Sheet") and the related
audited consolidated statements of income and cash flow for the year then ended
(the "Financials"). The Financials have been prepared in accordance with GAAP
applied on a basis consistent through the periods indicated and consistent with
each other. The Financials present fairly the consolidated financial condition
and operating results and cash flows of the Company and its subsidiaries as of
the dates and during the periods indicated therein. Since the date of the
Balance Sheet and until the date of this Agreement, there has not occurred any
material adverse change in the business, assets or condition (financial or
otherwise) of the Company and its subsidiaries, taken as a whole.
3.8 Disclosure. Neither this Agreement, nor any of the schedules,
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attachments, or certificates attached to this Agreement or delivered by the
Company at the Closing, contains any untrue statements of material fact or omits
a material fact necessary to make the statements contained herein or therein not
misleading. There is no fact which the Company has not disclosed to Buyer,
orally or in writing, and of which any of the Company's directors or officers
are aware, which could reasonably be anticipated to have a material adverse
effect, upon the financial condition, operating results or assets, of the
Company. Notwithstanding the foregoing, certain information provided by the
Company to the Buyer contained statements that are forward-looking, which are
covered by the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. Such forward-looking information involves important risks
and uncertainties that could significantly affect anticipated results in the
future, and accordingly, such results may differ materially from those expressed
in any forward-looking statements made by or on behalf of the Company. The
potential risks and uncertainties include, among others, the early stage of the
Web as an advertising and electronic commerce medium, the Company's dependence
on strategic relationships to drive traffic to its Web site, the Company's
ability to develop and integrate new technologies and services into its existing
services, and the increased use of the Web for commerce.
3.9 Regulatory Compliance. To the best of its knowledge the Company is
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not in violation of any applicable law, regulation, judgment, order or consent
decree (of any governmental or non-governmental regulatory or self-regulatory
agency or any organized exchange, including without limitation, the SEC, any
state or local securities or insurance regulatory body, or the Internal Revenue
Service), which violation is likely to have a material adverse effect on the
Company's business, financial condition, or this transaction.
3.10 Regulatory Proceedings, Investigations and Inquiries. To the best
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of its knowledge, the Company has not been the subject of any material
regulatory proceeding, examination, investigation or inquiry (known to the
Company), including any pending or threatened regulatory proceeding,
investigation or inquiry (known to the Company) (including without limitation
any by governmental or non-governmental regulatory or self-regulatory agency or
any organized exchange) relating to the Company.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
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Except as set forth below, Buyer makes no representations or warranties of
any nature or kind.
4.1 Authority. Buyer has full legal right, power and capacity to enter
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into, execute, deliver and perform this Agreement and all attendant documents
and instruments contemplated hereby. This Agreement has been duly executed and
delivered and constitutes the legal, valid and binding obligation of Buyer and
is enforceable with respect to Buyer in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, priority or other laws or
court decisions relating to or affecting generally the enforcement of creditors'
rights or affecting generally the availability of equitable remedies.
4.2 No Violation of Agreements. Neither the execution and delivery of
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this Agreement nor the consummation of the transactions contemplated hereunder
by Buyer will violate or conflict with any judgment, order, decree, statute,
rule or regulation applicable to Buyer or its assets or properties.
4.3 Purchase Entirely for Own Account. The Buyer understands that the
---------------------------------
Company is making this Agreement with the Buyer in reliance upon the Buyer's
representation to the Company, which by the Buyer's execution of this Agreement
the Buyer hereby confirms, that the Shares to be received by the Buyer will be
acquired for investment for the Buyer's own account, not as a nominee or agent,
and not with a view to the resale or distribution of any part thereof, and that
the Buyer has no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Agreement, the Buyer further
represents that the Buyer does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Shares. The Buyer
represents that it has full power and authority to enter into this Agreement.
4.4 Disclosure of Information. Subject in part to the truth and
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accuracy of the representations and warranties of the Company, the Buyer
believes that it has received all the information that it considers necessary or
appropriate for deciding whether to purchase the Shares. The Buyer further
represents that it has had an opportunity to review the SEC Documents and had
sufficient opportunity to ask questions and receive answers from the Company and
its directors and officers regarding the terms and conditions of the offering of
the Shares and the business and operations of the Company. The foregoing,
however, does not limit or modify the representations and warranties of the
Company in Section 3 of this Agreement or the right of the Buyer to rely
thereon.
4.5 Accredited Investor. The Buyer acknowledges that the Buyer is an
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"accredited investor" within the meaning of SEC Rule 501 of Regulation D, as now
in effect. The Buyer represents and warrants that the information the Buyer
provided to the Company in the Investor Questionnaire (a form of which is
attached hereto as Exhibit "A") is true and correct, and can be relied on by the
Company.
4.6 Investment Experience. The Buyer acknowledges that it can bear the
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economic risk of its investment and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Shares.
4.7 Restricted Securities. The Buyer understands that the Shares it is
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purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act of 1933, only in certain limited circumstances. In this
connection, the Buyer represents that it is familiar with SEC Rule 144, as now
in effect, and understands the resale limitations imposed thereby and by the
Act. The Company shall, within fifteen (15) days after the Closing, file a Form
D with the SEC and the Notice of Transaction with California Commissioner of
Corporations pursuant to California Corporations Code Section 25102(f).
4.8 Legends. It is understood that the certificates evidencing the
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Common Stock may bear one or all of the following legends:
4.8.1 The securities evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended, (the "Act") or the
securities laws of any state of the United States ("State Acts"). The
securities evidenced by this certificate may not be offered, sold or transferred
for value directly or indirectly, in the absence of such registration under the
Act and qualification under applicable State Acts, or pursuant to an exemption
from registration under the Act and qualification under applicable State Acts,
the availability of which is to be established to the reasonable satisfaction of
the Company; and
4.8.2 Any legend required by applicable state securities laws.
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
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The obligations of the Company to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction of each of the conditions
set forth below, any or all of which may be waived by the Company in whole or in
part without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by the Company of any other condition or of any of the
Company's rights or remedies, at law or in equity, if Buyer shall be in default
or breach of any of its representations, warranties or agreements under this
Agreement:
5.1 Purchase Price. Buyer shall deliver the aggregate Purchase Price
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at Closing as provided in Section 1.2.
5.2 Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of Buyer contained in this Agreement shall be accurate and
complete on and as of the Closing with the same effect as though such
representations and warranties had been made on or as of such date and Buyer
shall have delivered to the Company the Investor Questionnaire signed and
completed by Buyer, and dated as of the Closing, supporting the Buyer's
qualification as an accredited investor.
5.3 Performance of Agreements. Each and all of the conditions
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precedent and agreements of Buyer subject to satisfaction on or before the
Closing pursuant to the terms of this Agreement shall have been performed or
satisfied.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
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The obligations of Buyer to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction of each of the conditions
set forth below, any or all of which may be waived by Buyer in whole or in part
without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by Buyer of any other condition or of any of Buyer's
rights or remedies, at law or in equity, if the Company shall be in default or
breach of any of its representations, warranties or agreements under this
Agreement:
6.1 Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of the Company contained in this Agreement shall be accurate and
complete on and as of the Closing with the same effect as though such
representations and warranties had been made on or as of such date and the
Company shall have delivered to Buyer a certificate to that effect signed by the
Company, and dated as of the Closing.
6.2 Performance of Agreements. Each and all of the conditions
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precedent and agreements of the Company subject to satisfaction on or before the
Closing pursuant to the terms of this Agreement shall have been performed or
satisfied and the Company shall have delivered to Buyer a certificate to that
effect signed by the Company, and dated as of the Closing.
6.3 No Adverse Events. Between the date hereof and the Closing,
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neither the business, assets or condition, financial or otherwise, of the
Company taken as a whole shall have been materially adversely affected in any
manner.
7. PIGGYBACK REGISTRATION RIGHTS
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7.1 Piggyback Registration. If the Company at any time proposes to
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register any shares of Common Stock under the Act whether or not for sale for
its own account, other than an offering primarily or exclusively to employees,
and the registration form to be used may also be used for the registration of
Common Stock owned by the Buyer ( a "Piggyback Registration"), the Company shall
at such time notify the Buyer at least 30 days prior to the filing of any
registration statement with respect thereto. Upon the receipt of a written
request of Buyer made within ten (10) days after such notice (which request
shall specify the Common Stock intended to be registered), the Company will use
its best efforts, subject to the limitations set forth below, to include in such
registration the Shares. For the purposes of this subsection 7.1, best efforts
shall not require the Company to reduce the amount or sale price of the
securities it proposes to register. Each such request shall also contain an
undertaking from the Buyer to provide all such information and material and to
take all actions as may be required by the Company in order to permit the
Company to comply with all applicable federal and state securities laws.
Notwithstanding any other provision of this Section 7, 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 entirely, the number of shares
(including those of Buyer) to be included in such Piggyback Registration. If
limited, Buyer's shares will be registered pro rata with any other holders of
Common Stock or Common Stock equivalents having Registration Rights.
7.2 Sales Commissions and Other Charges. Buyer shall pay all sales
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commissions or other similar selling charges with respect to Common Stock sold
by such Buyer pursuant to a registration. The Company shall pay all
registration and filing fees, fees and expenses of compliance with federal and
state securities laws, printing expenses, messenger and delivery expenses, fees
and disbursements of counsel and accountants for the Company and reasonable fees
and expenses of one counsel, selected by Buyer, unless the applicable state
securities laws require that stockholders whose securities are being registered
pay their pro rata share of such fees, expenses and disbursements, in which case
each stockholder (including the Buyer) participating in the registration shall
pay its pro rata share of all such fees, expenses and disbursements based on its
pro rata share of the total number of shares being registered.
8. CONDITION SUBSEQUENT. From and following the Closing Date, the
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Shareholders agree to use their best efforts to cause the number of authorized
Directors on the Company's Board of Directors to be increased to seven (7) and
at each annual meeting to cause three (3) nominee's of the Buyer to be elected
to the Company's Board of Directors. The Buyer agree's to use its best efforts
at each annual meeting to cause the Shareholder's four (4) nominees to be
elected to the Company's Board of Directors.
9. MISCELLANEOUS
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9.1 Expenses and Taxes. Each party shall bear and pay its own
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expenses, including legal, accounting and other professional fees, and taxes
incurred in connection with the transactions referred to in this Agreement. The
party responsible under applicable law shall bear and pay in their entirety all
other taxes and registration and transfer fees, if any, payable by reason of the
sale and conveyance of the Shares. Each party will cooperate to the extent
practicable in minimizing all taxes and fees levied by reason of the sale or
assignment of the Shares.
9.2 Entire Agreement; Modifications; Waiver. This Agreement, together
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with the related agreements or certificates referenced herein, constitutes the
final, exclusive and complete understanding of the parties with respect to the
subject matter hereof and supersedes any and all prior agreements,
understandings and discussions with respect thereto. No variation or
modification of this Agreement and no waiver of any provision or condition
hereof, or granting of any consent contemplated hereby, shall be valid unless in
writing and signed by the party against whom enforcement of any such variation,
modification, waiver or consent is sought.
9.3 Survival of Representations, Warranties and Covenants. All
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representations, warranties and covenants made by any party to this Agreement or
pursuant hereto shall survive the Closing of the transactions hereunder. The
representations, warranties and covenants hereunder shall not be affected or
diminished by any investigation at any time by or on behalf of the party for
whose benefit such representations, warranties and covenants were made. All
statements contained herein or in any schedule, exhibit, certificate, list or
other document delivered pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties.
9.4 Further Assurances. The parties hereto shall use their best
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efforts, and shall cooperate with one another, to secure all necessary consents,
approvals, authorizations, exemptions and waivers from third parties as shall be
required in order to consummate the transactions contemplated hereby, and shall
otherwise use their best efforts to cause such transactions to be consummated in
accordance with the terms and conditions hereof. At any time or from time to
time after the Closing, each party hereto, shall execute and deliver any further
instruments or documents and take all such further action as such requesting
party may reasonably request in order to consummate and document the
transactions contemplated hereby.
9.5 Captions. The captions in this Agreement are for convenience only
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and shall not be considered a part of or affect the constructing or
interpretation of any provision of this Agreement.
9.6 Section References. Unless otherwise noted, all section references
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herein are to sections of this Agreement.
9.7. Counterparts. This Agreement may be executed in any number of
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counterparts, including electronically transmitted counterparts, each of which
when so executed shall constitute an original copy hereof, but all of which
together shall constitute one agreement.
9.8 Successors and Assigns. The Company acknowledges and agrees that
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the Buyer may assign all or any portion of its rights to purchase the Shares
under this Agreement to any of its affiliates. The Company shall not assign this
Agreement to any third party without the prior written consent of the Buyer.
9.9 Parties in Interest. Nothing in this Agreement, whether express or
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implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over against any party to this Agreement.
9.10 Notices. All notices, requests, demands and other communications
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hereunder ("Notices") shall be in writing and shall be deemed to have been duly
given if delivered by hand or by registered or certified mail, postage prepaid,
return receipt requested, but only upon receipt of such return receipt, as
follows:
If to Buyer:
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Attn:
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If to the Company: Biomerica, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt. All Notices shall be deemed received on the
date of delivery or, if mailed, on the date appearing on the return receipt
therefor.
9.11 Law Governing. This Agreement shall be governed by, and construed
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and enforced in accordance with the laws of the State of California, without
regard to its choice-of-laws or conflicts-of-law rules.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of date first above written.
"Buyer" "The Company"
Biomerica, Inc.,
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a Delaware corporation
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By: By:
------------------------- -----------------------------
Name: Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Title: President
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▇▇▇▇▇▇▇ ▇▇▇▇▇
Shareholder
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇
Shareholder
SCHEDULE 3.2
CAPITALIZATION
Authorized and Outstanding Capital Stock
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of
--
Biomerica, Inc.
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as of May 28,1999
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Common Stock Authorized 10,000,000 Shares
Common Stock Issued and Outstanding 4,110,195 Shares
Common Stock Reserved for Issuance Upon Exercise of
Options and Warrants 3,314,050 Shares*
Total Common Shares To Be
Outstanding on a Fully Diluted Basis: 7,424,245 Shares
================
*Includes shares reserved for issuance under the Company's 1991 Stock Option
and Restricted Stock Plan (the "1991 Plan") and 1995 Stock Option and
Restricted Stock Plan (the "1995 Plan"). Also, includes 1,660,000 shares of
Common Stock reserved for issuance upon exercise of outstanding warrants, and
1,200,000 shares of Common Stock reserved for issuance upon exercise of
outstanding non-statutory stock options.
