<PAGE> 1
SCHEDULE 13D
(Rule 13d-101)
Information to be Included in Statements Filed
Pursuant to Rule 13d-1(a) and Amendments Thereto
Filed Pursuant to Rule 13d-2(a)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 4)
ELECTROPHARMACOLOGY, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK
- --------------------------------------------------------------------------------
(Title of Class of Securities)
286128
- --------------------------------------------------------------------------------
(CUSIP Number)
Jonathan L. Awner, Esq.
Akerman, Senterfitt & Eidson, P.A.
One S.E. 3rd Avenue, 28th Floor
Miami, Florida 33131; (305) 374-5600
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
August 24, 1998
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
statement because of Rule 13d-1(b)(3) or (4), check the following box: [ ]
<PAGE> 2
SCHEDULE 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
NORTON HERRICK
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)[ ]
(b)[X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES --------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 1,893,950 (see Item 4)
REPORTING --------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH
-0-
--------------------------------------------
10 SHARED DISPOSITIVE POWER
1,893,950 (see Item 4)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,893,950
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE> 3
SCHEDULE 13D
The reporting person listed on the cover page to this Schedule 13D
hereby makes the following statement pursuant to Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder. This statement is an amendment of the
Schedule 13D dated November 13,1995, as amended and restated by Amendment No. 1
to Schedule 13D dated October 15, 1996, as amended by Amendment No. 2 to
Schedule 13D dated June 5, 1997 and as amended by Amendment No. 3 to Schedule
13D dated September 9, 1997 (collectively, the "Original Schedule 13D"). For
further information regarding any of the items amended herein, reference is made
to the Original Schedule 13D. Capitalized terms used herein and not defined have
the meanings ascribed to them in the Original Schedule 13D.
ITEM 2 IDENTITY AND BACKGROUND.
Item 2 of the Original Schedule 13D is hereby amended by adding the
following additional paragraph:
Pursuant to Rule 13d-5 promulgated under the Exchange Act, Mr. Herrick
may be deemed to be a member of a "group" with (a) David Saloff, Murray Feldman,
George Levine, and Paragon Capital Corporation at Spear, Leeds & Kellogg, LLC
(collectively, the "EPHI Group"), (b) Arup Sen, James Kaput and Richard Kneipper
(collectively, the "HTD Group") and (c) Gemini BioTech L.P., a Texas limited
partnership controlled by Krishna Jayaraman and Shashikala Jayaraman
(collectively, the "Gemini Group"), because Mr. Herrick has mutually agreed with
such parties to vote his shares of Common Stock in favor of certain matters
described in Item 4 below. However, because such agreement to vote is limited to
the matters described in Item 4 below, Mr. Herrick disclaims the existence of a
"group"and disclaims beneficial ownership of the shares of Common Stock
beneficially owned by the EPHI Group, the HTD Group and the Gemini Group. Mr.
Herrick is filing this statement on his own behalf, and not on behalf of the
EPHI Group, the HTD Group or the Gemini Group, pursuant to Rule 13d-1(k)(2)
promulgated under the Exchange Act. Any information provided in this statement
with respect to the EPHI Group, the HTD Group or the Gemini Group is based on
the Issuer's public filings with the Securities and Exchange Commission and
information provided by or on behalf of such parties, and Mr. Herrick disclaims
all responsibility for the completeness or accuracy of such information.
ITEM 4 PURPOSE OF TRANSACTION.
Item 4 of the Original Schedule 13D is hereby amended in its entirety as
follows:
On August 24, 1998, pursuant to a Master Agreement, dated June 18, 1998,
as amended on August 3, 1998 (the "Master Agreement") among HealthTech
Development, Inc. ("HTD"), Gemini BioTech L.P. ("Gemini"), the Issuer, EPi Sub,
Inc. ("EPi Sub"), Mr. Herrick, the EPHI Group, the HTD Group and the Gemini
Group, Mr. Herrick acquired 1,575,000 shares of Common Stock from the Issuer in
exchange for surrendering 242,950 shares of Preferred Stock and Warrants to
acquire 1,300,000 shares of Common Stock (the "Herrick Redemption").
Mr. Herrick has acquired the Common Stock for investment purposes, and
except as described below, Mr. Herrick has no plans or proposals which relate to
or would result in any of the events or transactions described in Item 4(a)-(j)
of Schedule 13D.
