<PAGE>
UNITED STATES
-------------
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
Washington, D.C. 20549
Form 10-QSB
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(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (Fee Required)
For the quarterly period ended December 31, 1999
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (No Fee Required)
For the transition period from ______________ to _________________
Commission file number 0-15179
NEUROTECH DEVELOPMENT CORPORATION
-----------------------------------------------------
(Name if small business issuer in its charter)
DELAWARE 06-1100063
- --------------------------- ------------------------
(State of incorporation (I.R.S. Employer
or organization) Identification No.)
45 ORCHARD STREET, MANHASSET, NEW YORK 11030
- -------------------------------------------- ------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (516) 869-9663
formerly Neurotech Corporation
----------------------------------------------------------------------------
(former name, former address and former fiscal year if changed since
last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 of 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such repots), and (2)
has been subject to such filing requirements for the past 90 days.
Yes (X) No ( )
35,803,672 shares of issuer's common stock were outstanding at January 28,
2000.
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NEUROTECH DEVELOPMENT CORPORATION AND SUBSIDIARIES
INDEX
DECEMBER 31, 1999
Page
PART I. FINANCIAL INFORMATION......................... 3
Item 1 Financial Statements.......................... 3
Consolidated balance sheets -
December 31, 1999 and June 30, 1999........... 3
Consolidated statements of operations -
Three months ended December 31, 1999 and 1998;
Six months ended December 31, 1999 and 1998... 4
Consolidated statements of cash flows -
Six months ended December 31, 1999 and 1998... 5
Notes to consolidated financial statements.... 6
2
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Part I. Financial Information
Item 1. Financial Statements
NEUROTECH DEVELOPMENT CORPORATION AND SUBSIDIARIES
(formerly Neurotech Corporation)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
1999 1999
---------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 71 $ 335
Accounts receivable - related parties 80,600 20,299
Loan receivable - Avalon 100,000 -
---------------- ----------------
Total current assets 180,671 20,634
INVESTMENTS IN AIM 1,320,000 -
---------------- ----------------
TOTAL ASSETS $ 1,500,671 $ 20,634
================ ================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Convertible debenture $ 100,000 $ 100,000
Accounts payable and accrued expenses 4,946,308 710,200
Accounts payable - related parties 22,009 140,981
Net liabilities of discontinued operations 1,359,195 1,359,195
---------------- ----------------
Total current liabilities 6,427,512 2,310,376
STOCKHOLDERS' DEFICIT
Common stock; par value $0.01 per share;
authorized 100,000,000 shares;
issued 34,911,149 and 33,917,244 shares, respectively 349,112 339,173
Additional paid-in capital 6,534,900 5,467,123
Retained earnings (deficit) (11,660,853) (7,946,038)
---------------- ----------------
(4,776,841) (2,139,742)
Less 100,000 shares of Treasury stock, at cost (150,000) (150,000)
---------------- ----------------
Total stockholders' deficit (4,926,841) (2,289,742)
---------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,500,671 $ 20,634
================ ================
</TABLE>
3
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NEUROTECH DEVELOPMENT CORPORATION AND SUBSIDIARIES
(formerly Neurotech Corporation)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1999 1998 1999 1998
---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
REVENUE $ - $ - $ - $ -
COSTS AND EXPENSES
Administrative (1,834,556) (211,917) (3,703,119) (487,608)
Interest (9,480) - (11,696) -
---------------- ----------------- ---------------- -----------------
Loss from continuing operations (1,844,036) (211,917) (3,714,815) (487,608)
Income tax benefit - - - -
---------------- ----------------- ---------------- -----------------
(1,844,036) (211,917) (3,714,815) (487,608)
DISCONTINUED OPERATIONS
Loss from operations - (580,724) - (794,436)
Loss on disposal - 270,488 - 158,165
---------------- ----------------- ---------------- -----------------
Loss from discontinued operations - (310,236) - (636,271)
---------------- ----------------- ---------------- -----------------
Net loss $ (1,844,036) $ (522,153) $ (3,714,815) $ (1,123,879)
================ ================= ================ =================
Basic loss per share
Continuing operations $ (0.05) $ (0.01) $ (0.11) $ (0.02)
Discontinued operations - (0.01) - (0.02)
---------------- ----------------- ---------------- -----------------
Net loss per share $ (0.05) $ (0.02) $ (0.11) $ (0.04)
================ ================= ================ =================
Weighted average number of
common shares outstanding 34,911,149 27,522,014 34,753,293 27,008,905
================ ================= ================ =================
</TABLE>
4
<PAGE>
NEUROTECH DEVELOPMENT CORPORATION AND SUBSIDIARIES
(formerly Neurotech Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
December 31, December 31,
1999 1998
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(3,714,815) $(1,123,879)
Adjustments to reconcile net loss to
net cash used in operating activities
Gain on disposal -- 158,165
Depreciation and amortization -- 59,013
Stock issued for services 703,126 31,700
Changes in assets and liabilities
Accounts receivable - related party (60,301) --
Accounts payable and accrued expenses 3,166,108 343,874
Accounts payable - related party (118,972) (62,692)
Net liabilities of discontinued operations -- 387,963
----------- -----------
Net cash used in operating activities (24,854) (205,856)
CASH FLOWS FROM INVESTING ACTIVITIES
Invest in AIM (1,320,000) --
Loan to Avalon (100,000) --
----------- -----------
Net cash used in investing activities (1,420,000) --
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowing 1,070,000 --
Sale of common stock 374,590 169,599
----------- -----------
Net cash provided by financing activities 1,444,590 169,599
----------- -----------
Net decrease in cash (264) (36,257)
CASH, BEGINNING 335 38,825
----------- -----------
CASH, ENDING $ 71 $ 2,568
=========== ===========
</TABLE>
5
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NEUROTECH DEVELOPMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-QSB and article
10 of Regulation S-X. Accordingly, they do not include all information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included. Operating
results for the three and six month periods ended December 31, 1999 are not
necessarily indicative of results that may be expected for the year ending
June 30, 2000. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report on
Form 10-KSB for the year ended June 30, 1999.
6
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Item 2. Management's Discussion and Analysis of Financial Condition
Certain statements contained herein are not based on historical facts, but
are forward-looking statements that are based upon numerous assumptions about
future conditions that could prove not to be accurate. Actual events,
transactions and results may materially differ from the anticipated events,
transactions or results described in such statements. The Company's ability to
consummate such transactions and achieve such events or results is subject to
certain risks and uncertainties. Such risks and uncertainties include, but are
not limited to, the existence of demand for and acceptance of the Company's
products and services, regulatory approvals and developments, economic
conditions, the impact of competition and pricing results of financing efforts
and other factors affecting the Company's business that are beyond the Company's
control. The Company undertakes no obligation and does not intend to update,
revise or otherwise publicly release the result of any revision to these
forward-looking statements that may be made to reflect future events or
circumstances.
Results of Operation
The Company has not had revenues from continuing operations for several
years. Management, including certain key advisors, has been exploring new lines
of business utilizing their international marketing expertise as well as
acquisitions and strategic alliances.
Management continues to expend significant time and effort in implementing
and exploring future lines of business. Administrative expenses were $3,703,119
and $487,608 for the six months ended December 31, 1999 and 1998, respectively,
and $1,834,556 and $211,917 for the fiscal quarter ended December 31, 1999 and
1998, respectively. Because of lack of revenues, stock of the Company has been
utilized where possible and practical as payment for expenses of the Company.
The valuation of stock issuances has resulted in a significant increase in
recognized expenses.
Liquidity and Capital Resources
The Company has incurred significant losses since inception resulting in a
shareholders' deficit and working capital deficit at December 31, 1999.
Effective October 17, 1998, the Company has discontinued all of its previous
operations. The Company's subsidiary, Global Health Enterprises, Inc., has
defaulted on its obligations and Global's secured creditors have taken
substantially all of Global's assets. In addition, one secured creditor has
filed a motion for partial summary judgment against the Company and Global.
These factors raise substantial doubt about the Company's ability to continue as
a going concern.
In view of these matters, the continued existence of the Company is
dependent upon its ability to meet its financing requirements and, ultimately,
the success of its planned future operations. Management believes that actions
presently being taken to acquire an operating business and to develop a new line
of business constructing prefabricated hospitals in third world countries
provide the Company the opportunity to continue as a going concern.
The Company has recently received acceptance of its rapid deployment health
care system via contracts from Indonesia and China. Many contracts are with
government, government owned development companies, and nonprofit foundations.