BENEFICIAL OWNERSHIP OF DIRECTOR, OFFICERS AND FIVE PERCENT (5%)
OR MORE SHAREHOLDERS
Beneficially
------------
Name of Principal Stockholders Issued and Outstanding Owned
------------------------------ ---------------------- -----
▇▇▇▇▇ ▇▇▇▇▇
Secretary and Director(1) 498,158 12.1%
▇▇▇▇▇▇▇ ▇▇▇▇▇
President, CEO and Director(2) 84,950 2.0%
▇▇. ▇▇▇▇▇▇ ▇. Orlando
Director (3) 22,000 *
Dr. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Director (4) 4,750 *
Total (Directors and Officers
as a Group) 609,858 14.4%
* Less than one percent (1%) of the outstanding shares of Common Stock.
(1) Includes options granted under the Company's 1991 and 1995 Plans to
purchase 16,200 shares of Common Stock exercisable by ▇▇. ▇▇▇▇▇ within
sixty (60) days after the date indicated above and 8,250 shares owned by
minor children.
(2) Includes options granted under the Company's 1991 Plan and 1995 Plan to
purchase 81,450 shares of Common Stock exercisable by ▇▇. ▇▇▇▇▇ within
sixty (60) days after the date indicated above.
(3) Includes options to purchase 8,000 shares of Common Stock exercisable by
Dr. Orlando within sixty (60) days after the date indicated above.
(4) Includes options granted under the Company's 1991 and 1995 Plans to
purchase 2,750 shares of Common Stock exercisable by ▇▇. ▇▇▇▇▇▇ within
sixty (60) days after the date indicated above.
OUTSTANDING OPTIONS AND WARRANTS
Holder Shares Underlying Options and Warrants
--------------- --------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ 1,139,700(a)
▇▇▇▇▇ ▇▇▇▇▇ 25,700(b)
Dr. ▇▇▇▇▇▇ ▇▇▇▇▇▇ 7,000(c)
▇▇. ▇▇▇▇▇▇ ▇. Orlando 13,000(d)
Employees 268,650
Third Party Service Providers 1,860,000(e)
------------
Total: 3,314,050(f)
(a) Includes options granted under the 1995 Plan to purchase 129,700 shares of
Common Stock at exercise prices ranging from $.85 to $1.92 per share, and
options granted under the 1991 Plan to purchase 10,000 shares of Common
Stock at an exercise price of $.80 per share. Also includes a non-
qualified stock option to purchase 1,000,000 shares of Common Stock at an
exercise price of $ 3.00 per share.
(b) Includes options granted under the 1995 Plan to purchase 15,700 shares of
Common Stock at exercise prices ranging from $.85 to $1.85 per share, and
options granted under the 1991 Plan to purchase 10,000 shares of Common
Stock at an exercise price of $.80 per share.
(c) Includes options granted under the 1995 Plan to purchase 7,000 shares of
Common Stock at exercise prices ranging from $.86 to $1.85 per share.
(d) Includes options granted under the 1995 Plan to purchase 8,000 shares of
Common Stock at exercise prices ranging from $.85 to $1.85 and options
granted under the 1991 Plan to purchase 5,000 shares of Common Stock at an
exercise price of $.80 per share.
(e) Includes 1,660,000 shares of Common Stock reserved for issuance upon
exercise of Warrants issued to 2 independent service providers, at exercise
prices ranging from $3.00 to $5.00 per share. Also includes 200,000 shares
of Common Stock reserved for issuance upon exercise of a non-statutory
stock option granted to a third party service providers, which is
exercisable at an exercise price of $3.00 per share.
(f) Includes options granted under the 1995 Plan to purchase 407,500 shares of
Common Stock at exercise prices ranging from $.85 to $3.00 per share, and
options granted under the 1991 Plan to purchase 46,550 shares of Common
Stock at exercise prices ranging from $.80 to $.86 per share.
SCHEDULE 3.5
LITIGATION
None
EXHIBIT A
INVESTOR QUESTIONNAIRE
NATURE OF INVESTOR; FORM OF OWNERSHIP.
(A) THE COMPANY WILL RELY ON THE INFORMATION IN THE FOLLOWING
SECTION TO DETERMINE WHETHER THE BUYER QUALIFIES AS AN ACCREDITED INVESTOR AS
SUCH TERM IS DEFINED IN RULE 501 PROMULGATED UNDER REGULATION D OF THE
SECURITIES ACT. THE BUYER IS (CHECK AND INITIAL ALL APPLICABLE ANSWERS, AND
---------------------------------------------
SIGN IN THE SPACE PROVIDED BELOW):
--------------------------------
INITIAL CHECK
------- -----
1. [ ] Any organization described in Section 501(c)(3)
-------- of the Internal Revenue Code, corporation,
Massachusetts or similar business trust, or
partnership, not formed for the specific purpose
of investing in the Shares, and having total
assets in excess of $5,000,000.
2. [ ] A natural person whose net worth (or joint net
-------- worth with my spouse) is in excess of $1,000,000
as of the date hereof.
3. [ ] A natural person whose income in 1996 and 1997
-------- was, and whose income in 1998 is expected to be,
in excess of $200,000, or whose income with a
spouse in 1996 and 1997 was, and whose income
with a spouse in 1998 is expected to be, in
excess of $300,000.
4. [ ] A trust with total assets in excess of
-------- $5,000,000, not formed for the specific purpose
of investing in the Company, whose purchase is
directed by a "sophisticated person" as described
in Rule 506(b)(2)(ii) of the Act.
5. [ ] A "Company," "savings and loan association" or
-------- "insurance company," as defined in the Act.
6. [ ] An "employee benefit plan" as defined in the
-------- Employee Retirement Income Security Act of 1974
(a "Plan") which has total assets in excess of
$5,000,000. If a Plan, the Disclosure and
Acknowledgment form for Qualified Plan has been
completed.
7. [ ] A Plan whose investment decisions, including the
-------- decision to subscribe for the Shares, are made
solely by (i) a "plan fiduciary" as defined in
the Employee Retirement Income Security Act of
1974, which includes a Company, a savings and
loan association, and insurance company or a
registered investment adviser, or (ii) an
"accredited investor" as defined under
Rule 501(a) of the Act, for a self-directed plan.
8. [ ] A broker/dealer registered pursuant to Section 15
-------- of the Securities Exchange Act of 1934, as
amended.
9. [ ] A director or an executive officer of the
-------- Company.
10. [ ] A "private business development company" as
-------- defined in the Investment Advisers Act of 1940,
as amended.
11. [ ] An investment company registered under, or a
-------- "business development company" as defined in, the
Investment Company Act of 1940, as amended.
12. [ ] A Small Business Investment Company licensed by
-------- the U.S. Small Business Administration under the
Small Business Investment Act of 1958.
13. [ ] A plan established and maintained by a state, its
-------- political subdivisions, or any agency or
instrumentality of a state or its political
subdivisions, for the benefit of its employees
and having total assets in excess of $5,000,000.
14. [ ] Any entity in which all of the equity owners are
-------- "accredited investors."
(B) THE BUYER IS/ARE (CHECK AND INITIAL ALL APPLICABLE ANSWERS):
------------------------------------------
1. [ ] Individual (one signature required)
--------
2. [ ] Joint Tenants with right of survivorship (both
-------- parties must sign)
3. [ ] Tenants in Common (both parties must sign)
--------
4. [ ] Community Property (one signature required if
-------- Shares are held in one name, i.e., managing
spouse; two signatures required if Shares are
held in both names or if Buyer is a resident of
California)
5. [ ] Corporation (signature of authorized party or
-------- parties required)
6. [ ] Partnership (signature of general partner
-------- required and any additional signatures required
by Partnership Agreement)
7. [ ] Trust (Trust must sign as follows:
-------- as trustee
-------------------
for ,
-------------------
dated ).
----------------------
8. [ ] Other Entities (signatures as required by
-------- applicable organization documents)
You may rely on the forgoing representations.
DATE
PRINT NAME
SIGNATURE
SOCIAL SECURITY OR TAX I.D. NO.
Exhibit 10.11
BIOMERICA, INC.
STOCK PURCHASE AGREEMENT
50,000 SHARES
OF
COMMON STOCK
TABLE OF CONTENTS
-----------------
1. PURCHASE AND SALE OF SHARES
1.1 Transfer of Shares
1.2 Purchase Price
2. CLOSING
2.1 Time
2.2 Deliveries at and Following the Closing
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Organization, Standing and Power
3.2 Capitalization
3.3 Authorization
3.4 Valid Issuance of Common Stock
3.5 Litigation
3.6 Employment; No Conflicting Agreements
3.7 SEC Documents; the Company's Financial Statements
3.8 Private Placement Memorandum
3.9 Regulatory Compliance
3.10 Regulatory Proceedings, Investigations and Inquiries
4. REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Authority
4.2 No Violation of Agreements
4.3 Purchase Entirely for Own Account
4.4 Disclosure of Information
4.5 Accredited Investor
4.6 Investment Experience
4.7 Restricted Securities
4.8 Legends
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
5.1 Purchase Price
5.2 Accuracy of Representations and Warranties
5.3 Performance of Agreements
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
6.1 Accuracy of Representations and Warranties
6.2 Performance of Agreements
6.3 No Adverse Events
7. PIGGYBACK REGISTRATION RIGHTS
7.1 Piggyback Registration
7.2 Sales Commissions and Other Charges
8. MISCELLANEOUS
8.1 Expenses and Taxes
8.2 Entire Agreement; Modifications; Waiver
8.3 Survival of Representations, Warranties and Covenants
8.4 Further Assurances
8.5 Captions
8.6 Section References
8.7 Counterparts
8.8 Successors and Assigns
8.9 Parties in Interest
8.10 Notices
8.11 Law Governing
INDEX OF SCHEDULES AND EXHIBITS
-------------------------------
Schedule 3.2 Capitalization
Schedule 3.5 Litigation
Exhibit A Form of Investor Questionnaire
STOCK PURCHASE AGREEMENT
------------------------
This Stock Purchase Agreement (this "Agreement") is made and entered into
as of June 11, 1999, by and between Biomerica, Inc., a Delaware corporation (the
"Company"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ (collectively the "Buyers").
RECITALS
--------
WHEREAS, the Company desires to sell and issue an aggregate of 50,000
shares of the Company's common stock (the "Shares") to Buyers upon the terms and
conditions hereinafter set forth; and
WHEREAS, Buyers desire to purchase the Shares from the Company upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the covenants, agreements and
considerations herein contained, the Company and Buyers agree as follows:
1. PURCHASE AND SALE OF SHARES
---------------------------
1.1 Transfer of Shares. Subject to the terms and conditions hereof,
------------------
the Company agrees to sell to Buyers, and Buyers agree to purchase from the
Company, the Shares. At the "Closing" (as hereinafter defined) the Company
shall deliver to Buyers the stock certificate(s), in the name of Buyers or its
nominee, representing the Shares free and clear of any claims, liens,
restrictions on transfer (except as provided in Section 4.7 below) or voting or
encumbrances with respect thereto.
1.2 Purchase Price. As full consideration for the sale of the Shares
--------------
to Buyers, Buyers have agreed to pay Five Dollars ($5.00) per share and shall
deliver to the Company at the Closing by wire transfer of immediately available
funds to such account as the Company shall designate the aggregate sum of Two
Hundred Fifty Thousand Dollars ($250,000) (the "Purchase Price").
2. CLOSING
-------
2.1 Time. The purchase and sale of the Shares shall take place on June
----
11, 1999 (the "Closing") at the offices of Jeffers, Wilson, ▇▇▇▇▇ & ▇▇▇▇, LLP
located at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or
such other location as the parties may individually agree.
2.2 Deliveries at and Following the Closing. At the Closing, the
---------------------------------------
parties hereto shall deliver all share certificates, consents, funds,
assignments and other instruments and documents provided for in this Agreement.
In addition, the Company agrees to execute and deliver all instruments and
documents and perform all other acts which may be reasonably required or
appropriate in order to further effect or perfect the sale and transfer of the
Shares and the consummation of the transactions contemplated by this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
Except as set forth below, the Company makes no representations or
warranties of any nature or kind.
3.1 Organization, Standing and Power. The Company is a corporation
--------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Company has the corporate power to own its properties
and to carry on its business as now being conducted and is duly qualified to do
business and is in good standing in each jurisdiction in which the failure to be
so qualified would have a material adverse effect on the business, assets or
condition (financial or otherwise) of the Company and its subsidiaries, taken as
a whole.
3.2 Capitalization. The authorized capital stock of the Company
--------------
consists of 10,000,000 shares of common stock, of which, as of the date
indicated on the capitalization table included on Schedule 3.2 hereto, there are
4,110,195 shares of common stock issued and outstanding. As of the date hereof,
there are no warrants, options, calls, commitments, or other rights to subscribe
for or to purchase from the Company any capital stock of the Company or any
securities convertible into or exchangeable for any shares of the Company, or
any other securities or agreements pursuant to which the Company is or may
become obligated to sell, transfer or deliver any capital stock except as set
forth in Schedule 3.2 hereto. The Company is not a party to any voting trust
agreements or understandings with respect to the voting common stock of the
Company.
3.3 Authorization.
-------------
3.3.1 The Company has full legal right, power and capacity to
enter into, execute, deliver and perform this Agreement and all attendant
documents and instruments contemplated hereby.
3.3.2 This Agreement has been duly executed and delivered and
constitutes the legal, valid and binding obligation of the Company and is
enforceable with respect to the Company in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, priority or other laws or
court decisions relating to or affecting generally the enforcement of creditors'
rights or affecting generally the availability of equitable remedies.
3.3.3 The execution and delivery of this Agreement by the Company,
and the consummation of the transactions contemplated hereby by the Company in
accordance with the terms hereof shall not conflict with or result in a breach
of, violation of, or default under, (or constitute an event that with notice,
lapse of time, or both, would constitute a breach or default under) or result in
the termination of, or accelerate the performance required by, or result in the
creation of any liens or other encumbrances upon any of the properties or assets
of the Company under any of the terms, conditions or provisions of the
Certificate of Incorporation or Bylaws, any provision of the laws of the State
of California or the State of Incorporation, or any note, bond, mortgage,
indenture, deed of trust, license, lease, credit agreement or other agreement,
document, instrument or obligation to which the Company is a party or by which
any of its assets or properties are bound.
3.3.4 Neither the execution and delivery of this Agreement by the
Company, nor the consummation of the transactions, contemplated hereunder by the
Company will violate or conflict with any judgment, order, decree, statute, rule
or regulation applicable to the Company or its assets or properties.
3.3.5 Except as referenced in Section 4.7 of this Agreement, no
consent, approval, authorization, order, registration, qualification or filing
of or with any court or any regulatory authority or any other governmental body
is required for the consummation by the Company of the transactions contemplated
by this Agreement.