The Herrick Redemption was consummated in connection with certain
reorganization transactions on August 24, 1998 by the Issuer (the
"Reorganization") including: (a) the sale of certain assets of the Issuer to ADM
Tronics Unlimited, Inc. and AA Northvale Medical Associates, Inc.; (b) the
merger of HTD with and into EPi Sub with the shareholders of HTD receiving
shares of Common Stock in exchange for their shares of capital stock of HTD; (c)
the
<PAGE> 4
SCHEDULE 13D
transfer of all of the assets of EPi Sub to Gemini Health Technologies L.P. (the
"Partnership") in exchange for partnership units in the Partnership; and (d) the
contribution by Krishna Jayaraman and Shashikala Jayaraman of all of their
partnership interests in Gemini and one hundred percent (100%) of the stock of
Gemini BioTech, Inc., a Texas corporation, in exchange for 6,000,000 partnership
units in the Partnership, which partnership units may be converted into
6,000,000 shares of Common Stock beginning on June 18, 1999.
Pursuant to the Master Agreement, Mr. Herrick, the EPHI Group, the HTD
Group and the Gemini Group have agreed that following the consummation of the
Reorganization in connection with the election of directors to the Board of
Directors of the Issuer they shall each vote their shares of Common Stock in
favor of a seven-person board of directors, consisting of two persons nominated
by Mr. Herrick and the EPHI Group, two persons nominated by the HTD Group, two
persons nominated by the Gemini Group and one person who is the Chief Executive
Officer. In addition, in connection with the election of the EPHI Group's
nominees, Mr. Herrick and Mr. Feldman have agreed with each other to support the
nomination of, and vote their shares in favor of, a person selected by the
other, pursuant to a letter agreement dated July 27, 1998 (the "Letter
Agreement"). Pursuant to the Master Agreement, Mr. Herrick and the EPHI Group
have selected David Saloff and Murray Feldman as their initial nominees, the HTD
Group has selected Bernard Carrico and Richard Kneipper as their initial
nominees, and the Gemini Group has selected Dr. Krishna Jayaraman and Dr. Gary
Wilcox as their initial nominees. Arup Sen, the Company's Chief Executive
Officer, is the final initial nominee selected by such parties.
Pursuant to the Master Agreement, upon consummation of the
Reorganization, the Issuer and Messrs. Herrick and Saloff, have agreed that the
Stockholders Agreement dated as of November 13, 1995 among such parties and the
Registration Rights Agreement dated as of November 13, 1995 among such parties
shall be terminated and of no further force and effect.
Pursuant to the Master Agreement, upon consummation of the
Reorganization which occurred on August 24, 1998, all shares of Preferred Stock
and all Warrants held by Mr. Herrick were redeemed and exchanged for an
aggregate of 1,575,000 shares of Common Stock of the Issuer (the "Herrick
Redemption Shares"). In addition, upon consummation of the Reorganization all
warrants to purchase shares of Common Stock owned by Messrs. Feldman and Levine
were redeemed and exchanged for 160,000 shares and 90,000 shares of Common
Stock, respectively (collectively, the "Other Redemption Shares," and together
with the Herrick Redemptions Shares, the "Redemption Shares").
Pursuant to the Master Agreement, Mr. Herrick, the EPHI Group, the HTD
Group and the Gemini Group have agreed not to sell or otherwise dispose of any
of the Redemption Shares or any other shares of Common Stock received in the
Reorganization for a period of 365 days after the effective date of the
Reorganization, provided that they each will be permitted to sell an amount of
shares which when aggregated with all shares sold for their individual accounts
within the preceding three months does not exceed the greater of (a) one percent
of the outstanding shares of Common Stock of the Issuer or (b) the average
weekly reported trading volume of such securities during the preceding four
calender weeks.
The Master Agreement will terminate on the earliest to occur of (a) two
years from the effective date of the Reorganization, or (b) the date on which
the market capitalization of the Issuer equals or exceeds $40,000,000 for any
period of 20 trading days within any six-month period.
Pursuant to a Registration Rights Agreement, dated as of June 28, 1998
(the "Registration Rights Agreement"), among the Issuer, Mr. Herrick, the EPHI
Group, the HTD Group and the Gemini Group, the Issuer has agreed to file
<PAGE> 5
SCHEDULE 13D
with the Securities and Exchange Commission as soon as reasonably practicable a
registration statement to register the shares of Common Stock held by Mr.