The Company currently has significant potential sales in these countries to be
completed over the next 3 years.
7
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The Company plans to begin construction of its first modular hospital in
March of 2000. Preliminary matters such as geological analysis for the sites in
Indonesia have been contracted by our customer. The Company has a medical and
engineering team scheduled to begin work in Indonesia in February of 2000. The
first hospital will be a prototype and is expected to be the only hospital
constructed during the first 5 months of the year. The Company then intends to
build the additional hospitals under Indonesian contracts over the next 2 years.
The Company expects to begin construction of its first modular hospital in
China in June, 2000. These China contracts cover turnkey modular hospitals,
tertiary hospitals, geriatric based modular hospitals, skilled nursing
facilities and senior housing.
The Company will be paid incrementally for each phase of the hospital
projects and does not anticipate the need to raise capital for these operations.
The Company has contacted major vendors for the supply of equipment,
pharmaceuticals, computers, medical disposables, training and education, as well
as the buildings to be erected.
The Company still plans to move forward with its acquisition of American
International Medical Resources Inc. The Company has invested $1,320,000 to
date and expects to pay $2,850,000 additionally plus 10 million shares of common
stock to complete a 100% acquisition of American International Medical Resources
Inc. American International Resources Inc. has an agreement in place to acquire
100% of Residential Health Care, Inc. The Company expects that American
International Medical Resources Inc., through its acquisition of Residential
Health Care, Inc., should provide a source of revenue for the Company during the
calendar year 2000.
The Company maintains a system of ongoing research in the areas of hospital
operating systems, patient management, software, purchasing, and construction
methods and standards.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
No new material legal proceedings were commenced and no material
developments occurred in existing legal proceedings during the Company's fiscal
quarter ended December 31, 1999. For information on the Company's ongoing
reportable litigation, please refer to the Company's 10-KSB for the fiscal year
ended June 30, 1999, and its 10-QSB for the fiscal quarter ended September 30,
1999.
Item 2. Changes in Securities
(a) As of December 10, 1999, a majority of the Company's stockholders
executed a written consent amending the Company's Certificate of Incorporation
to increase the total number of authorized shares of Common Stock, $.01 par
value, from 40,000,000 to 100,000,000. The Articles of Amendment were filed
with the Delaware Secretary of State on December 14, 1999.
(b) None
(c) None
(d) Not applicable
8
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Item 3. Defaults upon Senior Securities
On August 25, 1999, the Company entered into a financing agreement with
Avalon Financial Services, LLC (Avalon) for financing of up to $6,000,000
secured by 3.3 million shares of common stock of the Company owned by officers
and/or directors and a consultant. As consideration for arranging the loans,
the agreement also granted Avalon warrants to purchase 500,000 shares of common
stock of the Company exercisable at $0.55 per share. Due to several issues with
respect to Avalon's performance under the terms of the financing commitment, the
Company disputes its obligation to issue the warrants. As draws were made, the
Company entered into a series of 30-day renewable promissory notes bearing
interest at 10%. The Company had drawn $1.1 million under this financing
agreement before it was terminated. The funds were used to fund a potential
acquisition and for working capital.
In connection with the August 25, 1999 financing agreement with Avalon, 3.3
million shares of Company common stock owned by three individuals (officers
and/or directors and a consultant of the Company) were pledged as collateral.
In October 1999, Avalon foreclosed on $1.1 million of the 30-day notes plus
accrued interest and assumed 1,856,190 of the shares pledged as collateral in
payment. In consideration for the risk assumed by these three individuals to
their personal holdings of the Company common stock, and for the tax
consequences that would ensue, the Company agreed to issue 1.2 times the number
of shares lost in the foreclosure back to the individuals. In October 1999, the
Company agreed to issue 4,380,415 shares of common stock to the three
individuals as compensation for the shares lost in the foreclosure. The shares
have not been issued.
Item 4. Submission of Matters to a Vote of Security Holders
A majority of the Company's stockholders executed a written consent on
December 10, 1999, increasing the Company's authorized capital from 40,000,000
shares to 100,000,000 shares. The Articles of Amendment were filed on December
14, 1999. The Company has not held regular annual stockholders meetings since
its inception. As necessary, corporate actions have been approved by a
requisite majority of the Company's stockholders.
Item 5. Other Information
On January 27, 2000, the Company entered into a Consulting Agreement with
Wellington Capital Corporation ("Wellington") to provide financial consulting
services. Wellington will receive Company common stock and stock options as
consideration for its services.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4.2 Wellington Capital Corporation Registration Rights Agreement
4.3 Wellington Capital Corporation Stock Option Agreement
10.32 Wellington Capital Corporation Consulting Agreement
10.33 Wellington Capital Corporation Stock Option Agreement (See
Exhibit 4.3)
27.0 Financial Data Schedule
(b) Reports on Form 8-K
None
9
<PAGE>
SIGNATURES
----------
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
NEUROTECH DEVELOPMENT CORPORATION
Date: February 11, 2000 By: /s/ Bernard Artz
------------------------------------
Bernard Artz, Chairman,
Chief Financial Officer
10
<PAGE>
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated as of the 27th day of January, among Neurotech Development
Corporation, a Delaware corporation (the "Company"), and Wellington Capital
Corporation (the "Buyer").
WITNESSETH
WHEREAS, the Company and the Buyer have entered into a consulting agreement
(the "Consulting Agreement") dated as of the date hereof which, among other
things, provides for the issuance of options to purchase 10,000,000 shares of
Common Stock (as hereinafter defined) to the Buyer as partial payment for
services to be rendered by the Buyer pursuant to the Consulting Agreement; and
WHEREAS, the Company and the Buyer desire to set out in this Agreement the
various stockholder rights of the Buyer.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein and subject specifically to the conditions hereof, and
intending to be legally bound thereby, the parties agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein that are defined in
the Consulting Agreement shall have the meanings given such terms in the
Consulting Agreement. As used in this Agreement, the following terms shall have
the following meanings:
1.1 "Advice" shall have meaning set forth in Section 3(m).
1.2 "Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition,
"control" when used with respect to any Person, means the possession,
direct or indirect, of the power to direct or cause the direction of
the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; and the
terms of "affiliated" "controlling" and "controlled" have meanings
correlative to the foregoing.
1.3 "Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the
state of New York generally are authorized or required by law or other
government actions to close.
1.4 "Commission" means the United States Securities and Exchange
Commission.
1.5 "Common Stock" means the Company's common stock, par value $.O1 per
share.
1.6 "Effectiveness Period" shall have the meaning set forth in Section
2.1(b).
1.7 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
1.8 "Holder" or "Holders" means the holder or holders, as the case may be,
from time to time of Registrable Securities.
1.9 "Indemnified Party" shall have the meaning set forth in Section 5(b).
1.10 "Indemnifying Party" shall have the meaning set forth in Section
5(b).
<PAGE>
1.11 "Losses" shall have the meaning set forth in Section 5(a).
1.12 "Options" means collectively the options for the purchase of Common
Stock issuable to the Buyer pursuant to the Consulting Agreement and
the Stock Option Agreement (as defined in the Consulting Agreement).
1.13 "Option Shares" means the shares of Common Stock issuable upon
exercise in full of the Options.
1.14 "Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
1.15 "Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
1.16 "Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes
any information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering
of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to
the Prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
1.17 "Registrable Securities" means the Option Shares.
1.18 "Registration Statement" means any registration statement filed under
the Securities Act in accordance herewith, including (in each case)
the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments,
all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement.
1.19 "Rule 144" means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission
having substantially the same effect as such Rule.
1.20 "Securities Act" means the Securities Act of 1933, as amended.
1.21 "Special Counsel" means one special counsel to the Holder.
2. Registration.
2.1 Demand Registration.
(a) If the Company at any time after the date hereof shall receive a
written request from the Holder that the Company effect a registration
on Form S-3 (or if the Company is not then eligible to register for
resale the Registrable Securities on Form S-3 such registration shall
be on another appropriate form) and any related qualification or
compliance with respect to all or a part of the Registrable Securities,
then the Company shall, as soon as practicable, effect such
registration and all such qualifications and compliances as may be so
requested
2
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and as would permit or facilitate the sale and distribution of all or
such portion of the Registrable Securities as are specified in such
request, subject to Section 2.1(c).