3.4 Valid Issuance of Common Stock.
------------------------------
3.4.1 The Shares being purchased by the Buyers hereunder, when
issued, sold and delivered in accordance with the terms hereof for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable and will be issued in compliance with all applicable federal and
state securities laws.
3.4.2 The outstanding shares of the Company's common stock are all
duly and validly authorized and issued, fully paid and nonassessable, and were
issued in compliance with all applicable federal and state securities laws.
3.4.3 The Company has full power, right and authority to transfer,
convey and sell to Buyers at the Closing the Shares and upon consummation of the
transactions contemplated by this Agreement, Buyers will have acquired good and
marketable title to the Shares, free and clear of claims, liens, restrictions on
transfer (except as provided in Section 4.7 below) or voting or encumbrances.
3.5 Litigation. Except as referred to in the SEC Documents, or as
----------
disclosed in Schedule 3.5, there are no claims, suits, actions or proceedings
pending or, to the knowledge of the Company, threatened against, relating to or
affecting the Company or any of its subsidiaries, before any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator
that would reasonably be expected, either alone or in the aggregate with all
such claims, actions or proceedings, to have a material adverse effect on the
Company's business or financial condition or the transactions contemplated
hereunder. Except as referred to in the Company's SEC Documents, neither the
Company nor any of its subsidiaries is subject to any judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or authority, or any arbitrator which prohibits or
restricts the consummation of the transactions contemplated hereby or would have
a material adverse effect on the Company's business or financial condition or
the transactions contemplated hereunder.
3.6 Employment; No Conflicting Agreements.
-------------------------------------
3.6.1 None of the officers of the Company is obligated under any
contract (including licenses, covenants or commitments of any nature) or other
oral or written agreement, or subject to any judgment, decree or order of any
court, administrative or governmental agency, that would conflict with his or
her obligation to use his or her best efforts to promote the Company's business
as currently conducted and proposed to be conducted.
3.6.2 Neither the execution and delivery of this Agreement, nor
the carrying on of the Company's business as employees by such persons as such
business is currently conducted and proposed to be conducted, will conflict with
or result in the breach of the terms, conditions or provisions of, or constitute
a default under, any contract, covenant, agreement or instrument under which any
of the officers or directors of the Company is now obligated.
3.7 SEC Documents; the Company's Financial Statements. The Company is
-------------------------------------------------
a reporting company under the Securities Exchange Act of 1934 (the "Exchange
Act"), and files annual and periodic reports (the "SEC Documents") with the
Securities and Exchange Commission (the "SEC"). As of their respective filing
dates, the SEC Documents complied in all material respects with the requirements
of the Securities Exchange Act of 1934, as amended, applicable to the Company
and to the knowledge of the Company none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances in which they were made, not misleading, except to the
extent corrected by a subsequently filed document with the SEC. The SEC
Documents contain an audited consolidated balance sheet of the Company as of the
end of the last completed fiscal year, (the "Balance Sheet") and the related
audited consolidated statements of income and cash flow for the year then ended
(the "Financials"). The Financials have been prepared in accordance with GAAP
applied on a basis consistent through the periods indicated and consistent with
each other. The Financials present fairly the consolidated financial condition
and operating results and cash flows of the Company and its subsidiaries as of
the dates and during the periods indicated therein. Since the date of the
Balance Sheet and until the date of this Agreement, there has not occurred any
material adverse change in the business, assets or condition (financial or
otherwise) of the Company and its subsidiaries, taken as a whole.
3.8 Disclosure. Neither this Agreement, nor any of the schedules,
----------
attachments, or certificates attached to this Agreement or delivered by the
Company at the Closing, contains any untrue statements of material fact or omits
a material fact necessary to make the statements contained herein or therein not
misleading. There is no fact which the Company has not disclosed to Buyers,
orally or in writing, and of which any of the Company's directors or officers
are aware, which could reasonably be anticipated to have a material adverse
effect, upon the financial condition, operating results or assets, of the
Company. Notwithstanding the foregoing, certain information provided by the
Company to the Buyers contained statements that are forward-looking, which are
covered by the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. Such forward-looking information involves important risks
and uncertainties that could significantly affect anticipated results in the
future, and accordingly, such results may differ materially from those expressed
in any forward-looking statements made by or on behalf of the Company. The
potential risks and uncertainties include, among others, the early stage of the
Web as an advertising and electronic commerce medium, the Company's dependence
on strategic relationships to drive traffic to its Web site, the Company's
ability to develop and integrate new technologies and services into its existing
services, and the increased use of the Web for commerce.
3.9 Regulatory Compliance. To the best of its knowledge the Company is
---------------------
not in violation of any applicable law, regulation, judgment, order or consent
decree (of any governmental or non-governmental regulatory or self-regulatory
agency or any organized exchange, including without limitation, the SEC, any
state or local securities or insurance regulatory body, or the Internal Revenue
Service), which violation is likely to have a material adverse effect on the
Company's business, financial condition, or this transaction.
3.10 Regulatory Proceedings, Investigations and Inquiries. To the best
----------------------------------------------------
of its knowledge, the Company has not been the subject of any material
regulatory proceeding, examination, investigation or inquiry (known to the
Company), including any pending or threatened regulatory proceeding,
investigation or inquiry (known to the Company) (including without limitation
any by governmental or non-governmental regulatory or self-regulatory agency or
any organized exchange) relating to the Company.
4. REPRESENTATIONS AND WARRANTIES OF BUYERS
----------------------------------------
Except as set forth below, each Buyer makes no representations or
warranties of any nature or kind.
4.1 Authority. Buyer has full legal right, power and capacity to enter
---------
into, execute, deliver and perform this Agreement and all attendant documents
and instruments contemplated hereby. This Agreement has been duly executed and
delivered and constitutes the legal, valid and binding obligation of Buyer and
is enforceable with respect to Buyer in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, priority or other laws or
court decisions relating to or affecting generally the enforcement of creditors'
rights or affecting generally the availability of equitable remedies.
4.2 No Violation of Agreements. Neither the execution and delivery of
--------------------------
this Agreement nor the consummation of the transactions contemplated hereunder
by Buyer will violate or conflict with any judgment, order, decree, statute,
rule or regulation applicable to Buyer or its assets or properties.
4.3 Purchase Entirely for Own Account. The Buyer understands that the
---------------------------------
Company is making this Agreement with the Buyer in reliance upon the Buyer's
representation to the Company, which by the Buyer's execution of this Agreement
the Buyer hereby confirms, that the Shares to be received by the Buyer will be
acquired for investment for the Buyer's own account, not as a nominee or agent,
and not with a view to the resale or distribution of any part thereof, and that
the Buyer has no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Agreement, the Buyer further
represents that the Buyer does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Shares. The Buyer
represents that it has full power and authority to enter into this Agreement.
4.4 Disclosure of Information. Subject in part to the truth and
-------------------------
accuracy of the representations and warranties of the Company, the Buyer
believes that it has received all the information that it considers necessary or
appropriate for deciding whether to purchase the Shares. The Buyer further
represents that it has had an opportunity to review the SEC Documents and had
sufficient opportunity to ask questions and receive answers from the Company and
its directors and officers regarding the terms and conditions of the offering of
the Shares and the business and operations of the Company. The foregoing,
however, does not limit or modify the representations and warranties of the
Company in Section 3 of this Agreement or the right of the Buyer to rely
thereon.
4.5 Accredited Investor. The Buyer acknowledges that the Buyer is an
-------------------
"accredited investor" within the meaning of SEC Rule 501 of Regulation D, as now
in effect. The Buyer represents and warrants that the information the Buyer
provided to the Company in the Investor Questionnaire (a form of which is
attached hereto as Exhibit "A") is true and correct, and can be relied on by the
Company.
4.6 Investment Experience. The Buyer acknowledges that it can bear the
---------------------
economic risk of its investment and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Shares.
4.7 Restricted Securities. The Buyer understands that the Shares it is
---------------------
purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act of 1933, only in certain limited circumstances. In this
connection, the Buyer represents that it is familiar with SEC Rule 144, as now
in effect, and understands the resale limitations imposed thereby and by the
Act. The Company shall, within fifteen (15) days after the Closing, file a Form
D with the SEC and the Notice of Transaction with California Commissioner of
Corporations pursuant to California Corporations Code Section 25102(f).
4.8 Legends. It is understood that the certificates evidencing the
-------
Common Stock may bear one or all of the following legends:
4.8.1 The securities evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended, (the "Act") or the
securities laws of any state of the United States ("State Acts"). The
securities evidenced by this certificate may not be offered, sold or transferred
for value directly or indirectly, in the absence of such registration under the
Act and qualification under applicable State Acts, or pursuant to an exemption
from registration under the Act and qualification under applicable State Acts,
the availability of which is to be established to the reasonable satisfaction of
the Company; and
4.8.2 Any legend required by applicable state securities laws.
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
--------------------------------------------------
The obligations of the Company to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction of each of the conditions
set forth below, any or all of which may be waived by the Company in whole or in
part without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by the Company of any other condition or of any of the
Company's rights or remedies, at law or in equity, if either Buyer shall be in
default or breach of any of its representations, warranties or agreements under
this Agreement:
5.1 Purchase Price. Buyers shall deliver the aggregate Purchase Price
--------------
at Closing as provided in Section 1.2.
5.2 Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of Buyers contained in this Agreement shall be accurate and
complete on and as of the Closing with the same effect as though such
representations and warranties had been made on or as of such date and Buyers
shall have delivered to the Company the Investor Questionnaire signed and
completed by each Buyer, and dated as of the Closing, supporting each Buyer's
qualification as an accredited investor.
5.3 Performance of Agreements. Each and all of the conditions
-------------------------
precedent and agreements of Buyers subject to satisfaction on or before the
Closing pursuant to the terms of this Agreement shall have been performed or
satisfied.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYERS
---------------------------------------------
The obligations of the Buyers to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction of each of the conditions
set forth below, any or all of which may be waived by the Buyers in whole or in
part without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by the Buyers of any other condition or of any of
Buyers' rights or remedies, at law or in equity, if the Company shall be in
default or breach of any of its representations, warranties or agreements under
this Agreement:
6.1 Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of the Company contained in this Agreement shall be accurate and
complete on and as of the Closing with the same effect as though such
representations and warranties had been made on or as of such date and the
Company shall have delivered to Buyer a certificate to that effect signed by the
Company, and dated as of the Closing.
6.2 Performance of Agreements. Each and all of the conditions
-------------------------
precedent and agreements of the Company subject to satisfaction on or before the
Closing pursuant to the terms of this Agreement shall have been performed or
satisfied and the Company shall have delivered to Buyers a certificate to that
effect signed by the Company, and dated as of the Closing.
6.3 No Adverse Events. Between the date hereof and the Closing,
-----------------
neither the business, assets or condition, financial or otherwise, of the
Company taken as a whole shall have been materially adversely affected in any
manner.
7. PIGGYBACK REGISTRATION RIGHTS
-----------------------------
7.1 Piggyback Registration. If the Company at any time proposes to
----------------------
register any shares of Common Stock under the Act whether or not for sale for
its own account, other than an offering primarily or exclusively to employees,
and the registration form to be used may also be used for the registration of
Common Stock owned by the Buyers ( a "Piggyback Registration"), the Company
shall at such time notify the Buyers at least 30 days prior to the filing of any
registration statement with respect thereto. Upon the receipt of a written
request of Buyers made within ten (10) days after such notice (which request
shall specify the Common Stock intended to be registered), the Company will use
its best efforts, subject to the limitations set forth below, to include in such
registration the Shares. For the purposes of this subsection 7.1, best efforts
shall not require the Company to reduce the amount or sale price of the
securities it proposes to register. Each such request shall also contain an
undertaking from the Buyers to provide all such information and material and to
take all actions as may be required by the Company in order to permit the
Company to comply with all applicable federal and state securities laws.
Notwithstanding any other provision of this Section 7, 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 entirely, the number of shares
(including those of Buyers) to be included in such Piggyback Registration. If
limited, Buyers' shares will be registered pro rata with any other holders of
Common Stock or Common Stock equivalents having Registration Rights.
7.2 Sales Commissions and Other Charges. Each Buyer shall pay all
-----------------------------------
sales commissions or other similar selling charges with respect to Common Stock
sold by such Buyer pursuant to a registration. The Company shall pay all
registration and filing fees, fees and expenses of compliance with federal and
state securities laws, printing expenses, messenger and delivery expenses, fees
and disbursements of counsel and accountants for the Company and reasonable fees
and expenses of one counsel, selected by such Buyer, unless the applicable state
securities laws require that stockholders whose securities are being registered
pay their pro rata share of such fees, expenses and disbursements, in which case
each stockholder (including the Buyers) participating in the registration shall
pay its pro rata share of all such fees, expenses and disbursements based on its
pro rata share of the total number of shares being registered.
8. MISCELLANEOUS
-------------
8.1 Expenses and Taxes. Each party shall bear and pay its own
------------------
expenses, including legal, accounting and other professional fees, and taxes
incurred in connection with the transactions referred to in this Agreement. The
party responsible under applicable law shall bear and pay in their entirety all
other taxes and registration and transfer fees, if any, payable by reason of the
sale and conveyance of the Shares. Each party will cooperate to the extent
practicable in minimizing all taxes and fees levied by reason of the sale or
assignment of the Shares.
8.2 Entire Agreement; Modifications; Waiver. This Agreement, together
---------------------------------------
with the related agreements or certificates referenced herein, constitutes the
final, exclusive and complete understanding of the parties with respect to the
subject matter hereof and supersedes any and all prior agreements,
understandings and discussions with respect thereto. No variation or
modification of this Agreement and no waiver of any provision or condition
hereof, or granting of any consent contemplated hereby, shall be valid unless in
writing and signed by the party against whom enforcement of any such variation,
modification, waiver or consent is sought.
8.3 Survival of Representations, Warranties and Covenants. All
-----------------------------------------------------
representations, warranties and covenants made by any party to this Agreement or
pursuant hereto shall survive the Closing of the transactions hereunder. The
representations, warranties and covenants hereunder shall not be affected or
diminished by any investigation at any time by or on behalf of the party for
whose benefit such representations, warranties and covenants were made. All
statements contained herein or in any schedule, exhibit, certificate, list or
other document delivered pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties.
8.4 Further Assurances. The parties hereto shall use their best
------------------
efforts, and shall cooperate with one another, to secure all necessary consents,
approvals, authorizations, exemptions and waivers from third parties as shall be
required in order to consummate the transactions contemplated hereby, and shall
otherwise use their best efforts to cause such transactions to be consummated in
accordance with the terms and conditions hereof. At any time or from time to
time after the Closing, each party hereto, shall execute and deliver any further
instruments or documents and take all such further action as such requesting
party may reasonably request in order to consummate and document the
transactions contemplated hereby.
8.5 Captions. The captions in this Agreement are for convenience only
--------
and shall not be considered a part of or affect the constructing or
interpretation of any provision of this Agreement.
8.6 Section References. Unless otherwise noted, all section references
------------------
herein are to sections of this Agreement.
8.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts, including electronically transmitted counterparts, each of which
when so executed shall constitute an original copy hereof, but all of which
together shall constitute one agreement.
8.8 Successors and Assigns. The Company acknowledges and agrees that
----------------------
the Buyers may assign all or any portion of its rights to purchase the Shares
under this Agreement to any of its affiliates. The Company shall not assign this
Agreement to any third party without the prior written consent of the Buyers.
8.9 Parties in Interest. Nothing in this Agreement, whether express or
-------------------
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over against any party to this Agreement.
8.10 Notices. All notices, requests, demands and other communications
-------
hereunder ("Notices") shall be in writing and shall be deemed to have been duly
given if delivered by hand or by registered or certified mail, postage prepaid,
return receipt requested, but only upon receipt of such return receipt, as
follows:
If to Buyers:
------------------
------------------
Attn:
-------------
If to the Company: Biomerica, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt. All Notices shall be deemed received on the
date of delivery or, if mailed, on the date appearing on the return receipt
therefor.
8.11 Law Governing. This Agreement shall be governed by, and construed
-------------
and enforced in accordance with the laws of the State of California, without
regard to its choice-of-laws or conflicts-of-law rules.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of date first above written.
"The Company"
By:
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
"Buyers"
-----------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------
▇▇▇▇▇ ▇▇▇▇▇
SCHEDULE 3.2
CAPITALIZATION
Authorized and Outstanding Capital Stock
----------------------------------------
of
--
Biomerica, Inc.
---------------
as of May 28,1999
-----------------
Common Stock Authorized 10,000,000 Shares
Common Stock Issued and Outstanding 4,110,195 Shares
Common Stock Reserved for Issuance Upon Exercise of
Options and Warrants 3,314,050 Shares*
Total Common Shares To Be
Outstanding on a Fully Diluted Basis: 7,424,245 Shares
================
*Includes shares reserved for issuance under the Company's 1991 Stock Option
and Restricted Stock Plan (the "1991 Plan") and 1995 Stock Option and
Restricted Stock Plan (the "1995 Plan"). Also, includes 1,660,000 shares of
Common Stock reserved for issuance upon exercise of outstanding warrants, and
1,200,000 shares of Common Stock reserved for issuance upon exercise of
outstanding non-statutory stock options.
BENEFICIAL OWNERSHIP OF DIRECTOR, OFFICERS AND FIVE PERCENT (5%)
OR MORE SHAREHOLDERS
Beneficially
------------
Name of Principal Stockholders Issued and Outstanding Owned
------------------------------ ---------------------- -----
▇▇▇▇▇ ▇▇▇▇▇
Secretary and Director(1) 498,158 12.1%
▇▇▇▇▇▇▇ ▇▇▇▇▇
President, CEO and Director(2) 84,950 2.0%
▇▇. ▇▇▇▇▇▇ ▇. Orlando
Director (3) 22,000 *
Dr. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Director (4) 4,750 *
Total (Directors and Officers
as a Group) 609,858 14.4%
* Less than one percent (1%) of the outstanding shares of Common Stock.
(1) Includes options granted under the Company's 1991 and 1995 Plans to
purchase 16,200 shares of Common Stock exercisable by ▇▇. ▇▇▇▇▇ within
sixty (60) days after the date indicated above and 8,250 shares owned by
minor children.
(2) Includes options granted under the Company's 1991 Plan and 1995 Plan to
purchase 81,450 shares of Common Stock exercisable by ▇▇. ▇▇▇▇▇ within
sixty (60) days after the date indicated above.
(3) Includes options to purchase 8,000 shares of Common Stock exercisable by
Dr. Orlando within sixty (60) days after the date indicated above.
(4) Includes options granted under the Company's 1991 and 1995 Plans to
purchase 2,750 shares of Common Stock exercisable by ▇▇. ▇▇▇▇▇▇ within
sixty (60) days after the date indicated above.
OUTSTANDING OPTIONS AND WARRANTS
Holder Shares Underlying Options and Warrants
--------------- --------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ 1,139,700(a)
▇▇▇▇▇ ▇▇▇▇▇ 25,700(b)
Dr. ▇▇▇▇▇▇ ▇▇▇▇▇▇ 7,000(c)
▇▇. ▇▇▇▇▇▇ ▇. Orlando 13,000(d)
Employees 268,650
Third Party Service Providers 1,860,000(e)
------------
Total: 3,314,050(f)
(a) Includes options granted under the 1995 Plan to purchase 129,700 shares of
Common Stock at exercise prices ranging from $.85 to $1.92 per share, and
options granted under the 1991 Plan to purchase 10,000 shares of Common
Stock at an exercise price of $.80 per share. Also includes a non-
qualified stock option to purchase 1,000,000 shares of Common Stock at an
exercise price of $ 3.00 per share.
(b) Includes options granted under the 1995 Plan to purchase 15,700 shares of
Common Stock at exercise prices ranging from $.85 to $1.85 per share, and
options granted under the 1991 Plan to purchase 10,000 shares of Common
Stock at an exercise price of $.80 per share.
(c) Includes options granted under the 1995 Plan to purchase 7,000 shares of
Common Stock at exercise prices ranging from $.86 to $1.85 per share.
(d) Includes options granted under the 1995 Plan to purchase 8,000 shares of
Common Stock at exercise prices ranging from $.85 to $1.85 and options
granted under the 1991 Plan to purchase 5,000 shares of Common Stock at an
exercise price of $.80 per share.
(e) Includes 1,660,000 shares of Common Stock reserved for issuance upon
exercise of Warrants issued to 2 independent service providers, at exercise
prices ranging from $3.00 to $5.00 per share. Also includes 200,000 shares
of Common Stock reserved for issuance upon exercise of a non-statutory
stock option granted to a third party service providers, which is
exercisable at an exercise price of $3.00 per share.
(f) Includes options granted under the 1995 Plan to purchase 407,500 shares of
Common Stock at exercise prices ranging from $.85 to $3.00 per share, and
options granted under the 1991 Plan to purchase 46,550 shares of Common
Stock at exercise prices ranging from $.80 to $.86 per share.
SCHEDULE 3.5
LITIGATION
None
EXHIBIT A
INVESTOR QUESTIONNAIRE
NATURE OF INVESTOR; FORM OF OWNERSHIP.
(A) THE COMPANY WILL RELY ON THE INFORMATION IN THE FOLLOWING
SECTION TO DETERMINE WHETHER THE BUYER QUALIFIES AS AN ACCREDITED INVESTOR AS
SUCH TERM IS DEFINED IN RULE 501 PROMULGATED UNDER REGULATION D OF THE
SECURITIES ACT. THE BUYER IS (CHECK AND INITIAL ALL APPLICABLE ANSWERS, AND
---------------------------------------------
SIGN IN THE SPACE PROVIDED BELOW):
--------------------------------
INITIAL CHECK
------- -----
1. [ ] Any organization described in Section 501(c)(3) of
------- the Internal Revenue Code, corporation,
Massachusetts or similar business trust, or
partnership, not formed for the specific purpose
of investing in the Shares, and having total
assets in excess of $5,000,000.
2. [ ] A natural person whose net worth (or joint net
-------- worth with my spouse) is in excess of $1,000,000
as of the date hereof.
3. [ ] A natural person whose income in 1996 and 1997
-------- was, and whose income in 1998 is expected to be,
in excess of $200,000, or whose income with a
spouse in 1996 and 1997 was, and whose income with
a spouse in 1998 is expected to be, in excess of
$300,000.
4. [ ] A trust with total assets in excess of $5,000,000,
-------- not formed for the specific purpose of investing
in the Company, whose purchase is directed by a
"sophisticated person" as described in
Rule 506(b)(2)(ii) of the Act.
5. [ ] A "Company," "savings and loan association" or
-------- "insurance company," as defined in the Act.
6. [ ] An "employee benefit plan" as defined in the
-------- Employee Retirement Income Security Act of 1974 (a
"Plan") which has total assets in excess of
$5,000,000. If a Plan, the Disclosure and
Acknowledgment form for Qualified Plan has been
completed.
7. [ ] A Plan whose investment decisions, including the
-------- decision to subscribe for the Shares, are made
solely by (i) a "plan fiduciary" as defined in the
Employee Retirement Income Security Act of 1974,
which includes a Company, a savings and loan
association, and insurance company or a registered
investment adviser, or (ii) an "accredited
investor" as defined under Rule 501(a) of the Act,
for a self-directed plan.
8. [ ] A broker/dealer registered pursuant to Section 15
-------- of the Securities Exchange Act of 1934, as
amended.
9. [ ] A director or an executive officer of the Company.
--------
10.[ ] A "private business development company" as
-------- defined in the Investment Advisers Act of 1940, as
amended.
11.[ ] An investment company registered under, or a
-------- "business development company" as defined in, the
Investment Company Act of 1940, as amended.
12.[ ] A Small Business Investment Company licensed by
-------- the U.S. Small Business Administration under the
Small Business Investment Act of 1958.
13.[ ] A plan established and maintained by a state, its
-------- political subdivisions, or any agency or
instrumentality of a state or its political
subdivisions, for the benefit of its employees and
having total assets in excess of $5,000,000.
14.[ ] Any entity in which all of the equity owners are
-------- "accredited investors."
(B) THE BUYER IS/ARE (CHECK AND INITIAL ALL APPLICABLE ANSWERS):
------------------------------------------
1. [ ] Individual (one signature required)
--------
2. [ ] Joint Tenants with right of survivorship (both
-------- parties must sign)
3. [ ] Tenants in Common (both parties must sign)
--------
4. [ ] Community Property (one signature required if
-------- Shares are held in one name, i.e., managing
spouse; two signatures required if Shares are held
in both names or if Buyer is a resident of
California)
5. [ ] Corporation (signature of authorized party or
-------- parties required)
6. [ ] Partnership (signature of general partner required
-------- and any additional signatures required by
Partnership Agreement)
7. [ ] Trust (Trust must sign as follows:
-------- as trustee
-------------------
for ,
-------------------
dated ).
----------------------
8. [ ] Other Entities (signatures as required by
-------- applicable organization documents)
You may rely on the forgoing representations.
DATE
PRINT NAME
SIGNATURE
SOCIAL SECURITY OR TAX I.D. NO.
Exhibit 10.12
BACK-END PROCESSING AGREEMENT
THIS AGREEMENT is entered into as of the 11 day of June, 1999 (the
"Effective Date"), by and between The ▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation
(the "Company"), and Biomerica, Inc., a Delaware corporation ("Biomerica"),
with reference to the following facts:
WHEREAS, the Company has developed, or is in the process of developing, an
infrastructure, which includes certain proprietary technology, which enables the
Company, among other things, to be able to process e-commerce transactions on
the Internet in an efficient and effective manner and to track customer orders
from the time the order is placed until delivery (the "Back-end Processing
Technology").
WHEREAS, Biomerica desires to leverage the Company's Back-end Processing
Technology by retaining the Company to provide back-end processing services (the
"Back-end Processing Services"), more particularly described below, in
connection with an e-commerce Internet website to be developed and operated by
Biomerica, upon the terms and conditions set forth below.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. RETENTION OF COMPANY; SCOPE OF SERVICES.
---------------------------------------
(a) Biomerica hereby retains the Company, and the Company hereby accepts
such retention, to provide to and/or assist Biomerica with at the option of
Biomerica, during the Term (as defined below) of this Agreement the Back-end
Processing Services using its Back-end Processing Technology for Biomerica's e-
commerce Internet website, which shall include, without limitation, website
hosting, website design and development (including the possible integration of
Biomerica's existing website) customer order processing, debit/credit card
validation, fraud detection, vendor communication and management (either by e-
fax, fax, e-mail, EDI or telephone), data encryption, order tracking, customer
service (by e-mail and telephone), customer and product database management,
transaction accounting and reporting and records retention.
(b) The Company shall also develop customized back-end processing in
accordance with Biomerica's reasonable specifications in order to enable
Biomerica to process customer prescription orders on-line and insurance claims
and payments (the "Script Technology"). The Script Technology shall also
include security protections to insure that Customer Confidential Medical
Information (as defined in Section 6(f) below) protected from unauthorized
access. The parties agree to work together in good faith in order to develop
the Script Technology in an efficient and cost effective manner. The Script
Technology shall be jointly owned by the Company and Biomerica. The Company
agrees to provide to Biomerica written documentation of the specifications for
the Script Technology and all modifications thereto, applicable source code and
object code, as well as back-up copies of the software to be stored at
Biomerica.
(c) The Company warrants and covenants that its affiliate, The
▇▇▇▇▇▇.▇▇▇, Inc. (the "BigHub"), will provide to Biomerica perpetual and
continuous (e.g., always running) free advertising on the BigHub's web site and
continuous banners on and links from its website to Biomerica's website during
the term of this Agreement. All advertising shall be pre-approved by Biomerica.
(d) The Company agrees that, within the capabilities of its system
architecture and to the extent that such information is readily available, to
make available to Biomerica customer profiles and recent prescription and
product order histories (estimated to be a minimum six (6) to twelve (12) month
history). All Confidential Customer Medical Information (as defined in Section
6(f) below) shall belong exclusively to Biomerica.
(e) During the term of this Agreement, the Company agrees to provide on-
going maintenance of the Back-end Processing Technology and the Script
Technology and to make available to Biomerica at no cost all enhancements and
modifications developed by the Company to such technology.
(f) The parties agree that Biomerica shall have and maintain exclusive
control over its business operations and the development of its website and the
Script Technology and Confidential Customer Medical Information; provided,
however, that, in the event that Biomerica requests new developments which
exceed the intended scope of this Agreement and the parties relationship,
Biomerica and the Company agree to negotiate in good faith the economics of such
development which negotiations shall take into consideration the market value of
the services to be provided and the compensation being received by the Company
from affiliates for similar services.
(g) Notwithstanding anything to the contrary contained herein, Biomerica
shall have the option, without penalty, not to use certain services of the
Company and may procure independent of the Company service sourcing. Anything
developed for Biomerica in connection with such independent service sourcing
shall be owned solely and completely by Biomerica. Both parties agree that
product sourcing by one party of general health and beauty products (excluding
disease state products, prescription products and medical specialty products)
may be leveraged by the other party.