(b) The Company shall use its best efforts to keep such Registration
Statement continuously effective under the Securities Act until the
date which is five years after the date that such Registration
Statement is declared effective by the Commission or such earlier date
when all Registrable Securities covered by such Registration Statement
have been sold or may be sold without volume restrictions pursuant to
Rule 144(k) as determined by the counsel to the Company pursuant to a
written opinion letter to such effect, addressed and acceptable to the
Company's transfer agent (the "Effectiveness Period").
(c) Payments by the Company. The Company shall cause each Registration
Statement required to be filed pursuant to Section 2.1(a) hereof to
become effective as soon as practicable, but in no event later than the
ninetieth (90th) day following a Written Request (each a "Registration
Deadline"). If (i) the Registration Statement required to be filed by
the Company pursuant to Section 2.1(a) hereof is not declared
effective by the SEC on or before the Registration Deadline applicable
to such Registration Statement, (ii) if, after any such Registration
Statement has been declared effective by the SEC, sales of all of the
Registrable Securities required to be covered by such Registration
Statement cannot be made pursuant to such Registration Statement (by
reason of a stop order or the Company's failure to update the
Registration Statement or any other reason outside the control of the
Holders) or (iii) the Common Stock (including any Registrable
Securities) is not listed or included for quotation on the OTC Bulletin
Board ("OTCBB") or the Nasdaq SmallCap Market ("NSM"), at any time
after the initial Registration Deadline hereunder, then the Company
will make payments to the Holders in such amounts and at such times as
shall be determined pursuant to this Section 2(c) as partial relief for
the damages to the Holders by reason of any such delay in or reduction
of their ability to sell the Registrable Securities (which remedy shall
not be exclusive of any other remedies available at law or in equity).
The Company shall pay to each Holder such number of shares of Common
Stock equal to two percent (2%) of the outstanding Common Stock, on a
fully diluted basis (the "Penalty Shares") for each thirty (30) day
period (A) after a Registration Deadline and prior to the date the
applicable Registration Statement filed pursuant to Section 2(a) is
declared effective by the SEC, and (B) during which sales of any
Registrable Securities cannot be made pursuant to any such Registration
Statement after the Registration Statement has been declared effective
or the Common Stock (including any Registrable Securities) is not
listed or included for quotation on the OTCBB or NSM. Provided however,
that there shall be excluded from each such period any delays which are
solely attributable to changes (other than corrections of Company
mistakes with respect to information previously provided by the
Holders) required by the Holders in the Registration Statement with
respect to information relating to the Holders, including, without
limitation, changes to the plan of distribution. The Penalty Shares
shall be issued to the Holder within five (5) days after the end of
each period that gives rise to such obligation, and shall be free and
clear of all liens, pledges, encumbrances, charges and claims thereon.
The Penalty Shares, shall on or before the time of delivery, be duly
authorized, and when issued, will be duly and validly issued, fully
paid and non-assessable and will not subject the Holder to personal
liability by reason of such issuance.
2.2 Piggyback Registrations.
(a) The Company shall notify the Holder in writing at least thirty (30)
days prior to the filing of a Registration Statement for purposes of a
public offering of securities of the Company (including, but not
limited to, registration statements relating to secondary offerings of
securities of the Company, but excluding registration statements
relating to employee benefit
3
<PAGE>
plans or with respect to corporate reorganizations or other
transactions under Rule 145 of the Securities Act) and will afford to
the Holder an opportunity to include in such registration statement all
or part of the Registrable Securities held by the Holder. If the Holder
desires to include in any such registration statement all or any part
of the Registrable Securities it shall, within fifteen (15) days after
the above-described notice from the Company, so notify the Company in
writing. Such notice shall state the intended method of disposition of
the Registrable Securities by such Holder. If the Holder decides not to
include all of its Registrable Securities in a Registration Statement
thereafter filed by the Company, the Holder shall nevertheless continue
to have the right to include any Registrable Securities in any
subsequent Registration Statement or Registration Statements as may be
filed by the Company with respect to offerings of its securities, all
upon the terms and conditions set forth herein.
(b) If the registration statement under which the Company gives notice
under this Section 2.2 is for an underwritten offering, the Company
shall so advise the Holder. In such event, the right of the Holder to
be included in a registration pursuant to this Section 2.2 shall be
conditioned upon the Holder's participation in such underwriting and
the inclusion of the Registrable Securities in the underwriting to the
extent provided herein. The Holder agrees to enter into an underwriting
agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any
other provision of the Agreement, if the underwriter determines in good
faith that marketing factors require a limitation of the number of
shares to be underwritten, the number of shares that may be included in
the underwriting shall be allocated, first, to the Company; second, to
the Holder; third, to any shareholder of the Company on a pro rata
basis. Notwithstanding the immediately prior sentence, no such
reduction shall reduce the amount of securities of the Holder included
in the registration below twenty-five percent (25%) of the total amount
of securities included in such registration. In no event will shares of
any other selling shareholder be included in such registration which
would reduce the number of shares which may be included by the Holder
without the written consent of the Holder. To the extent that any
shares of the Holder are not included to any such underwritten
offering, they shall nevertheless be included in the Registration
Statement relating thereto but shall be precluded from public sale for
such period of time after the commencement of the underwritten offering
as shall be requested by the underwriter, but in no event for more than
90 days after the comment of the underwritten offering.
3. Registration Procedures.
In connection with the Company's registration obligations hereunder, the
Company shall as expeditiously as reasonably possible:
(a) Prepare and file with the Commission a Registration Statement on
Form S-3 (or if the Company is not then eligible to register for resale
the Registrable Securities on Form S-3 such registration shall be on
another appropriate form in accordance herewith) and use commercially
reasonable efforts to cause the Registration Statement to become
effective and remain effective as provided herein; provided, however,
that not less than five (5) Business Days prior to the filing of the
Registration Statement or any related Prospectus or any amendment or
supplement thereto, the Company shall, (i) furnish to the Holder and
its Special Counsel copies of all such documents proposed to be filed,
which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such Holder
and its Special Counsel, and (ii) cause its officers and directors,
counsel and independent certified public accountants to respond to such
inquiries as shall be necessary, in the reasonable opinion of Special
Counsel to such Holder, to conduct a
4
<PAGE>
reasonable investigation within the meaning of the Securities Act.
(b) (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective as
to the applicable Registrable Securities for the Effectiveness Period;
(ii) cause the related Prospectus to be amended or supplemented by any
required Prospectus supplement, and as so supplemented or amended to be
filed pursuant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; (iii) respond as promptly as
reasonably possible to any comments received from the Commission with
respect to the Registration Statement or any amendment thereto and as
promptly as reasonably possible provide the Holders true and complete
copies of all correspondence from and to the Commission relating to the
Registration Statement; and (iv) comply in all material respects with
the provisions of the Securities Act and the Exchange Act with respect
to the disposition of all Registrable Securities covered by the
Registration Statement during the applicable period in accordance with
the intended methods of disposition by the Holder thereof set forth in
the Registration Statement as so amended or in such Prospectus as so
supplemented.
(c) Notify the Holder of Registrable Securities to be sold and its Special
Counsel as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than five (5) days prior to such filing) and (if
requested by any such Person) confirm such notice in writing no later
than three (3) Business Days following the day (i)(A) when a Prospectus
or any Prospectus supplement or post-effective amendment to the
Registration Statement is proposed to be filed; (B) when the
Commission notifies the Company whether there will be a "review" of
such Registration Statement and whenever the Commission comments in
writing on such Registration Statement (the Company shall provide true
and complete copies thereof and all written responses thereto to the
Holder); and (C) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of
any request by the Commission or any other Federal or state
governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional information;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement covering any or all of
the Registrable Securities or the initiation of any Proceedings for
that purpose; (iv) if at any time any of the representations and
warranties of the Company contained in any agreement (including any
underwriting agreement) contemplated hereby ceases to be true and
correct in all material respects; (v) of the receipt by the Company of
any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for
sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; and (vi) of the occurrence of any event
that makes any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or that requires
any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the
Prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(d) Use commercially reasonable efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the
effectiveness of the Registration Statement, or (ii) any suspension of
the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment.
5
<PAGE>
(e) Furnish to the Holder and its Special Counsel, without charge, at least
one conformed copy of each Registration Statement and each amendment
thereto, including financial statements and schedules, and all exhibits
to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of
such documents with the Commission.