2. TRANSFER OF DOMAIN NAME. In addition to the provision of the Back-end
-----------------------
Processing Services to be provided to Biomerica pursuant to the terms hereof,
the Company agrees to, and hereby does, transfer and assign to Biomerica all of
the Company's right, title and interest in and to the Internet domain name
"▇▇▇▇▇▇▇▇.▇▇▇" and all rights to any trademark relating thereto, including any
pending trademark registrations (the "Assignment"). The Company agrees that
within five (5) business days of the Effective Date, it shall file, or cause the
registrant of the domain name to file, with Network Solutions all documents
necessary to carry out the foregoing Assignment and to reflect Biomerica as the
registrant of the domain name "▇▇▇▇▇▇▇▇.▇▇▇". With respect to the Assignment of
the Company's trademark rights, Biomerica agrees to reimburse the Company for
all costs and expenses, including attorneys' fees and application costs,
incurred by the Company prior to the Assignment not to exceed Three Thousand
Dollars ($3,000).
3. TERM AND TERMINATION.
--------------------
3.1 The term of this Agreement shall commence as of the Effective Date
and continue for a period of five (5) years (the " Initial Term"), unless sooner
terminated as provided below. Upon expiration of the Initial Term, the
Agreement shall be automatically extended for additional periods of five (5)
years (each an "Additional Term"). Within sixty (60) days prior to the
expiration of the Initial Term and each Additional Term, the parties agree to
negotiate the terms of such Additional Term, which negotiations shall take into
consideration the value of the services provided and compensation paid to date,
the services being provided to and compensation being paid by affiliated
companies, and the current market rate for such services (including anticipated
services). The Initial Term and each Additional Term are collectively referred
to herein as the "Term".
3.2 The Company and Biomerica may mutually agree in writing to terminate
this Agreement at any time.
3.3 Either party may terminate this Agreement immediately if:
(a) the other party has breached a material term of this Agreement
and, after written notice and a reasonable opportunity, not to exceed fifteen
(15) days, the other party fails to cure such breach; or
(b) the other party has committed any act or omission which
materially injures the reputation of the other party.
3.4 This Agreement shall automatically terminate upon the occurrence of
any of the following events:
(a) the bankruptcy or insolvency of either party; or
(b) the liquidation or dissolution of either party.
3.5 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. The parties agree that the Confidential Customer
Medical Information shall be delivered to Biomerica, and that it shall have the
exclusive right to use such information.
3.6 Upon any termination of this Agreement, the parties agree that each
party shall continue to have joint ownership of the Script Technology and a non-
exclusive, fully-paid, transferable license to use and exploit the Script
Technology in its form as it existed as of the date of such termination, except
that all Confidential Customer Medical Information shall be the sole and
exclusive property of Biomerica.
4. COMPENSATION. As compensation for the Back-end Processing Services to
------------
be rendered by the Company under this Agreement and the Assignment, Biomerica
shall issue to the Company a common stock warrant to purchase 660,000 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 a exercise period of five (5) years commencing on
the date that the Company shall begin providing the Back-end Processing Services
to Biomerica. (A form of the Warrant is attached hereto as Exhibit A).
5. 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 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. The Company shall be required to hire its own employees
and/or consultants to provide the Back-end Processing Services and shall have
full and sole responsibility for the payment of all federal, state and local
taxes or contributions that are required pursuant to unemployment insurance,
social security, income taxes, and workers' compensation statutes, and agrees to
indemnify Biomerica for any liability relating thereto or resulting from the
acts, omissions or negligence of such employees or consultants arising out of or
relating to the Back-end Processing Services. It is agreed that neither the
Company nor its employees or consultants shall have a claim against Biomerica
by reason of the Back-end Processing Services performed under this Agreement for
any social security, disability, unemployment, vacation, sick leave, insurance,
retirement or any other employment benefits of any kind.
6. CONFIDENTIALITY; NON-CIRCUMVENTION AND NON-COMPETITION.
------------------------------------------------------
(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 confidential or
proprietary information of such party regarding the 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, for a period of five (5) years or 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, without any obligation to keep it
confidential, prior to the receipt of such item of Confidential Information from
the other party, or (iv) was independently developed by one party without
reference to Confidential Information received hereunder.
(d) The parties agree that during the Term of this Agreement, the
Company may sell a limited number of typical household health and beauty
products, but shall not sell prescription products, medical specialty products,
and disease state products (all of such products as defined by Biomerica) and
shall not provide medical content (e.g., medical advice) on its website.
Notwithstanding the Company's right to sell typical health and beauty products,
Biomerica acknowledges that it will have significant SKU count and brand name
advantage. The parties agree to discuss in good faith the desirability of
swapping advertising and leveraging website traffic.
(e) 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, non-circumvention or non-competition 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: (i) obtain damages
for breach of the obligations hereunder; (ii) 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.
(f) The parties acknowledge and agree that included within the
Confidential Information of Biomerica shall be all information regarding each of
Biomerica's customers which is required by applicable law to remain
confidential, including, without limitation, anything of a confidential nature
purchased by a customer, such as prescriptions (collectively, "Confidential
Customer Medical Information). The Company agrees to employ the most vigorous
security schemes used by the Company to protect and prevent unauthorized access
to (both from within and outside the Company) the Confidential Customer Medical
Information. The Company further agrees to maintain a log of all persons
accessing the Confidential Customer Medical Information and to provide such log
to Biomerica on a regular basis. Notwithstanding the foregoing, the parties
agree that the identity of Biomerica's customers and the products purchase by
them which do not fall within the description of Confidential Customer Medical
Information shall not be deemed Confidential Information and may be used by
either party for target marketing and other commercially reasonable purposes.
7. OWNERSHIP OF PROPRIETARY INFORMATION. Biomerica hereby acknowledges and
------------------------------------
agrees that the Back-end Processing Technology is the sole and exclusive
property of the Company and that Biomerica has no, and shall not obtain any by
virtue of this Agreement, right, title or interest in or to any of the Back-end
Processing Technology. The parties agree that any customizations,
modifications, revisions, enhancements or additions to the Back-end Processing
Technology made by the Company at the request of Biomerica, or jointly developed
by the Company and Biomerica, shall be jointly owned by the Company and
Biomerica. Notwithstanding the foregoing, the parties agree that the Script
Technology and all customer profile information (excluding Confidential Customer
Medical Information) shall be jointly owned by them. The parties further agree
that Biomerica shall have exclusive ownership of all Confidential Customer
Medical Information. Biomerica shall have the right to mirror at its offices
all data relating to the Script Technology, all customer information, including
Confidential Customer Medical Information, and such other information as may be
necessary in order to have a back-up of its web site.
8. INDEMNIFICATION. Each party (the "Indemnifying Party") agrees to defend,
---------------
indemnify and hold harmless the other party and its directors, officers,
employees, shareholders, assigns and agents (the "Indemnified Party") from and
against any and all damages, liabilities, losses, claims, demands, costs and
expenses (including, without limitation, reasonable attorneys' fees) which may
be asserted against or sustained or incurred by any of the Indemnified Party as
a result of, arising out of or relating to (i) any material breach or default by
the Indemnifying Party of any of the terms or provisions of this Agreement,
including without limitation, any use or misuse of the Back-end Processing
Technology or Script Technology, or any negligence or errors or omissions on the
party of a party in the performance of its duties or obligations hereunder, or
(ii) any litigation involving the Indemnifying Party not relating to this
Agreement where the Indemnified Party has been made a party to such litigation
by virtue of the parties' strategic relationship.
9. TIME IS OF THE ESSENCE. The parties hereto acknowledge that time is of
----------------------
the essence under this Agreement. The Company warrants that it shall have the
systems and technology in place and be fully prepared to provide the Back-end
Processing Services and perform each of its obligations under this Agreement no
later than some time during the fourth calendar quarter of 1999; provided, that
such time frame contemplates that Biomerica shall begin delivering to the
Company's I.T. department within one week of the date hereof vendor procurement
information, appropriate business rules, and that such vendors have proper EDI
technology. The parties agree that the target date shall be extended by a
period of time equal to the aggregate number of days that Biomerica is late in
providing to the Company its deliverables (as such shall be reasonably
communicated to Biomerica from time to time).
10. FORCE MAJEURE. Subject to the limitations of this Agreement and except as
-------------
specifically provided in this Agreement to the contrary, neither of the parties
hereto shall be liable for defaults, delays or non-performance of any covenant,
agreement, work, service, or other act required under this Agreement to be
performed by such party, or for any damages, including, without limitation, any
incidental or consequential damages, arising out of the failure to perform any
of its obligations, by reason of any circumstance or condition beyond its
control, including, without limitation, default of third-party vendors,
suppliers or service providers, failure of power or other utilities, strikes,
lockouts and other labor disputes or other industrial disturbances, unavoidable
accidents, acts of terrorism, sabotage, embargoes, blockades, injunction or
other administrative order, governmental law or regulations which prevent or
substantially interfere with the required performance, condemnations, riots,
insurrections, martial law, conflicts (declared or undeclared), civil commotion
or disorders and any adverse change in political, economic or social conditions,
fire, explosion, flood, earthquakes and other casualty, acts of God, or any
other cause beyond the control of such party (each, a "Force Majeure Event").
In the event of any such Force Majeure Event, the performance of any covenant,
agreement, obligation, work or service, or other act of the party affected by
such Force Majeure Event under this Agreement shall be excused for the period of
delay and the period for the performance of the same shall be extended by such
period. Each of the parties hereto shall take all reasonable steps to resume
performance hereunder with the least possible delay.
Notwithstanding the foregoing, each party agrees that this provision shall
not apply to a third party claim against either or both of them for personal
injury or death resulting from such party's failure to perform its obligations
under this Agreement. If both parties are found to be liable on such third
party claim, the parties agree that their respective responsibility for
satisfying such claim shall be determined by arbitration.
11. ACCESS TO INFORMATION. The Company hereby agrees to provide access to
---------------------
Biomerica and its authorized representatives (e.g., its auditors) during normal
business hours to the Company's computer systems, software, accounting records,
and other books and records, to the extent that the foregoing relate to
Biomerica and to the extent that Biomerica has a legitimate business purpose for
requesting such access; provided, that such parties agree to execute
confidentiality and non-disclosure agreements acceptable to the Company.
12. MISCELLANEOUS.
-------------
12.1 ENTIRE AGREEMENT. Except as otherwise provided herein, this
----------------
Agreement constitutes the entire agreement between the parties, and all prior
negotiations, representations, or agreements between the parties, whether oral
or written, are merged into this Agreement. This Agreement may only be modified
by an agreement in writing executed by the parties hereto.
12.2 BINDING EFFECT, ASSIGNMENT. 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 personal representatives and shall extend to their controlled
corporations, partnerships, trusts, proprietorships, affiliates, agents,
trustees or executives. In the event that the Company shall be sold (either
stock or assets) or shall merge into another entity, the Company agrees that the
assumption of all of its obligations hereunder by the acquiring or surviving
entity shall be a condition to the consummation of such transaction.
12.3 NOTICES. All notices, requests, demands, and other communications
-------
provided for hereunder shall be in writing (or by telex or facsimile
transmission) and shall be deemed to have been duly given:
(i) on the date of service if delivered in person or by telex
or facsimile transmission (with the telex or facsimile
confirmation of transmission receipt acting as confirmation of
service when sent and provided that telexed or telecopied
notices are also mailed by first class, certified or
registered mail, postage prepaid); or
(ii) In seventy-two (72) hours after mailing by first class,
registered or certified mail, postage prepaid, and properly
addressed as follows:
The ▇▇▇▇▇▇▇▇.▇▇▇, Inc.: Biomerica, Inc.:
---------------------- ---------------
3388 Via Lido ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇, President
-------------------
or at such other address as the party affected may designate in a written notice
in compliance with this Section.
12.4 ARBITRATION. Except for matters covered by Section 6(d) above, all
-----------
disputes arising out of 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.
12.5 ATTORNEY FEES. 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.
12.6 SECTION HEADINGS. 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.
12.7 SEVERABILITY. In the event that any provisions, or portions thereof,
------------
of this Agreement are held to be unenforceable or invalid by any court of
competent jurisdiction, the validity and enforceability of the remaining
provisions, or portions thereof, shall not be affected thereby.
12.8 COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, all of which together shall constitute a single agreement, each of
which shall be an original for all purposes.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first above written.
THE ▇▇▇▇▇▇▇▇.▇▇▇, INC. BIOMERICA, INC.
By: By:
------------------------
Name: Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------
Title: Title: President
----------------------
Exhibit 10.13
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 ▇▇▇▇▇▇▇▇.▇▇▇, 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, Six Hundred Sixty Thousand
(660,000) 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 Back-end Processing Services Agreement of
even date herewith.
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
▇▇▇▇▇▇▇ ▇▇▇▇▇, IN ANY CAPACITY, CURRENTLY AS PRESIDENT AND CHIEF 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
(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.
(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 the to Company, to:
Biomerica, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the Holder, to:
The ▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
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 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 June, 1999.
------
Biomerica, Inc.
By:
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: President
Attest:
Name:
Title:
NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of ,
------------------------
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: $
----------------------
CASHLESS EXERCISE
Exhibit 10.14
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"), RJM CONSULTING, LLC., 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, One Million (1,000,000) 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 $3.00 per share, subject to further adjustment as set forth in
Section 6 hereof. One-half of this Warrant is being issued to the Holder in
consideration for Holder's services in raising equity capital for the Company
and one-half of this Warrant is being issued to the Holder in consideration for
Holder's introduction of The ▇▇▇▇▇▇▇▇.▇▇▇, Inc. to the Company.
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 ▇▇▇▇▇▇▇ ▇▇▇▇▇, IN ANY CAPACITY, CURRENTLY AS PRESIDENT
AND CHIEF 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
(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.
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.
(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 entirely, 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 the to Company, to:
Biomerica, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the Holder, to:
RJM Consulting, LLC
▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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 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 June, 1999.
-------
Biomerica, Inc.
By:
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: President
Attest:
Name:
Title:
NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of
--------------------------,
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: $
--------------------
CASHLESS EXERCISE
Exhibit 10.15
BIOMERICA, INC.
NON-QUALIFIED OPTION AGREEMENT
This Non-Qualified Option Agreement (the "Agreement") is made and entered
into effective as of June 10, 1999 by and between BIOMERICA, INC., a Delaware
corporation (the "Corporation"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇, and his permitted designees
and assigns (the "Optionee").
WHEREAS, in recognition of Optionee's efforts in structuring and negotiate
this Corporation's strategic alliance with The ▇▇▇▇▇▇▇▇.▇▇▇, Inc. and to
encourage Optionee's continued employment and association with the Company, the
Corporation desires to grant to Optionee an option to acquire 1,000,000 shares
of the Corporation.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Grant of Option. In consideration for the Services provided by
---------------
Optionee to the Corporation (including serving on the Corporation's Board of
Directors), the Corporation hereby grants to Optionee and its permitted
designees and assignees, as of the date hereof, the right and option to
purchase, on the terms and conditions hereinafter set forth, One Million
(1,000,000) shares of the Corporation's common stock (the "Common Shares"), as
such amount is set forth on the Signature Page attached hereto (the "Option"),
subject to adjustment in accordance with the provisions of Section 14 below. It
is understood and acknowledged that the Option is designated as a Non-Qualified
Stock Option which will not qualify as an Incentive Stock Option under Section
422 of the Internal Revenue Code.
2. Option Price. The price to be paid for the shares of common stock to
------------
be issued upon exercise of the Option or any part thereof shall be as set forth
on the Signature Page (the "Purchase Price").
3. Right to Exercise. The Optionee's right to exercise the Option shall
-----------------
vest in equal increments at the first, second and third anniversaries of the
date on which the Option is granted; provided, however, that the Option shall
fully vest immediately prior to a public offering of the Company's common stock.
The only condition to vesting of the Optionee's right to exercise the Option
shall be the passage of time and Optionee'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.
4. Securities Law Requirements. No part of the Option shall be exercised
---------------------------
if counsel to the Corporation determines that any applicable registration
requirement under the Securities Act of 1933, as amended, or any other
applicable requirement of Federal or state law has not been met.
5. Term of Option. The Option shall remain exercisable for a period of
--------------
ten (10) years.
6. Nontransferability. Except in the event of death or incapacity of
------------------
Optionee, and except as otherwise provided herein or unless the Corporation
otherwise consents in writing, the option and all rights and privileges granted
hereunder shall be non-assignable and non-transferable by the Optionee, either
voluntarily or by operation of law (except upon the dissolution or liquidation
of the Optionee and then only to the owners of the Optionee) and shall not be
pledged or hypothecated in any way. Except as otherwise provided herein, any
attempted alienation, assignment, pledge, hypothecation, attachment, execution
or similar process, whether voluntary or involuntary, with respect to all or any
part of the Option or any right thereunder, shall be null and void and, at the
Corporation's option, shall cause all of Optionee's rights under this Agreement
to terminate. Notwithstanding the foregoing, Optionee shall have the one-time
right to assign its rights in all or part of the Option to affiliates and other
parties involved in the provision of the Services to the Corporation; provided
each such party agrees to enter into an option agreement with terms
substantially similar to the terms of this Agreement.
7. Effect of Exercise. Upon exercise of all or any part of the Option,
------------------
the number of shares of common stock subject to the Option under this Agreement
shall be reduced by the number of shares with respect to which such exercise is
made.
8. Method of Exercise. Each exercise of the Option shall be by means of
------------------
a written notice of exercise in substantially the form prescribed from time to
time by the Board delivered to the Secretary of the Corporation at its principal
office and accompanied by payment in full of the option price for each share of
common stock purchased under the Option. Such notice shall specify the number
of shares of common stock with respect to which the Option is exercised and
shall be signed by the person exercising the Option. If the Option is exercised
by a person other than the Optionee, such notice shall be accompanied by proof,
reasonably satisfactory to the Corporation, of such person's right to exercise
the Option.
The Purchase Price specified in Section 2 above shall be paid in full upon
the exercise of the Option (i) by cash, in United States dollars; (ii) by
cancellation of indebtedness owed by the Corporation to the Optionee; (iii) by
delivery of a full recourse promissory note bearing interest at the then
prevailing rate having such payment terms and conditions as the Corporation may
determine, or (iv) by any combination of the foregoing. The Board of Directors
may, but is not obligated to, accept a secured recourse promissory note of
Optionee (bearing such rate of interest and such other terms as they may
reasonably determine) as payment of the exercise price; provided, however, no
-------- -------
stock certificate representing the shares be released until the note shall have
been paid in full.
9. Withholding Taxes. If the Optionee is an employee or former employee
-----------------
of the Corporation when all or part of the option is exercised, the Corporation
may require the Optionee to deliver payment of any withholding taxes (in
addition to the Option exercise price) in cash with respect to the difference
between the Option exercise price and the fair market value of the common stock
acquired upon exercise. Alternatively, the Corporation may accept shares having
a fair market value equal to the amount of the withholding taxes.
10. Issuance of Shares. Subject to the foregoing conditions, the
------------------
Corporation, as soon as reasonably practicable after receipt of a proper notice
of exercise and without transfer or issue tax or other incidental expense to the
person exercising the Option, shall deliver to such person at the principal
office of the Corporation, or such other location as may be acceptable to the
Corporation and such person, one or more certificates for the shares of common
stock with respect to which the option has been exercised. Such shares shall be
fully paid and nonassessable and shall be issued in the name of such person.
11. Piggyback Registration Rights.
-----------------------------
11.1 Piggyback Registration. If the Corporation at any time
----------------------
proposes to register any shares of Common Stock under the Act whether or not for
sale for its own account, other than an offering primarily or exclusively to
employees, and the registration form to be used may also be used for the
registration of Common Stock owned by the Optionee (a "Piggyback Registration"),
the Corporation shall at such time notify the Optionee at least 30 days prior to
the filing of any registration statement with respect thereto. Upon the receipt
of a written request of Optionee made within ten (10) days after such notice
(which request shall specify the Common Stock intended to be registered), the
Corporation will use its best efforts, subject to the limitations set forth
below, to include in such registration the Shares. For the purposes of this
subsection 11.1, best efforts shall not require the Corporation to reduce the
amount or sale price of the securities it proposes to register. Each such
request shall also contain an undertaking from the Optionee to provide all such
information and material and to take all actions as may be required by the
Corporation in order to permit the Corporation to comply with all applicable
federal and state securities laws. Notwithstanding any other provision of this
Section 11, 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
entirely, the number of shares (including those of Optionee) to be included in
such Piggyback Registration. If limited, Optionee's shares will be registered
pro rata with any other holders of Common Stock or Common Stock equivalents
having Registration Rights.
11.2 Sales Commissions and Other Charges. Optionee shall pay all
-----------------------------------
sales commissions or other similar selling charges with respect to Common Stock
sold by such Optionee pursuant to a registration statement. The Corporation
shall pay all registration and filing fees, fees and expenses of compliance with
federal and state securities laws, printing expenses, messenger and delivery
expenses, fees and disbursements of counsel and accountants for the Corporation
and reasonable fees and expenses of one counsel, selected by Optionee, unless
the applicable state securities laws require that stockholders whose securities
are being registered pay their pro rata share of such fees, expenses and
disbursements, in which case each stockholder (including the Optionee)
participating in the registration shall pay its pro rata share of all such fees,
expenses and disbursements based on its pro rata share of the total number of
shares being registered.
12. Limitation of Optionee's Rights. Neither Optionee nor any person
-------------------------------
entitled to exercise the Option shall be or have any of the rights of a
shareholder of the Corporation in respect of any share issuable upon the
exercise of the Option unless and until a certificate or certificates
representing shares of common stock shall have been issued and delivered upon
exercise of the Option in full or in part. No adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificates are issued.
13. Consent Required to Transfer. Except as provided herein, in
----------------------------
connection with any underwritten public offering by the Corporation of its
equity securities pursuant to an effective registration statement filed under
the 1933 Act, including the Corporation's secondary public offering, Optionee
shall not sell, make any short sale of, loan, hypothecate, pledge, grant any
option for the purchase of, or otherwise dispose or transfer for value or
otherwise agree to engage in any of the foregoing transactions with respect to,
any shares of common stock purchased under the Option without the prior written
consent of the Corporation or its underwriters. Such limitations shall be in
effect for such period of time from and after the effective date of such
registration statement as may be requested by the Corporation or such
underwriters.
14. Protection Against Dilution.
---------------------------
14.1 Adjustment Mechanism. If an adjustment of the Purchase Price is
--------------------
required pursuant to this Section 14, the Optionee 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 is entitled to purchase pursuant to this
Option, multiplied by (ii) the adjusted purchase price per share, to equal (iii)
the dollar amount of the total number of shares of common stock is entitled to
purchase before adjustment multiplied by the total purchase price before
adjustment.
14.2 Capital Adjustment. 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 14 shall be applied as if such
capital adjustment event had occurred immediately prior to the date of this
Option 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 14 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.
14.3 Adjustment for Spin Off. If, for any reason, prior to the
-----------------------
purchase of this Option 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 holder of the Company, then
(a) the Company shall cause (i) to be reserved Spin Off
Securities equal to the number thereof that would have been issued to the
Optionee had the entire unexercised portion of the Option 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
Portion") 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 Optionee on the purchase of all or any of the Outstanding
Portion, 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 Portion then being purchased, and (II) the denominator
is the amount of the Outstanding Portion; and
(b) the Purchase Price on the Outstanding Portion shall be
adjusted immediately after consummation of the Spin Off by multiplying he
Purchaser 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 such adjusted Purchase Price shall be deemed to be the Purchase
Price with respect to the Outstanding Portion after the Record Date.
For the purposes of this Section 14.3, 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.
15. Notices. Any notice to the Corporation contemplated by this Agreement
-------
shall be addressed to it in care of its President; any notice to the Optionee
shall be addressed to Optionee at the address on file with the Corporation on
the date hereof or at such other address as Optionee may hereafter designate in
a writing delivered to the Corporation as provided herein.
16. Interpretation. The interpretation, construction, performance and
--------------
enforcement of this Agreement shall lie within the sole discretion of the Board,
and the Board's determinations shall be conclusive and binding on all interested
persons.
17. Governing Law. This Agreement has been made, executed and delivered
-------------
in, and the interpretation, performance and enforcement hereof shall be governed
by and construed under the laws of the State of California.
SIGNATURE PAGE
BIOMERICA, INC.
NON-QUALIFIED OPTION AGREEMENT
Date of Grant: June 10, 1999
Purchase Price: $3.00 per share
Number of Shares: 1,000,000
Vesting Schedule: See Section 3.
IN WITNESS WHEREOF, this Non-Qualified Option Agreement has been delivered
by the Parties hereto.
Date: "Optionee"
------------------------
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
Address:
------------------------
---------------------------------
Tax Identification Number:
------
The Company hereby agrees to
all the terms of the Agreement.
Biomerica, Inc.
By:
----------------------
Name:
--------------------
Title:
-------------------
Exhibit 10.16
BIOMERICA, INC.
NON-QUALIFIED OPTION AGREEMENT
This Non-Qualified Option Agreement (the "Agreement") is made and entered
into effective as of June 10, 1999 by and between BIOMERICA, INC., a Delaware
corporation (the "Corporation"), and ▇▇▇▇▇ ▇▇▇▇▇, and her permitted designees
and assigns (the "Optionee").
WHEREAS, in recognition of the outstanding services provided by Optionee to
the Corporation and to encourage Optionee's continued employment and association
with the Company, the Corporation desires to grant to Optionee an option to
acquire 50,000 shares of the Corporation.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Grant of Option. In consideration for the Services provided by
---------------
Optionee to the Corporation, the Corporation hereby grants to Optionee and her
permitted designees and assignees, as of the date hereof, the right and option
to purchase, on the terms and conditions hereinafter set forth, Fifty Thousand
(50,000) shares of the Corporation's common stock (the "Common Shares"), as such
amount is set forth on the Signature Page attached hereto (the "Option"),
subject to adjustment in accordance with the provisions of Section 14 below. It
is understood and acknowledged that the Option is designated as a Non-Qualified
Stock Option which will not qualify as an Incentive Stock Option under Section
422 of the Internal Revenue Code.
2. Option Price. The price to be paid for the shares of common stock to
------------
be issued upon exercise of the Option or any part thereof shall be as set forth
on the Signature Page (the "Purchase Price").
3. Right to Exercise. The Optionee's right to exercise the Option shall
-----------------
vest in equal increments at the first, second and third anniversaries of the
date on which the Option is granted; provided, however, that the Option shall
fully vest immediately prior to a public offering of the Company's common stock.
The only condition to vesting of the Optionee's right to exercise the Option
shall be the passage of time and Optionee'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.
4. Securities Law Requirements. No part of the Option shall be exercised
---------------------------
if counsel to the Corporation determines that any applicable registration
requirement under the Securities Act of 1933, as amended, or any other
applicable requirement of Federal or state law has not been met.
5. Term of Option. The Option shall remain exercisable for a period of
--------------
ten (10) years.
6. Nontransferability. Except in the event of death or incapacity of
------------------
Optionee, and except as otherwise provided herein or unless the Corporation
otherwise consents in writing, the option and all rights and privileges granted
hereunder shall be non-assignable and non-transferable by the Optionee, either
voluntarily or by operation of law (except upon the dissolution or liquidation
of the Optionee and then only to the owners of the Optionee) and shall not be
pledged or hypothecated in any way. Except as otherwise provided herein, any
attempted alienation, assignment, pledge, hypothecation, attachment, execution
or similar process, whether voluntary or involuntary, with respect to all or any
part of the Option or any right thereunder, shall be null and void and, at the
Corporation's option, shall cause all of Optionee's rights under this Agreement
to terminate. Notwithstanding the foregoing, Optionee shall have the one-time
right to assign her rights in all or part of the Option to affiliates and other
parties involved in the provision of the Services to the Corporation; provided
each such party agrees to enter into an option agreement with terms
substantially similar to the terms of this Agreement.
7. Effect of Exercise. Upon exercise of all or any part of the Option,
------------------
the number of shares of common stock subject to the Option under this Agreement
shall be reduced by the number of shares with respect to which such exercise is
made.
8. Method of Exercise. Each exercise of the Option shall be by means of
------------------
a written notice of exercise in substantially the form prescribed from time to
time by the Board delivered to the Secretary of the Corporation at its principal
office and accompanied by payment in full of the option price for each share of
common stock purchased under the Option. Such notice shall specify the number
of shares of common stock with respect to which the Option is exercised and
shall be signed by the person exercising the Option. If the Option is exercised
by a person other than the Optionee, such notice shall be accompanied by proof,
reasonably satisfactory to the Corporation, of such person's right to exercise
the Option.
The Purchase Price specified in Section 2 above shall be paid in full upon
the exercise of the Option (i) by cash, in United States dollars; (ii) by
cancellation of indebtedness owed by the Corporation to the Optionee; (iii) by
delivery of a full recourse promissory note bearing interest at the then
prevailing rate having such payment terms and conditions as the Corporation may
determine; or (iv) by any combination of the foregoing. The Board of Directors
may, but is not obligated to, accept a secured recourse promissory note of
Optionee (bearing such rate of interest and such other terms as they may
reasonably determine) as payment of the exercise price; provided, however, no
-------- -------
stock certificate representing the shares be released until the note shall have
been paid in full.