(f) Promptly deliver to the Holder and its Special Counsel, without charge,
as many copies of the Prospectus or Prospectuses (including each form
of prospectus) and each amendment or supplement thereto as such Persons
may reasonably request; and the Company hereby consents to the use of
such Prospectus and each amendment or supplement thereto by the selling
Holder in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement
thereto.
(g) Prior to any public offering of Registrable Securities, use
commercially reasonable efforts to register or qualify or cooperate
with the selling Holder and its Special Counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions within the United
States as the Holder requests in writing, to keep each such
registration or qualification (or exemption therefrom) effective during
the Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions
of the Registrable Securities covered by a Registration Statement;
provided, however, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so
qualified or to take any action that would subject it to general
service of process in any such jurisdiction where it is not then so
subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
(h) Cooperate with the Holder to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be
delivered to a transferee pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by applicable law,
of all restrictive legends, and to enable such Registrable Securities
to be in such denominations and registered in such names as the Holder
may request at least two Business Days prior to any sale of Registrable
Securities.
(i) Upon the occurrence of any event contemplated by Section 3(c)(vi), as
promptly as reasonably possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or
a supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, and file any other
required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(j) Use its best efforts to cause all Registrable Securities relating to
such Registration Statement to be listed on the Bulletin Board, Nasdaq
SmallCap Market or any other market, if any, on which Common Stock are
then listed.
(k) Make available for inspection by the selling Holder and any attorney or
accountant retained by such selling Holder, at the offices where
normally kept, during reasonable business hours, all financial and
other records, pertinent corporate documents and properties of the
Company and its subsidiaries, and cause the officers, directors, agents
and employees of the Company and its subsidiaries to supply all
information in each case reasonably requested by any such
6
<PAGE>
Holder, attorney or accountant in connection with the Registration
Statement; provided, however, that any information that is determined
in good faith by the Company in writing to be of a confidential nature
at the time of delivery of such information shall be kept confidential
by such Persons, unless (i) disclosure of such information is required
by court or administrative order or is necessary to respond to
inquiries of regulatory authorities; (ii) such information becomes
generally available to the public other than as a result of a
disclosure or failure to safeguard by such Person; or (iii) such
information becomes available to such Person from a source other than
the Company and such source is not known by such Person to be bound by
a confidentiality agreement with the Company.
(1) Comply with all applicable rules and regulations of the Commission.
(m) The Company may require the selling Holder to furnish to the Company
such information regarding the distribution of such Registrable
Securities and the beneficial ownership of Common Stock held by such
Holder as is required by law to be disclosed in the Registration
Statement, and the Company may exclude from such registration the
Registrable Securities of any such Holder who unreasonably fails to
furnish such information within a reasonable time after receiving such
request.
If the Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such
Holder shall have the right to require (if such reference to such
Holder by name or otherwise is not required by the Securities Act or
any similar Federal statute then in force) the deletion of the
reference to such Holder in any amendment or supplement to the
Registration Statement filed or prepared subsequent to the time that
such reference ceases to be required.
The Holder covenants and agrees that (i) it will not sell any
Registrable Securities under the Registration Statement until it has
received copies of the Prospectus as then amended or supplemented as
contemplated in Section 3(f) and notice from the Company that such
Registration Statement and any post-effective amendments thereto have
become effective as contemplated by Section 3(c) and (ii) it and its
officers, directors or Affiliates, if any, will comply with the
prospectus delivery requirements of the Securities Act as applicable
to it in connection with sales of Registrable Securities pursuant to
the Registration Statement.
The Holder agrees by its acquisition of such Registrable Securities
that, upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 3(c)(ii), 3(c)(iii),
3(c)(iv), 3(c)(v) or 3(c)(vi), such Holder will forthwith discontinue
disposition of such Registrable Securities under the Registration
Statement until such Holder's receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(i), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may
be resumed, and, in either case, has received copies of any additional
or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration
Statement.
4. Registration Expenses.
All fees and expenses incident to the performance of or compliance with
this Agreement by the Company shall be borne by the Company and whether or not a
Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to a Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses) (A) with respect to filings required to be made with NASDAQ
or any subsequent market on which the Common Stock is then listed for trading,
and
7
<PAGE>
(B) in compliance with state securities or Blue Sky laws (including, without
limitation, fees and disbursements of its counsel) in connection with
qualifications or exemptions of the Registrable Securities, (ii) printing
expenses (including, without limitation, expenses of printing Registration
Statements and/or Prospectuses and certificates for Registrable Securities),
(iii) messenger, telephone and delivery expenses of the Company, (iv) fees and
expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement and (v)
reasonable attorneys fees and expenses incurred by the Holder in connection with
the review of the Registration Statement provided hereunder. In addition, the
Company shall be responsible for all of its internal expenses incurred in
connection with the consummation of the transactions contemplated by this
Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, the fees and expenses incurred in connection with the listing
of the Registrable Securities on any securities exchange as required hereunder.
5. Indemnification.
(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless the Holder,
the officers, directors, agents and employees of each of them, each
Person who controls any such Holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling
Person, to the fullest extent permitted by applicable law, from and
against any and all losses, claims, damages, liabilities, costs
(including, without limitation, costs of preparation and reasonable
attorneys' fees) and expenses (collectively, "Losses"), as incurred,
arising out of or relating to any untrue or alleged untrue statement of
a material fact contained in the Registration Statement, any Prospectus
or any form of prospectus or in any amendment or supplement thereto or
in any preliminary prospectus, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except to the
extent, but only to the extent, that such untrue statements or
omissions are based solely upon information regarding such Holder
furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder
or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such
Holder expressly for use in the Registration Statement, such Prospectus
or such form of Prospectus or in any amendment or supplement thereto.
The Company shall notify the Holders promptly of the institution,
threat or assertion of any Proceeding of which the Company is aware in
connection with the transactions contemplated by this Agreement.
(b) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder
(an "Indemnified Party"), such Indemnified Party shall promptly notify
the Person from whom indemnity is sought (the "Indemnifying Party") in
writing, and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is
not subject to appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding
8
<PAGE>
and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (1) the Indemnifying Party has agreed in writing to
pay such fees and expenses; or (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ
counsel reasonably satisfactory to such Indemnified Party in any such
Proceeding; or (3) the named parties to any such Proceeding (including
any impleaded parties) include both such Indemnified Party and the
Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying
Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate
counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense thereof and such
counsel shall be at the expense of the Indemnifying Party; provided,
however, that the Indemnifying Party shall be responsible for the fees
and expenses of one counsel for all such Indemnified Parties unless an
Indemnified Party shall have been advised by counsel that a conflict
of interest is likely to exist if the same counsel were to represent
all such Indemnified Parties, in which case such Indemnified Party
shall be permitted, at the expense of the Indemnifying Party, to
employ separate counsel). The Indemnifying Party shall not be liable
for any settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld. No
Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in
respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party
from all liability on claims that are the subject matter of such
Proceeding.
All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten (10) Business Days of written notice
thereof to the Indemnifying Party (regardless of whether it is
ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided that the Indemnifying Party may
require such Indemnified Party to undertake to reimburse all such
fees and expenses to the extent it is finally judicially determined
that such Indemnified Party is not entitled to indemnification
hereunder).
(c) Contribution. If a claim for indemnification under Section 5(a) or
5(b) is unavailable to an Indemnified Party (by reason of public
policy or otherwise), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses,
in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations. The relative fault of
such Indemnifying Party and Indemnified Party shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or
omission or alleged omission of a material fact, has been taken or
made by, or relates to information supplied by, such Indemnifying
Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such action, statement or omission. The amount paid or payable by a
party as a result of any Losses shall be deemed to include, subject to
the limitations set forth in Section 5(c), any reasonable attorneys'
or other reasonable fees or expenses incurred by such party in
connection with any Proceeding to the extent such party would have
been indemnified for such fees or expenses if the indemnification
provided for in this Section was available to such party in accordance
with its terms.
9
<PAGE>
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take
into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of
this Section 5(d), no Holder shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the proceeds
actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages
that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any Person who was not guilty of such fraudulent
misrepresentation.
The indemnity and contribution agreements contained in this Section
are in addition to any liability that the Indemnifying Parties may
have to the Indemnified Parties.
6. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by the Holder, of
any of their obligations under this Agreement, the Holder or the
Company, as the case may be, in addition to being entitled to exercise
all rights granted by law and under this Agreement, including recovery
of damages, will be entitled to specific performance of its rights
under this Agreement. The Company and the Holder agree that monetary
damages would not provide adequate compensation for any losses
incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action
for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate. So long as the Company
uses commercially reasonable efforts to cause the Registration
Statement to become effective and remain effective as agreed in
Section 3(a) hereof, Holder shall have no right to claim, and does
hereby waive any claim, for any damages or other remedy for any delay
or failure of the Commission to declare the Registration Statement
effective.
(b) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the same shall be in
writing and signed by the Company and the Holder.
(c) Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) the date of transmission, if
such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 5:00
p.m. (New York City time) on a Business Day, (iii) the Business Day
after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in
this Section later than 5:00 p.m. (New York City time) on any date and
earlier than 11:59 p.m. (New York City time) on such date; or (iv)
upon receipt, when delivered by a reputable overnight delivery
service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications
shall be:
10
<PAGE>
If to the Company: Neurotech Development Corporation
45 Orchard Street
Manhasset, NY 11030
Facsimile: 516-869-9667
Attention: Bernard Artz
If to Buyer, to its address in the Consulting Agreement.
Each party shall provide five days' prior written notice to the other
party of any change in address or telephone number.
If to any other Person who is then the registered Holder:
To the address of such Holder as it appears in the stock transfer books
of the Company or such other address as may be designated in writing
hereafter, in the same manner, by such Person.
(d) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of the Holder. The Company may
not assign its rights or obligations hereunder without the prior
written consent of each Holder.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the
same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile
signature were the original thereof.
(f) Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York
without regard to the principles of conflicts of law thereof.
(g) Cumulative Remedies. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.
(h) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force
and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and
employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention
of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such
that may be hereafter declared invalid, illegal, void or unenforceable.
(i) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
11
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
NEUROTECH DEVELOPMENT CORPORATION
By: /s/ Bernard Artz
--------------------------------------
Name: Bernard Artz
Its: Chairman & CFO
WELLINGTON CAPITAL CORPORATION
By: /s/ Marc Sharinn /s/ Colm O. Wrynn
--------------------------------------
Name: Marc Sharinn/Colm O. Wrynn
Title: President /Secretary/Treasurer
12
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EXHIBIT 4.3
STOCK OPTION AGREEMENT
AGREEMENT, dated as of the 27th day of January 2000, by and among
Wellington Capital Corporation, a New York corporation (the "Optionee"), and
Neurotech Development Corporation, a Delaware corporation (the "Company").
WHEREAS, the Optionee and the Company entered into a Consulting Agreement
dated January 27, 2000 (the "Consulting Agreement") which, among other things,
entitles the Optionee to options to purchase 10,000,000 shares of the Company's
common stock; and
WHEREAS, the Optionee and the Company desire set forth the terms and
conditions of such options.
NOW, THEREFORE, in consideration of the agreements hereinafter contained,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and intending to be legally bound, the parties hereto
agree as follows:
1. The Company hereby grants to the Optionee the option (the "Option"), subject
to the terms and conditions hereof and in the Consulting Agreement, to purchase
from the Company up to and including 10,000,000 shares of the Seller's common
stock (the "Optioned Shares") at the price per share equal to $.01 per share
(the "Exercise Price").
2. In the event that the Optionee exercises any Option, the Company shall
transfer and deliver to the Optionee and the Optionee shall acquire all of the
stock free and clear of all liens, pledges, encumbrances, charges and claims
thereon. The Optioned Shares, shall on or before the time of delivery, be duly
authorized, and when issued, will be duly and validly issued, fully paid and
non-assessable and will not subject the Optionee or holder thereof to personal
liability by reason of being such Optionee and/or holder. The Optioned Shares
shall be registered in accordance with that certain Registration Rights
Agreement dated as of January 27, 2000 by and between the parties hereto (the
"Registration Rights Agreement").
3. The Optionee shall have the right to exercise any or all of its Option for
ten (10) years (the "Term") from the date of this Agreement, subject to
exercisability as set forth in the Consulting Agreement.
4. In no event shall the Optionee be entitled to exercise its Option in excess
of that number of options which, upon giving effect to such exercise, would
cause the aggregate number of shares of common stock beneficially owned by the
Optionee and its affiliates to exceed 4.99% of the outstanding shares of the
common stock following such exercise. For purposes of this Section 4, beneficial
ownership shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended. The Optionee may, as to itself only, waive the
foregoing limitations by written notice to the Company upon not less than 61
days prior notice (with such waiver taking effect only upon the expiration of
such 61 day notice period).
5. The Optioned Shares shall be deposited within 5 days from the date hereof and
maintained in a brokerage account in the name of the Optionee, the selection of
which shall be at the Optionee's discretion. The Optionee shall have no control
over the Optioned Shares unless and until Optionee exercises its Option. The
Company shall make all reasonable efforts, including but not limited to oral or
written authorizations or other correspondence with necessary brokerage firms to
ensure good and expeditious delivery of the common stock to the Optionee upon
the exercise of any or all of the Options. The Optionee shall be obligated, upon
the expiration of the Term, to return all Optioned Shares in its possession not
exercised to the Company within five (5) days from the date of such expiration.
Optionee shall not be entitled to
<PAGE>
dividends, voting rights or any other right, preference or privilege that comes
with the beneficial ownership of the Optioned Shares unless and until Optionee
exercises its Option.
6. If the Company (i) pays a dividend or makes a distribution on its common
stock in shares of its common stock; (ii) subdivides its outstanding shares of
common stock into a greater number of shares; (iii) combines its outstanding
shares of common stock into a smaller number of shares; (iv) makes a
distribution on its common stock in shares of its capital stock other than
common stock; or (v) issues by reclassification of its common stock any shares
of its capital stock; then the Exercise Price in effect and number of Optioned
Shares issuable immediately prior to such action shall be proportionately
adjusted so that the Optionee, for any Option thereafter exercised, may receive
the aggregate number and kind of shares of capital stock of the Company which it
would have owned immediately following such action if such Option had been
exercised immediately prior to such action.
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective date
in the case of a subdivision, combination or reclassification.
If after an adjustment, the Optionee upon exercise of an Option may receive
shares of two or more classes of capital stock of the Company, the Board of
Directors of the Company shall determine in the good faith exercise of its
reasonable business judgment the allocation of the adjusted Exercise Price
between the classes of capital stock. After such allocation, the exercise
privilege and the Exercise Price of each class of capital stock shall thereafter
be subject to adjustment on terms comparable to those applicable to common stock
in this Section 6.
Such adjustment shall be made successively whenever any event listed above
shall occur.
7. This Agreement has been duly and validly executed and delivered by the
Company and constitutes a valid and binding agreement and is enforceable
according to its terms. The Optionee and the Company both have the power and
legal capacity to enter into this Agreement and to carry out their respective
obligations hereunder.
8. The representations and warranties of any party to this Agreement contained
herein shall survive the closing date and the closing, and all inspections,
examinations or audits made by the other party or parties hereto.
9. All elections to exercise the options hereunder, notices, demands, requests
or other communications (each a "Notice") required or permitted to be given to
or made upon the parties hereunder shall be in writing and shall be either
personally delivered, mailed, postage prepaid, be registered or certified mail,
return receipt requested, sent by commercial overnight carrier or sent by
facsimile, wire or other telegraphic communication to the other party addressed
as follows, or at such other address as shall be designated by such party by a
Notice given in accordance with this Section. Each such Notice shall be deemed
given (a) if delivered personally or sent by commercial overnight carrier, when
received; (b) if mailed, three (3) Business Days after depositing such notice,
postage prepaid, in a mail receptacle under the exclusive legal control of the
U.S. Postal Service; and (c) if sent by facsimile wire or other telegraphic
communication, upon confirmed transmission. All notices to the Company and/or
the Optionee shall be sent to their respective address set forth in the
Consulting Agreement.
10. This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
2
<PAGE>
11. Except as set forth in the Consulting Agreement and the Registration Rights
Agreement, each party will pay its own expenses in connection with this
Agreement and the transactions contemplated hereby.
12. This Agreement shall be construed under and in accordance with the laws of
the State of New York, without giving effect to the choice of laws principles
thereof.
13. This Agreement shall be binding upon and inure to the benefit of the parties
and their respective successors and permitted assigns. This Agreement is not
assignable without the prior written consent of each of the parties hereto.