9. Withholding Taxes. If the Optionee is an employee or former employee
-----------------
of the Corporation when all or part of the option is exercised, the Corporation
may require the Optionee to deliver payment of any withholding taxes (in
addition to the Option exercise price) in cash with respect to the difference
between the Option exercise price and the fair market value of the common stock
acquired upon exercise. Alternatively, the Corporation may accept shares having
a fair market value equal to the amount of the withholding taxes.
10. Issuance of Shares. Subject to the foregoing conditions, the
------------------
Corporation, as soon as reasonably practicable after receipt of a proper notice
of exercise and without transfer or issue tax or other incidental expense to the
person exercising the Option, shall deliver to such person at the principal
office of the Corporation, or such other location as may be acceptable to the
Corporation and such person, one or more certificates for the shares of common
stock with respect to which the option has been exercised. Such shares shall be
fully paid and nonassessable and shall be issued in the name of such person.
11. Piggyback Registration Rights.
-----------------------------
11.1 Piggyback Registration. If the Corporation at any time
----------------------
proposes to register any shares of common stock under the Securities Act of 1933
(the "Act") whether or not for sale for its own account, other than an offering
primarily or exclusively to employees, and the registration form to be used may
also be used for the registration of common stock owned by the Optionee (a
"Piggyback Registration"), the Corporation shall at such time notify the
Optionee at least thirty (30) days prior to the filing of any registration
statement with respect thereto. Upon the receipt of a written request of
Optionee made within ten (10) days after such notice (which request shall
specify the common stock intended to be registered), the Corporation will use
its best efforts, subject to the limitations set forth below, to include in such
registration the Common Shares. For the purposes of this subsection 11.1, best
efforts shall not require the Corporation to reduce the amount or sale price of
the securities it proposes to register. Each such request shall also contain an
undertaking from the Optionee to provide all such information and material and
to take all actions as may be required by the Corporation in order to permit the
Corporation to comply with all applicable federal and state securities laws.
Notwithstanding any other provision of this Section 11, 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 the number of shares (including those of
Optionee) to be included in such Piggyback Registration. If limited, Optionee's
shares will be registered pro rata with any other holders of common stock or
common stock equivalents having Registration Rights.
11.2 Sales Commissions and Other Charges. Optionee shall pay all
-----------------------------------
sales commissions or other similar selling charges with respect to common stock
sold by such Optionee pursuant to a registration statement. The Corporation
shall pay all registration and filing fees, fees and expenses of compliance with
federal and state securities laws, printing expenses, messenger and delivery
expenses, fees and disbursements of counsel and accountants for the Corporation
and reasonable fees and expenses of one counsel, selected by Optionee, unless
the applicable state securities laws require that stockholders whose securities
are being registered pay their pro rata share of such fees, expenses and
disbursements, in which case each stockholder (including the Optionee)
participating in the registration shall pay its pro rata share of all such fees,
expenses and disbursements based on its pro rata share of the total number of
shares being registered.
12. Limitation of Optionee's Rights. Neither Optionee nor any person
-------------------------------
entitled to exercise the Option shall be or have any of the rights of a
shareholder of the Corporation in respect of any share issuable upon the
exercise of the Option unless and until a certificate or certificates
representing shares of common stock shall have been issued and delivered upon
exercise of the Option in full or in part. No adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificates are issued.
13. Consent Required to Transfer. Except as provided herein, in
----------------------------
connection with any underwritten public offering by the Corporation of its
equity securities pursuant to an effective registration statement filed under
the Act, including the Corporation's secondary public offering, Optionee shall
not sell, make any short sale of, loan, hypothecate, pledge, grant any option
for the purchase of, or otherwise dispose or transfer for value or otherwise
agree to engage in any of the foregoing transactions with respect to, any shares
of common stock purchased under the Option without the prior written consent of
the Corporation or its underwriters. Such limitations shall be in effect for
such period of time from and after the effective date of such registration
statement as may be requested by the Corporation or such underwriters.
14. Protection Against Dilution.
---------------------------
14.1 Adjustment Mechanism. If an adjustment of the Purchase Price is
--------------------
required pursuant to this Section 14, the Optionee 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 is entitled to purchase pursuant to this
Option, multiplied by (ii) the adjusted purchase price per share, to equal (iii)
the dollar amount of the total number of shares of common stock is entitled to
purchase before adjustment multiplied by the total purchase price before
adjustment.
14.2 Capital Adjustment. 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 Corporation, the provisions of this Section 14 shall be applied as if
such capital adjustment event had occurred immediately prior to the date of this
Option 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 14 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.
14.3 Adjustment for Spin Off. If, for any reason, prior to the
-----------------------
purchase of this Option in full, the Corporation 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 Corporation 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 holder of the Corporation, then
(a) the Corporation shall cause (i) to be reserved Spin Off
Securities equal to the number thereof that would have been issued to the
Optionee had the entire unexercised portion of the Option 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 Corporation (the
"Outstanding Portion") 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 Optionee on the purchase of all or any of the
Outstanding Portion, 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 Portion then being purchased, and
(II) the denominator is the amount of the Outstanding Portion; and
(b) the Purchase Price on the Outstanding Portion shall be
adjusted immediately after consummation of the Spin Off by multiplying the
Purchase 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 such adjusted Purchase Price shall be deemed to be the Purchase
Price with respect to the Outstanding Portion after the Record Date.
For the purposes of this Section 14.3, 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.
15. Restricted Securities. Optionee understands that the Option and the
---------------------
Common Shares issuable upon exercise of the Option are "restricted securities"
under the federal securities laws in as much as they are being acquired from the
Corporation in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the Act only in certain limited circumstances.
16. Notices. Any notice to the Corporation contemplated by this Agreement
-------
shall be addressed to it in care of its President; any notice to the Optionee
shall be addressed to Optionee at the address on file with the Corporation on
the date hereof or at such other address as Optionee may hereafter designate in
a writing delivered to the Corporation as provided herein.
17. Interpretation. The interpretation, construction, performance and
--------------
enforcement of this Agreement shall lie within the sole discretion of the Board,
and the Board's determinations shall be conclusive and binding on all interested
persons.
18. Governing Law. This Agreement has been made, executed and delivered
-------------
in, and the interpretation, performance and enforcement hereof shall be governed
by and construed under the laws of the State of California.
SIGNATURE PAGE
BIOMERICA, INC.
NON-QUALIFIED OPTION AGREEMENT
Date of Grant: June 10, 1999
Purchase Price: $3.00 per share
Number of Shares: 50,000
Vesting Schedule: See Section 3.
IN WITNESS WHEREOF, this Non-Qualified Option Agreement has been delivered
by the Parties hereto.
Date: "Optionee"
------------------------
----------------------------------
▇▇▇▇▇ ▇▇▇▇▇
Address:
-------------------------
----------------------------------
Tax Identification Number:
-------
The Corporation hereby agrees to
all the terms of the Agreement.
Biomerica, Inc.
By:
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
Exhibit 10.17
BIOMERICA, INC.
NON-QUALIFIED OPTION AGREEMENT
This Non-Qualified Option Agreement (the "Agreement") is made and entered
into effective as of June 10, 1999 by and between BIOMERICA, INC., a Delaware
corporation (the "Corporation"), and Dr. ▇▇▇▇▇▇ ▇▇▇▇▇▇, and his permitted
designees and assigns (the "Optionee").
WHEREAS, in recognition of the outstanding services provided by Optionee to
the Corporation and to encourage Optionee's continued employment and association
with the Company, the Corporation desires to grant to Optionee an option to
acquire 10,000 shares of the Corporation.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Grant of Option. In consideration for the Services provided by
---------------
Optionee to the Corporation, the Corporation hereby grants to Optionee and his
permitted designees and assignees, as of the date hereof, the right and option
to purchase, on the terms and conditions hereinafter set forth, Ten Thousand
(10,000) shares of the Corporation's common stock (the "Common Shares"), as such
amount is set forth on the Signature Page attached hereto (the "Option"),
subject to adjustment in accordance with the provisions of Section 14 below. It
is understood and acknowledged that the Option is designated as a Non-Qualified
Stock Option which will not qualify as an Incentive Stock Option under Section
422 of the Internal Revenue Code.
2. Option Price. The price to be paid for the shares of common stock to
------------
be issued upon exercise of the Option or any part thereof shall be as set forth
on the Signature Page (the "Purchase Price").
3. Right to Exercise. The Optionee's right to exercise the Option shall
-----------------
vest in equal increments at the first, second and third anniversaries of the
date on which the Option is granted; provided, however, that the Option shall
fully vest immediately prior to a public offering of the Company's common stock.
The only condition to vesting of the Optionee's right to exercise the Option
shall be the passage of time and Optionee'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.
4. Securities Law Requirements. No part of the Option shall be exercised
---------------------------
if counsel to the Corporation determines that any applicable registration
requirement under the Securities Act of 1933, as amended, or any other
applicable requirement of Federal or state law has not been met.
5. Term of Option. The Option shall remain exercisable for a period of
--------------
ten (10) years.
6. Nontransferability. Except in the event of death or incapacity of
------------------
Optionee, and except as otherwise provided herein or unless the Corporation
otherwise consents in writing, the option and all rights and privileges granted
hereunder shall be non-assignable and non-transferable by the Optionee, either
voluntarily or by operation of law (except upon the dissolution or liquidation
of the Optionee and then only to the owners of the Optionee) and shall not be
pledged or hypothecated in any way. Except as otherwise provided herein, any
attempted alienation, assignment, pledge, hypothecation, attachment, execution
or similar process, whether voluntary or involuntary, with respect to all or any
part of the Option or any right thereunder, shall be null and void and, at the
Corporation's option, shall cause all of Optionee's rights under this Agreement
to terminate. Notwithstanding the foregoing, Optionee shall have the one-time
right to assign its rights in all or part of the Option to affiliates and other
parties involved in the provision of the Services to the Corporation; provided
each such party agrees to enter into an option agreement with terms
substantially similar to the terms of this Agreement.
7. Effect of Exercise. Upon exercise of all or any part of the Option,
------------------
the number of shares of common stock subject to the Option under this Agreement
shall be reduced by the number of shares with respect to which such exercise is
made.
8. Method of Exercise. Each exercise of the Option shall be by means of
------------------
a written notice of exercise in substantially the form prescribed from time to
time by the Board delivered to the Secretary of the Corporation at its principal
office and accompanied by payment in full of the option price for each share of
common stock purchased under the Option. Such notice shall specify the number
of shares of common stock with respect to which the Option is exercised and
shall be signed by the person exercising the Option. If the Option is exercised
by a person other than the Optionee, such notice shall be accompanied by proof,
reasonably satisfactory to the Corporation, of such person's right to exercise
the Option.
The Purchase Price specified in Section 2 above shall be paid in full upon
the exercise of the Option (i) by cash, in United States dollars; (ii) by
cancellation of indebtedness owed by the Corporation to the Optionee; (iii) by
delivery of a full recourse promissory note bearing interest at the then
prevailing rate having such payment terms and conditions as the Corporation may
determine; or (iv) by any combination of the foregoing. The Board of Directors
may, but is not obligated to, accept a secured recourse promissory note of
Optionee (bearing such rate of interest and such other terms as they may
reasonably determine) as payment of the exercise price; provided, however, no
-------- -------
stock certificate representing the shares be released until the note shall have
been paid in full.
9. Withholding Taxes. If the Optionee is an employee or former employee
-----------------
of the Corporation when all or part of the option is exercised, the Corporation
may require the Optionee to deliver payment of any withholding taxes (in
addition to the Option exercise price) in cash with respect to the difference
between the Option exercise price and the fair market value of the common stock
acquired upon exercise. Alternatively, the Corporation may accept shares having
a fair market value equal to the amount of the withholding taxes.
10. Issuance of Shares. Subject to the foregoing conditions, the
------------------
Corporation, as soon as reasonably practicable after receipt of a proper notice
of exercise and without transfer or issue tax or other incidental expense to the
person exercising the Option, shall deliver to such person at the principal
office of the Corporation, or such other location as may be acceptable to the
Corporation and such person, one or more certificates for the shares of common
stock with respect to which the option has been exercised. Such shares shall be
fully paid and nonassessable and shall be issued in the name of such person.
11. Piggyback Registration Rights.
-----------------------------
11.1 Piggyback Registration. If the Corporation at any time
----------------------
proposes to register any shares of common stock under the Securities Act of
1933, as amended (the "Act") whether or not for sale for its own account, other
than an offering primarily or exclusively to employees, and the registration
form to be used may also be used for the registration of common stock owned by
the Optionee (a "Piggyback Registration"), the Corporation shall at such time
notify the Optionee at least thirty (30) days prior to the filing of any
registration statement with respect thereto. Upon the receipt of a written
request of Optionee made within ten (10) days after such notice (which request
shall specify the common stock intended to be registered), the Corporation will
use its best efforts, subject to the limitations set forth below, to include in
such registration the Common Shares. For the purposes of this subsection 11.1,
best efforts shall not require the Corporation to reduce the amount or sale
price of the securities it proposes to register. Each such request shall also
contain an undertaking from the Optionee to provide all such information and
material and to take all actions as may be required by the Corporation in order
to permit the Corporation to comply with all applicable federal and state
securities laws. Notwithstanding any other provision of this Section 11, 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 the number of shares (including
those of Optionee) to be included in such Piggyback Registration. If limited,
Optionee's shares will be registered pro rata with any other holders of common
stock or common stock equivalents having Registration Rights.
11.2 Sales Commissions and Other Charges. Optionee shall pay all
-----------------------------------
sales commissions or other similar selling charges with respect to common stock
sold by such Optionee pursuant to a registration statement. The Corporation
shall pay all registration and filing fees, fees and expenses of compliance with
federal and state securities laws, printing expenses, messenger and delivery
expenses, fees and disbursements of counsel and accountants for the Corporation
and reasonable fees and expenses of one counsel, selected by Optionee, unless
the applicable state securities laws require that stockholders whose securities
are being registered pay their pro rata share of such fees, expenses and
disbursements, in which case each stockholder (including the Optionee)
participating in the registration shall pay its pro rata share of all such fees,
expenses and disbursements based on its pro rata share of the total number of
shares being registered.
12. Limitation of Optionee's Rights. Neither Optionee nor any person
-------------------------------
entitled to exercise the Option shall be or have any of the rights of a
shareholder of the Corporation in respect of any share issuable upon the
exercise of the Option unless and until a certificate or certificates
representing shares of common stock shall have been issued and delivered upon
exercise of the Option in full or in part. No adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificates are issued.