14. This Agreement sets forth the entire understanding of the parties with
respect to the subject matter hereof. There are no agreements, restrictions,
promises, warranties, covenants or undertakings other than those expressly set
forth or referred to herein. This Agreement supersedes all prior agreements and
undertakings between the parties with respect to such subject matter.
15. At any time and from time to time, upon the request of one of the parties
hereto, the other parties shall execute, deliver and acknowledge or cause to be
executed, delivered and acknowledged, such further documents and instruments and
do such other acts and things as the requesting party may reasonably request in
order to fully effect the purposes of this Agreement and the transactions
contemplated hereby.
NEUROTECH CAPITAL CORPORATION
By: /s/ Bernard Artz
----------------------------------
Name: Bernard Artz
Title: Chairman & CFO
WELLINGTON CAPITAL CORPORATION
By: /s/ Marc A. Sharinn
----------------------------------
Name: Marc A. Sharinn
Title: President
By: /s/ Colm O. Wrynn
----------------------------------
Name: Colm O. Wrynn
Title: Secretary/Treasurer
3
<PAGE>
EXHIBIT 10.32
CONSULTING AGREEMENT
This Agreement is made as of January 27, 2000, by and between Neurotech
Development Corporation, (the "Company"), a Delaware corporation with its
principal offices at 45 Orchard Street, Manhasset, New York 11030 and Wellington
Capital Corporation ("WCC"), a New York corporation, with its principal offices
at 1719 Alexis Road, Merrick, New York 11566.
WITNESSETH
WHEREAS, the Company requires expertise in the area of investment banking
to support its business and growth; and
WHEREAS, WCC has substantial contacts among the members of the investment
community, investment banking expertise, and desires to act as a consultant to
provide investment banking and advisory services;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and subject specifically to the conditions hereof, and
intending to be legally bound thereby, the parties agree as follows:
1. CERTAIN DEFINITIONS. When used in this Agreement, the following terms shall
have the meanings set forth below:
1.1. "Affiliate" means any persons or entities controlled by a party.
1.2. "Business Day" means any day except Saturday, Sunday and day which is
designated in the State of New York as a legal holiday or a day on
which banking institutions are legally required or authorized to
close.
1.3. "Contact Person" The person who shall be primarily responsible for
carrying out the duties of the parties hereunder. The Company and WCC
shall each appoint a Contact Person to be responsible for their
respective duties. In the event that one party gives notice to the
other party in writing that, in their reasonable opinion, the other
party's Contact Person is not able to fulfill their duties and
responsibilities hereunder, both parties shall mutually agree upon a
replacement Contact Person within 10 days of the said notice.
1.4. "Securities" means the common stock, $.01 par value, of the Company.
2. SERVICES TO BE RENDERED BY WCC. WCC shall render the following services:
2.1. Financing Activities. Subject to the limitations set forth in Section
2.7 hereof and elsewhere in this Agreement, WCC will use commercially
reasonable efforts to introduce to the Company third parties, to
obtain financing ("Financing") reasonably acceptable to the Company,
for working capital and expansion.
<PAGE>
2.2. Advice and Counsel. WCC will provide advice and counsel regarding the
Company's strategic business and financial plans, strategy and
negotiations with potential lenders/investors, merger/acquisition
candidates, joint ventures, corporate partners and others involving
financial and financially related transactions.
2.3. Introductions to the Securities Brokerage Community. WCC shall use its
contacts in the brokerage community to assist the Company in establishing
relationships with securities dealers in North America and Europe and to
provide the most recent corporate information to interested securities
dealers on a regular and continuous basis.
2.4. Market Intelligence. WCC will monitor and react to sensitive market
information on a timely basis and provide advice, counsel and proprietary
intelligence (including but not limited to information on price, volume
and the identification of market-makers, buyers and sellers) to the
Company in a timely fashion with respect to securities in which the
Company has an interest. The Company understands that this information is
available from other sources but acknowledges that WCC can provide it in a
more timely fashion and with substantial value-added interpretation of
such information. The foregoing notwithstanding, no information will be
provided to the Company with respect to the activities of any other WCC
customers or customer accounts without such customer's prior consent.
2.5 Company and/or Company Client Transaction Due Diligence. WCC will
undertake due diligence on all proposed financial transactions affecting
the Company, of which WCC is notified in writing in advance, including
investigation and advice on the financial, valuation and stock price
implications thereof.
2.6. Additional Duties. The Company and WCC shall mutually agree upon any
additional duties which WCC may provide.
2.7. Devotion of Duties. WCC shall devote such time and effort to the affairs
of the Company as is commercially reasonable and adequate to render the
consulting services contemplated by this Agreement. WCC cannot guarantee
results on behalf of the Company, but shall pursue all reasonable avenues
available through its network of financial contacts. At such time as an
interest is expressed by a third party in the Company's needs, WCC shall
notify the Company and advise it as to the source of such interest and any
terms and conditions of such interest. The acceptance and consummation of
any transaction is subject to acceptance of the terms and conditions by
the Company. It is understood that a portion of the compensation to be
paid hereunder is being paid hereunder by the Company to have WCC remain
available to assist it with transactions on an as-needed basis.
2.8. Services Excluded. The parties may specifically exclude certain services
from the operation of this Agreement by written addendum hereto and
acknowledge and agree that the following items are not intended to be
included among the services to be
2
<PAGE>
provided by WCC:
2.8.1. WCC agrees that neither it or any affiliate or fund with which it
is associated is or shall be a market-maker, dealer or underwriter
of any of the Company's securities (but may be a placement agent
by other "Selling Agreement" from time to time) in the Company's
securities;
2.8.2. Any payments made herein to WCC are not, and shall not be
construed as, compensation to WCC for the purposes of making a
market, to cover WCC out-of-pocket expenses for making a market,
or for the submission by WCC of an application to make a market in
any of the Company's securities;
2.8.3. No payment made herein to WCC are for the purpose of affecting
the price of any security or influencing any market-making
functions, including but not limited to bid/ask quotations,
initiation and termination of quotations, retail securities
activities, or for the submission of any application to make a
market.
2.8.4. It is understood and agreed that in performing any of the
services contemplated by this Agreement, WCC shall not be taken to
be rendering any legal opinions or any work that is in the
ordinary purview of a Certified Public Accountant or of a licensed
NASD broker/dealer.
2.9. Nothing herein shall limit or prevent WCC from directly or indirectly
owning an interest in, lend money or render financial or other
assistance to or participate in or be connected with, as a stockholder
or otherwise, any entity or company, including but not limited to,
entities or companies that conduct activities similar to the Company.
3. TERM. WCC agrees to provide the services described herein beginning on
January 18, 2000 and continuing until January 18, 2001 (the "Term"),
unless the Company terminates this Agreement prior to the expiration
of the Term, which it may do at its sole discretion without cause (a
"Terminating Event"); provided, however, that a Terminating Event will
not relieve the Company of any of its obligations contemplated
hereunder including, but not limited to, payment of the Issued Shares
in accordance with this Agreement.
4. COMPENSATION TO WCC.
4.1. Fees. Except as provided hereunder, as full and complete compensation
for the services to be provided by WCC to the Company, the Company
agrees to issue such number of Securities and options to purchase
Securities to WCC as set forth in Schedule A annexed hereto and made a
part hereof (the "Issued Shares"). The Company shall register for
resale for WCC the Issued Shares not registered as of the date hereof,
pursuant to the Registration Rights Agreement between the parties
hereto set forth as Exhibit A annexed hereto.
3
<PAGE>
4.2. Expenses. The Company shall be responsible for all fees and expenses
pertaining to the issuance, listing or registration of the Issued
Shares, including, but not limited to, SEC and "Blue Sky" registration
fees, transfer agent fees, escrow fees, NASD registration or exchange
listing fees, all as further set forth in the Registration Rights
Agreement.
4.3. Additional Fees. In addition to the Compensation, the Company shall
pay WCC a negotiated sum with respect to each successful Financing
contemplated hereunder.
5. WCC'S REPRESENTATIONS AND WARRANTIES.
WCC represents and warrants that:
5.1. WCC Experience. WCC has the experience and expertise to evaluate an
investment in the Securities.
5.2. Investment Purpose. It is acquiring the Issued Shares for its own
account for investment only and not with a view towards, or for resale
in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the Securities Act of
1933, as amended (the "1933 Act"); provided, however, that by making
the representations herein, WCC does not agree to hold any of the
Issued Shares for any minimum or other specific term and reserves the
right to dispose of the Issued Shares at any time in accordance with
or pursuant to a registration statement or an exemption under the 1933
Act.
5.3. Reliance on Exemptions. WCC understands that the Issued Shares are
being offered and sold to it in reliance on specific exemptions from
the registration requirements of United States federal and state
securities laws and that the Company is relying upon the truth and
accuracy of, and WCC's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of WCC set
forth herein in order to determine the availability of such exemptions
and the eligibility of WCC to acquire the Issued Shares.
5.4. Information. WCC and its advisors, if any, have been furnished with
all public materials relating to the business, finances and operations
of the Company and materials relating to issuance of the Issued Shares
which have been requested by WCC. WCC acknowledges that it and such of
its advisors as it considers relevant have been afforded full and
sufficient opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by WCC
or its advisors or its representatives shall modify, amend or affect
WCC's right to rely on the completeness and accuracy of the materials
provided to WCC by or on behalf of the Company with respect to the
transactions contemplated hereby or on the Company's representations
and warranties contained in this Agreement. WCC understands that its
investment in the Issued Shares involves a high degree of risk.
4
<PAGE>
WCC has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with
respect to its acquisition of the Issued Shares.
5.5. No Governmental Review. WCC understands that no United States federal
or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Issued
Shares or the fairness or suitability of the investment in the Issued
Shares nor have such authorities passed upon or endorsed the merits of
the offering of the Issued Shares.
5.6. Transfer or Resale.
(a) WCC understands that, except as otherwise provided in Schedule A
or in the Registration Rights Agreement: (i) the Issued Shares have
not been and are not being registered under the 1933 Act or any state
securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered pursuant to an
effective registration statement under the 1933 Act, (B) WCC shall
have delivered to the Company an opinion of counsel, in a generally
acceptable form, to the effect that the Issued Shares to be sold,
assigned or transferred may be sold, assigned or transferred pursuant
to an exemption from such registration, (C) WCC provides the Company
with reasonable assurance that the Issued Shares can be sold, assigned
or transferred pursuant to Rule 144 promulgated under the 1933 Act (or
a successor rule thereto) ("RULE 144") or (D) such transferee or
assignee is an Affiliate (as defined in Rule 144) of WCC.
(b) Any sale of the Issued Shares made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 and further, if
Rule 144 is not applicable, any resale of the Issued Shares under
circumstances in which the seller (or the person through whom the sale
is made) may be deemed to be an underwriter (as that term is defined
in the 1933 Act) may require compliance with some other exemption
under the 1933 Act or the rules and regulations of the SEC thereunder.
5.7. Legend. The Company represents that the certificates or other
instruments representing two million (2,000,000) of the Issued Shares
have been registered under the 1933 Act, as amended, and may be sold,
resold, transferred, pledged and/or assigned by WCC without any
restrictions whatsoever. The parties agree that the certificates
representing the balance of the Issued Shares have not been registered
under the 1933 Act and except as set forth below or as contemplated by
the Registration Rights Agreement, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order will be
placed against transfer of such stock certificates):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE
5
<PAGE>
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION
OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144
UNDER SAID ACT."
5.8. The legend set forth above shall be removed and the Company shall
issue a certificate without any legend to the holder of the Securities
upon which it is stamped, if (i) such Securities are registered for
resale under the 1933 Act, (ii) in connection with a sale transaction,
such holder provides the Company with an opinion of counsel, in form
acceptable to the Company, to the effect that a public sale,
assignment or transfer of such Securities may be made without
registration under the 1933 Act, or (iii) such holder provides the
Company with reasonable assurances that such Securities can be sold
without restriction pursuant to Rule 144(k).
6. CERTAIN AGREEMENTS BY THE COMPANY
6.1. Registration. The Company agrees to register the Issued Shares for
resale in accordance with the terms of the Registration Rights
Agreement attached hereto.
6.2. Form D; Blue Sky Filings. The Company agrees to file a Form D with
respect to the Issued Shares as required under Regulation D. The
Company shall take such action and make such filings as the Company
shall reasonably determine is necessary and as required by applicable
law to qualify the Issued Shares under, or obtain exemption for the
Issued Shares from, the applicable securities or "Blue Sky" laws of
the states of the United States.
6.3. Reservation of Shares. The Company shall take all action necessary to
at all times have authorized, and reserved for the purpose of
issuance, no less than 100% of the number of shares of Common Stock
needed to satisfy the Company's obligations under this Agreement.
6.4. Listing. The Company shall use its best efforts to maintain the
Securities' authorization for listing on the Bulletin Board or if
applicable the Nasdaq SmallCap Market or any other market on which
the Securities is then listed or traded. Neither the Company nor any
of its subsidiaries shall take any action which may result in the
delisting or suspension of the Securities on the Bulletin Board,
Nasdaq SmallCap Market or on any market on which the Securities are
then listed or traded (other than to switch listings from the Bulletin
Board to a subsequent market). The Company
6
<PAGE>
shall pay all fees and expenses in connection with satisfying its
obligations under this Section.
7. INDEMNIFICATION. The Company agrees to indemnify and hold harmless WCC, its
affiliates, and each of their respective officers, directors and employees
against any and all liability, loss, and costs, expenses or damages,
including but not limited to, any and all expenses whatsoever reasonably
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever or howsoever caused by
reason of any injury (whether to body, property, personal or business
character or reputation) sustained by any person or their property by reason
of any act, neglect, default or omission, or any untrue or alleged untrue
statement of a material fact, or any misrepresentation of any material fact
or any breach of any representation, warranty or covenant of the Company or
any of its agents, employees, or other representatives arising out of, or in
relation to, this Agreement. All remedies provided by law or in equity shall
be cumulative and not in the alternative.
8. COMPANY REPRESENTATIONS. The Company hereby represents, covenants and
warrants to WCC as follows:
8.1. Organization. Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company has all requisite
corporate power and authority to own and operate its properties and
assets, to execute and deliver this Agreement, the Registration Rights
Agreement and the Option Agreement, as defined in Schedule A
(collectively, the "Related Agreements"), to issue and sell the Issued
Shares and to carry out the provisions of this Agreement, the Related
Agreements and to carry on its business as presently conducted and as
presently proposed to be conducted. The Company is duly qualified and
authorized to do business and is good standing as a foreign
corporation in all jurisdictions in which the nature of its activities
and of its properties (both owned and leased) makes such qualification
necessary except for those jurisdictions in which failure to do so
would not have a material adverse effect on the business, financial
condition, properties or prospectus of the Company.
8.2. Capitalization: Voting Rights. All issued and outstanding shares of
the Company's capital stock (a) have been duly authorized and validly
issued, (b) are fully paid and nonassessable and (c) were issued in
compliance with all applicable state and federal laws concerning the
issuance of securities. When issued in compliance with the provisions
of this Agreement, the Issued Shares will be validly issued, fully
paid and nonassessable, and will be free of any liens or encumbrances,
and will have the rights, preferences, privileges and restrictions
stated in the Certificate of Incorporation of the Company, as amended,
and the Related Agreements. The Securities underlying options to be
issued hereunder have been duly and validly reserved for issuance.
8.3. No Violation. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will violate
any provision of
7
<PAGE>
the charter or by-laws of the Company, or violate any term or
provision of any other agreement or any statute or law.
8.4. Consents. All consents required or necessary to the consummation of
the transactions contemplated hereby, including, without limitation,
consents from federal, state, or local governmental agencies and
consents provided for under any credit agreement, material contract,
lease or other agreement to which the Company is a party, have been
obtained or will be obtained prior to the commencement of the Term.
8.5. Company's Representations. All representations and statements provided
about the Company to WCC are true and complete and accurate to the
best of the Company's knowledge.
8.6. Legal Representation. The Company has been represented or had every
opportunity to be represented in the transactions contemplated herein
by the law firm of its choice.
8.7. DTC Reports. The Company shall provide WCC with copies of weekly DTC
reports.
8.8. Offering Valid. Assuming the accuracy of the representations and
warranties of WCC contained in Section 5 hereof, the offer, sale and
issue of the Issued Shares will be exempt from the registration
requirements of the 1933 Act and will have been registered or
qualified (or are exempt from registration and qualification) under
the registration, permit or qualification requirements of all
applicable state securities laws.