13. Consent Required to Transfer. Except as provided herein, in
----------------------------
connection with any underwritten public offering by the Corporation of its
equity securities pursuant to an effective registration statement filed under
the Act, including the Corporation's secondary public offering, Optionee shall
not sell, make any short sale of, loan, hypothecate, pledge, grant any option
for the purchase of, or otherwise dispose or transfer for value or otherwise
agree to engage in any of the foregoing transactions with respect to, any shares
of common stock purchased under the Option without the prior written consent of
the Corporation or its underwriters. Such limitations shall be in effect for
such period of time from and after the effective date of such registration
statement as may be requested by the Corporation or such underwriters.
14. Protection Against Dilution.
---------------------------
14.1 Adjustment Mechanism. If an adjustment of the Purchase Price is
--------------------
required pursuant to this Section 14, the Optionee 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 is entitled to purchase pursuant to this
Option, multiplied by (ii) the adjusted purchase price per share, to equal (iii)
the dollar amount of the total number of shares of common stock is entitled to
purchase before adjustment multiplied by the total purchase price before
adjustment.
14.2 Capital Adjustment. 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 Corporation, the provisions of this Section 14 shall be applied as if
such capital adjustment event had occurred immediately prior to the date of this
Option 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 14 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.
14.3 Adjustment for Spin Off. If, for any reason, prior to the
-----------------------
purchase of this Option in full, the Corporation 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 Corporation 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 holder of the Corporation, then
(a) the Corporation shall cause (i) to be reserved Spin Off
Securities equal to the number thereof that would have been issued to the
Optionee had the entire unexercised portion of the Option 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 Corporation (the
"Outstanding Portion") 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 Optionee on the purchase of all or any of the
Outstanding Portion, 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 Portion then being purchased, and
(II) the denominator is the amount of the Outstanding Portion; and
(b) the Purchase Price on the Outstanding Portion shall be
adjusted immediately after consummation of the Spin Off by multiplying the
Purchase 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 such adjusted Purchase Price shall be deemed to be the Purchase
Price with respect to the Outstanding Portion after the Record Date.
For the purposes of this Section 14.3, 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.
15. Restricted Securities. Optionee understands that the Option and the
---------------------
Common Shares issuable upon exercise of the Option are "restricted securities"
under the federal securities laws in as much as they are being acquired from the
Corporation in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the Act only in certain limited circumstances.
16. Notices. Any notice to the Corporation contemplated by this Agreement
-------
shall be addressed to it in care of its President; any notice to the Optionee
shall be addressed to Optionee at the address on file with the Corporation on
the date hereof or at such other address as Optionee may hereafter designate in
a writing delivered to the Corporation as provided herein.
17. Interpretation. The interpretation, construction, performance and
--------------
enforcement of this Agreement shall lie within the sole discretion of the Board,
and the Board's determinations shall be conclusive and binding on all interested
persons.
18. Governing Law. This Agreement has been made, executed and delivered
-------------
in, and the interpretation, performance and enforcement hereof shall be governed
by and construed under the laws of the State of California.
SIGNATURE PAGE
BIOMERICA, INC.
NON-QUALIFIED OPTION AGREEMENT
Date of Grant: June 10, 1999
Purchase Price: $3.00 per share
Number of Shares: 10,000
Vesting Schedule: See Section 3.
IN WITNESS WHEREOF, this Non-Qualified Option Agreement has been delivered
by the Parties hereto.
Date: "Optionee"
------------------------
----------------------------------
Dr. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Address:
-------------------------
----------------------------------
Tax Identification Number:
--------
The Corporation hereby agrees to
all the terms of the Agreement.
Biomerica, Inc.
By:
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
Exhibit 10.18
BIOMERICA, INC.
NON-QUALIFIED OPTION AGREEMENT
This Non-Qualified Option Agreement (the "Agreement") is made and entered
into effective as of June 10, 1999 by and between BIOMERICA, INC., a Delaware
corporation (the "Corporation"), and ▇▇. ▇▇▇▇▇▇ ▇. Orlando, and his permitted
designees and assigns (the "Optionee").
WHEREAS, in recognition of the outstanding services provided by Optionee to
the Corporation and to encourage Optionee's continued employment and association
with the Company, the Corporation desires to grant to Optionee an option to
acquire 40,000 shares of the Corporation.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Grant of Option. In consideration for the Services provided by
---------------
Optionee to the Corporation, the Corporation hereby grants to Optionee and his
permitted designees and assignees, as of the date hereof, the right and option
to purchase, on the terms and conditions hereinafter set forth, Forty Thousand
(40,000) shares of the Corporation's common stock (the "Common Shares"), as such
amount is set forth on the Signature Page attached hereto (the "Option"),
subject to adjustment in accordance with the provisions of Section 14 below. It
is understood and acknowledged that the Option is designated as a Non-Qualified
Stock Option which will not qualify as an Incentive Stock Option under Section
422 of the Internal Revenue Code.
2. Option Price. The price to be paid for the shares of common stock to
------------
be issued upon exercise of the Option or any part thereof shall be as set forth
on the Signature Page (the "Purchase Price").
3. Right to Exercise. The Optionee's right to exercise the Option shall
-----------------
vest in equal increments at the first, second and third anniversaries of the
date on which the Option is granted; provided, however, that the Option shall
fully vest immediately prior to a public offering of the Company's common stock.
The only condition to vesting of the Optionee's right to exercise the Option
shall be the passage of time and Optionee'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.
4. Securities Law Requirements. No part of the Option shall be exercised
---------------------------
if counsel to the Corporation determines that any applicable registration
requirement under the Securities Act of 1933, as amended, or any other
applicable requirement of Federal or state law has not been met.
5. Term of Option. The Option shall remain exercisable for a period of
--------------
ten (10) years.
6. Nontransferability. Except in the event of death or incapacity of
------------------
Optionee, and except as otherwise provided herein or unless the Corporation
otherwise consents in writing, the option and all rights and privileges granted
hereunder shall be non-assignable and non-transferable by the Optionee, either
voluntarily or by operation of law (except upon the dissolution or liquidation
of the Optionee and then only to the owners of the Optionee) and shall not be
pledged or hypothecated in any way. Except as otherwise provided herein, any
attempted alienation, assignment, pledge, hypothecation, attachment, execution
or similar process, whether voluntary or involuntary, with respect to all or any
part of the Option or any right thereunder, shall be null and void and, at the
Corporation's option, shall cause all of Optionee's rights under this Agreement
to terminate. Notwithstanding the foregoing, Optionee shall have the one-time
right to assign its rights in all or part of the Option to affiliates and other
parties involved in the provision of the Services to the Corporation; provided
each such party agrees to enter into an option agreement with terms
substantially similar to the terms of this Agreement.
7. Effect of Exercise. Upon exercise of all or any part of the Option,
------------------
the number of shares of common stock subject to the Option under this Agreement
shall be reduced by the number of shares with respect to which such exercise is
made.
8. Method of Exercise. Each exercise of the Option shall be by means of
------------------
a written notice of exercise in substantially the form prescribed from time to
time by the Board delivered to the Secretary of the Corporation at its principal
office and accompanied by payment in full of the option price for each share of
common stock purchased under the Option. Such notice shall specify the number
of shares of common stock with respect to which the Option is exercised and
shall be signed by the person exercising the Option. If the Option is exercised
by a person other than the Optionee, such notice shall be accompanied by proof,
reasonably satisfactory to the Corporation, of such person's right to exercise
the Option.
The Purchase Price specified in Section 2 above shall be paid in full upon
the exercise of the Option (i) by cash, in United States dollars; (ii) by
cancellation of indebtedness owed by the Corporation to the Optionee; (iii) by
delivery of a full recourse promissory note bearing interest at the then
prevailing rate having such payment terms and conditions as the Corporation may
determine; or (iv) by any combination of the foregoing. The Board of Directors
may, but is not obligated to, accept a secured recourse promissory note of
Optionee (bearing such rate of interest and such other terms as they may
reasonably determine) as payment of the exercise price; provided, however, no
-------- -------
stock certificate representing the shares be released until the note shall have
been paid in full.
9. Withholding Taxes. If the Optionee is an employee or former employee
-----------------
of the Corporation when all or part of the option is exercised, the Corporation
may require the Optionee to deliver payment of any withholding taxes (in
addition to the Option exercise price) in cash with respect to the difference
between the Option exercise price and the fair market value of the common stock
acquired upon exercise. Alternatively, the Corporation may accept shares having
a fair market value equal to the amount of the withholding taxes.
10. Issuance of Shares. Subject to the foregoing conditions, the
------------------
Corporation, as soon as reasonably practicable after receipt of a proper notice
of exercise and without transfer or issue tax or other incidental expense to the
person exercising the Option, shall deliver to such person at the principal
office of the Corporation, or such other location as may be acceptable to the
Corporation and such person, one or more certificates for the shares of common
stock with respect to which the option has been exercised. Such shares shall be
fully paid and nonassessable and shall be issued in the name of such person.
11. Piggyback Registration Rights.
-----------------------------
11.1 Piggyback Registration. If the Corporation at any time
----------------------
proposes to register any shares of common stock under the Securities Act of 1933
(the "Act") whether or not for sale for its own account, other than an offering
primarily or exclusively to employees, and the registration form to be used may
also be used for the registration of common stock owned by the Optionee (a
"Piggyback Registration"), the Corporation shall at such time notify the
Optionee at least thirty (30) days prior to the filing of any registration
statement with respect thereto. Upon the receipt of a written request of
Optionee made within ten (10) days after such notice (which request shall
specify the common stock intended to be registered), the Corporation will use
its best efforts, subject to the limitations set forth below, to include in such
registration the Common Shares. For the purposes of this subsection 11.1, best
efforts shall not require the Corporation to reduce the amount or sale price of
the securities it proposes to register. Each such request shall also contain an
undertaking from the Optionee to provide all such information and material and
to take all actions as may be required by the Corporation in order to permit the
Corporation to comply with all applicable federal and state securities laws.
Notwithstanding any other provision of this Section 11, 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 the number of shares (including those of
Optionee) to be included in such Piggyback Registration. If limited, Optionee's
shares will be registered pro rata with any other holders of common stock or
common stock equivalents having Registration Rights.
11.2 Sales Commissions and Other Charges. Optionee shall pay all
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sales commissions or other similar selling charges with respect to common stock
sold by such Optionee pursuant to a registration statement. The Corporation
shall pay all registration and filing fees, fees and expenses of compliance with
federal and state securities laws, printing expenses, messenger and delivery
expenses, fees and disbursements of counsel and accountants for the Corporation
and reasonable fees and expenses of one counsel, selected by Optionee, unless
the applicable state securities laws require that stockholders whose securities
are being registered pay their pro rata share of such fees, expenses and
disbursements, in which case each stockholder (including the Optionee)
participating in the registration shall pay its pro rata share of all such fees,
expenses and disbursements based on its pro rata share of the total number of
shares being registered.
12. Limitation of Optionee's Rights. Neither Optionee nor any person
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entitled to exercise the Option shall be or have any of the rights of a
shareholder of the Corporation in respect of any share issuable upon the
exercise of the Option unless and until a certificate or certificates
representing shares of common stock shall have been issued and delivered upon
exercise of the Option in full or in part. No adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificates are issued.
13. Consent Required to Transfer. Except as provided herein, in
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connection with any underwritten public offering by the Corporation of its
equity securities pursuant to an effective registration statement filed under
the Act, including the Corporation's secondary public offering, Optionee shall
not sell, make any short sale of, loan, hypothecate, pledge, grant any option
for the purchase of, or otherwise dispose or transfer for value or otherwise
agree to engage in any of the foregoing transactions with respect to, any shares
of common stock purchased under the Option without the prior written consent of
the Corporation or its underwriters. Such limitations shall be in effect for
such period of time from and after the effective date of such registration
statement as may be requested by the Corporation or such underwriters.
14. Protection Against Dilution.
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14.1 Adjustment Mechanism. If an adjustment of the Purchase Price is
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required pursuant to this Section 14, the Optionee 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 is entitled to purchase pursuant to this
Option, multiplied by (ii) the adjusted purchase price per share, to equal (iii)
the dollar amount of the total number of shares of common stock is entitled to
purchase before adjustment multiplied by the total purchase price before
adjustment.
14.2 Capital Adjustment. In case of any stock split or reverse stock
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split, stock dividend, reclassification of the common stock, recapitalization,
merger or consolidation, or like capital adjustment affecting the common stock
of the Corporation, the provisions of this Section 14 shall be applied as if
such capital adjustment event had occurred immediately prior to the date of this
Option 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 14 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.
14.3 Adjustment for Spin Off. If, for any reason, prior to the
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purchase of this Option in full, the Corporation 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 Corporation 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 holder of the Corporation, then
(a) the Corporation shall cause (i) to be reserved Spin Off
Securities equal to the number thereof that would have been issued to the
Optionee had the entire unexercised portion of the Option 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 Corporation (the
"Outstanding Portion") 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 Optionee on the purchase of all or any of the
Outstanding Portion, 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 Portion then being purchased, and
(II) the denominator is the amount of the Outstanding Portion; and
(b) the Purchase Price on the Outstanding Portion shall be
adjusted immediately after consummation of the Spin Off by multiplying the
Purchase 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 such adjusted Purchase Price shall be deemed to be the Purchase
Price with respect to the Outstanding Portion after the Record Date.
For the purposes of this Section 14.3, 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.
15. Restricted Securities. Optionee understands that the Option and the
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Common Shares issuable upon exercise of the Option are "restricted securities"
under the federal securities laws in as much as they are being acquired from the
Corporation in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the Act only in certain limited circumstances.
16. Notices. Any notice to the Corporation contemplated by this Agreement
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shall be addressed to it in care of its President; any notice to the Optionee
shall be addressed to Optionee at the address on file with the Corporation on
the date hereof or at such other address as Optionee may hereafter designate in
a writing delivered to the Corporation as provided herein.
17. Interpretation. The interpretation, construction, performance and
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enforcement of this Agreement shall lie within the sole discretion of the Board,
and the Board's determinations shall be conclusive and binding on all interested
persons.
18. Governing Law. This Agreement has been made, executed and delivered
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in, and the interpretation, performance and enforcement hereof shall be governed
by and construed under the laws of the State of California.
SIGNATURE PAGE
BIOMERICA, INC.
NON-QUALIFIED OPTION AGREEMENT
Date of Grant: June 10, 1999
Purchase Price: $3.00 per share
Number of Shares: 40,000
Vesting Schedule: See Section 3.
IN WITNESS WHEREOF, this Non-Qualified Option Agreement has been delivered
by the Parties hereto.
Date: "Optionee"
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▇▇. ▇▇▇▇▇▇ ▇. Orlando
Address:
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Tax Identification Number:
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The Corporation hereby agrees to
all the terms of the Agreement.
Biomerica, Inc.
By:
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