9. CONFIDENTIALITY.
9.1. Each party agrees to provide reasonable security measures to keep
information confidential where release may be detrimental to the other
party's interests. Each party shall require their respective
employees, agents, affiliates, subsidiaries, other licensees, and
others who will have access to the information through the other
party, to first enter into appropriate non-disclosure agreements
requiring the confidentiality contemplated by this Agreement for a
reasonable time thereafter.
9.2 WCC will not, during its engagement by the Company pursuant to this
Agreement, disclose or use for its benefit, any confidential
information, knowledge, or data of the Company in any way acquired or
used by WCC during its engagement by the Company. Confidential
information, knowledge or data of the Company shall not include any
information which is or becomes generally available to the public
other than as a result of a disclosure by WCC.
8
<PAGE>
10. MISCELLANEOUS PROVISIONS.
10.1. Amendment and Modification. This Agreement and any part thereof may be
amended, waived, modified or supplemented only by written Agreement of
WCC and the Company.
10.2. Strict Compliance. No waiver or failure to insist upon strict
compliance with any obligation, covenant, agreement or condition under
this Agreement shall operate as a waiver of, or estoppel with respect
to, any subsequent or other failure.
10.3. Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) the date of transmission, if
such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 5:00
p.m. (New York time) on a Business Day, (iii) the Business Day after
the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile telephone number specified in this
Section later than 5:00 p.m. (New York time); or (iv) upon receipt,
when delivered by a reputable overnight delivery service, in each case
properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
If to the Company:
Neurotech Development Corporation
45 Orchard Street
Manhasset, NY 11030
Telephone: 516-869-9663
Facsimile: 516-869-9667
Attention: Bernard Artz, Chairman and CFO
If to WCC:
Wellington Capital Corporation
1719 Alexis Road
Merrick, N.Y. 11566
Telephone: 516-378-1099
Attention: Marc Sharinn, President and/or Colm O. Wrynn, Sec./Treas.
Each party shall provide five days' prior written notice to the other party
of any change in address or telephone number.
10.4. Contact Persons. The Contact Person for the Company is Bernard Artz,
President. The Contact Person for WCC is Marc Sharinn, President
and/or Colm O. Wrynn, Secretary/Treasurer.
9
<PAGE>
10.5. Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this
Agreement nor any right, interests or obligations hereunder shall be
delegated or assigned by any of the parties hereto without the prior
written consent of the other party; provided however, that WCC may
assign this Agreement or any right, interests or obligation hereunder
to an affiliate of WCC without the prior written consent of the
Company.
10.6. Publicity. Neither WCC nor the Company shall make or issue, or cause
to be made or issued, any announcement or written statement concerning
this Agreement or the transaction contemplated hereby for
dissemination to the general public without the prior consent of the
other party. This provision shall not apply, however, to any
announcement or written statement required to be made by law or the
regulations of any federal or state governmental agency, except that
the parties shall agree concerning the timing and content of such
announcement before such announcement is made.
10.7. Governing Law. This Agreement, the Related Agreements and the legal
relations among the parties hereto shall be governed by and construed
in accordance with the laws of the State of New York, without regard
to its conflict of law doctrine.
10.8. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts or by facsimile, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
10.9. Headings. The heading of the Sections of this Agreement are inserted
for convenience only and shall not constitute a part hereto or affect
in any way the meaning or interpretation of this Agreement.
10.10. Entire Agreement. This Agreement, including any Exhibits hereto, and
the other documents and certificates delivered pursuant to the terms
hereto, set forth the entire Agreement and understanding of the
parties hereto in respect of the subject matter contained herein, and
superseded all prior Agreements, promise, covenants arrangements,
communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party
hereto.
10.11. Attorneys' Fees and Costs. If any action is necessary to enforce and
collect upon the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees and costs, in addition to
any other relief to which that party may be entitled. This provision
shall be construed as applicable to the entire Agreement.
10.12. Survivability. If any part of this Agreement is found to be invalid
or unenforceable, that part shall be severable from the remainder of
this Agreement.
10
<PAGE>
10.13. Further Assurances. Each of the parties agrees that it shall from
the time to time take such actions and execute such additional
instruments as may be reasonably necessary or convenient to
implement and carry out the intent and purpose of this Agreement.
10.14. Right to Data After Termination. After termination of this Agreement
each party shall be entitled to the return of all copies of any and
all information provided to the other prior to the date of
termination and not previously returned to it.
10.15. Relationship of the Parties. WCC is an independent contractor.
Nothing contained in this Agreement shall be deemed to cause either
party to become the partner, agent or legal representative of the
other, nor create any fiduciary relationship or joint venture
between them, except as otherwise expressly provided herein. It is
not the intention of the parties to create nor shall this Agreement
be construed to create any commercial relationship or other
partnership. Neither party shall have any authority to act for or to
assume any obligation or responsibility on behalf of the other
party, except as otherwise expressly provided herein.
11. ARBITRATION. The parties hereby agree to waive their right to seek remedy in
court, including their right to jury trial and to submit all disputes,
controversies, or differences between the Company or WCC or anyone claiming
through or under them including any of their respective officers,
directors, agents or employees, arising out of, in connection with or as a
result of this Agreement and the Related Agreements, to final and binding
arbitration rather than through litigation.
11.1. Any disputing party shall submit the dispute for resolution in New
York, New York within five (5) days after receiving a written
request to do so from any of the aforesaid parties.
11.2. If any party to a dispute fails to submit the dispute to arbitration
on request, then the requesting party may itself commence an
arbitration proceeding, but is under no obligation to do so.
11.3. If any party shall institute any court proceeding in an effort to
resist arbitration and be unsuccessful in resisting arbitration or
shall unsuccessfully contest the jurisdiction of the arbitration
forum, the prevailing party shall be entitled to recover from the
losing party its legal fees and any out-of-pocket expenses incurred
in connection with the defense of such legal proceeding or its
efforts to enforce its rights to arbitration as provided for herein.
11.4. Any arbitration conducted hereunder shall be conducted by an
arbitrator selected by the American Arbitration Association. Such
arbitration shall be conducted pursuant to the commercial
Arbitration Rules of the American Arbitration Association.
11.5. The parties shall accept the decision of any award as being final
and conclusive and agree to abide thereby.
11
<PAGE>
11.6. Any arbitration award shall be submitted to any state or federal
court sitting in New York City, New York as a basis for judgement
and execution for collection.
12. CALL OPTION. Under the circumstances and on the terms described below, WCC
shall have the following rights:
12.1. For a period of three (3) years from the date hereof, any of the
Company's officers, insiders and directors (each, a "Control
Person") executing this Agreement seeking to sell all or any part of
such Control Persons' Securities held in his name or the name of an
entity controlled by him, shall notify (the "Notice") WCC in writing
at least fifteen (15) days prior to such sale and will afford to WCC
an opportunity to purchase all or any part of such Securities (the
"Call"), at a price per share equal to eighty percent (80%) of the
average bid price of the Securities for the five days immediately
prior to the date of the Call Notice (as hereinafter defined) on
such market on which the Securities are then listed or traded.
12.2. WCC shall exercise the Call by giving the Control Person against
whom the Call is exercised written notice of such intent within ten
(10) days after WCC's receipt of the Notice (the "Call Notice"). The
closing of the purchase of the Securities subject to the Call shall
be held at the offices of WCC no later than the thirtieth (30th) day
after the Call Notice is deemed delivered under this Agreement,
except upon the mutual agreement of the parties hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE TO FOLLOW]
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
NEUROTECH DEVELOPMENT CORPORATION
By: /s/ Bernard Artz
---------------------------------------
Bernard Artz, Chairman & CFO
WELLINGTON CAPITAL CORPORATION
By: /s/ Colm O. Wrynn/Marc A. Sharinn
---------------------------------------
Colm O. Wrynn, Secretary/Treasurer
Marc A. Sharinn, President
Solely for purposes of Section 12:
/s/ Bernard Artz
---------------------------------------
Bernard Artz, in his individual capacity
/s/ Lawrence Artz
---------------------------------------
Lawrence Artz, in his individual capacity
---------------------------------------
, in his individual capacity
---------------------------------------
, in his individual capacity
---------------------------------------
, in his individual capacity
13
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<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 71
<SECURITIES> 0
<RECEIVABLES> 180,600
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 180,671
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0
0
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<TOTAL-LIABILITY-AND-EQUITY> 1,500,671
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<INCOME-CONTINUING> (3,714,815)
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<CHANGES> 0
<NET-INCOME> (3,714,815)
<EPS-BASIC> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