Herrick, the EPHI Group, the HTD Group and the Gemini Group. The Issuer has
agreed to use its reasonable efforts to have the registration statement declared
effective and remain continuously effective for at least one year (unless the
registration statement can be filed or amended on Form S-3, in which case it
shall remain effective until all selling stockholders thereunder can resell
their shares under Rule 144(k) under the Securities Act of 1933, as amended). In
addition, if such registration statement is no longer in effect, the Issuer has
granted such selling security holders piggyback registration rights on other
registration statements to be filed by the Company. Mr. Herrick, the EPHI Group,
the HTD Group and the Gemini Group have agreed to share the expenses of any such
registration statements pro rata.
Copies of the Master Agreement (including amendments thereto), the
Registration Rights Agreement and the Letter Agreement are attached hereto as
Exhibits 10, 11 and 12, respectively, and are incorporated herein by reference.
The descriptions of the terms of the Master Agreement, the Registration Rights
Agreement and the Letter Agreement set forth herein are qualified in their
entirety by the terms of the Master Agreement, the Registration Rights Agreement
and the Letter Agreement, respectively.
ITEM 5 INTEREST IN SECURITIES OF THE ISSUER.
Item 5 of the Original Schedule 13D is hereby amended in its entirety as
follows:
(a) and (b) As of August 24, 1998, Mr. Herrick may be deemed to
beneficially own, on an individual basis before attribution of shares
beneficially owned as part of a "group" as described below, 1,893,950 shares of
Common Stock representing approximately 15.1% of the issued and outstanding
shares of Common Stock, calculated in accordance with Rule 13d-3 under the
Exchange Act (based on 12,505,480 shares of Common Stock issued and outstanding
following the consummation of the Reorganization, as reported by the Issuer).
Except as described in Item 4 above, Mr. Herrick has the sole power to vote and
the sole power to dispose of the 1,893,950 shares of Common Stock which he
beneficially owns.
To the extent that Mr. Herrick may be deemed to be a member of a "group"
with the EPHI Group, the HTD Group and the Gemini Group pursuant to Rule 13d-5
under the Exchange Act, Mr. Herrick may be deemed to beneficially own the shares
of Common Stock currently beneficially owned by (a) the EPHI Group consisting
of: Mr. Saloff (259,199 shares of Common Stock and options exercisable within 60
days of the date hereof to purchase 134,286 shares of Common Stock), Mr. Feldman
(895,410 shares of Common Stock and options exercisable within 60 days of the
date hereof to purchase 22,500 shares of Common Stock) and Paragon Capital
Corporation at Spear, Leeds & Kellogg, LLC (571,039 shares of Common Stock); (b)
the HTD Group consisting of: Mr. Sen (2,278,394 shares of Common Stock and
options exercisable within 60 days of the date hereof to purchase 361,966 shares
of Common Stock), Mr. Kaput (1,339,694 shares of Common Stock) and Mr. Kneipper
(1,339,694 shares of Common Stock); and (c) the Gemini Group, the members of
which do not currently beneficially own any shares, but will have the right to
convert certain partnership units in the Partnership into Common Stock beginning
on June 18, 1998, for which Mr. Herrick shares voting power pursuant to the
Master Agreement described in Item 4 above. As of August 24, 1998, the 7,202,182
shares of Common Stock beneficially owned by the EPHI Group and the HTD Group,
together with the 1,893,950 shares of Common Stock beneficially owned by Mr.
Herrick described above, represent approximately 69.8% of the issued and
outstanding shares of Common Stock, calculated in accordance with Rule 13d-3
under the Exchange Act (based on 12,505,480 shares of Common Stock issued and
outstanding following the consummation of the Reorganization, as reported by the
Issuer, plus the 134,286 shares of Common Stock issuable to Mr. Saloff upon
exercise of certain options, plus the 22,500 shares of
<PAGE> 6
SCHEDULE 13D
Common Stock issuable to Mr. Feldman upon exercise of certain options and plus
the 361,966 shares of Common Stock issuable to Mr. Sen upon exercise of certain
options, in each case which may be deemed to be beneficially owned by such
persons and which are deemed outstanding for purposes of this computation). Mr.
Herrick shares voting and dispositive power of the shares of Common Stock
beneficially owned by the EPHI Group and the HTD Group as described in Item 4
above, but has no other rights with respect to such shares and disclaims
beneficial ownership of such shares and the existence of a "group."
(c) Except as described in Item 4, Mr. Herrick has not affected any
transactions in the securities of the Issuer during the past 60 days.
ITEM 6 CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Item 6 of the Original Schedule 13D is hereby amended by adding the
following additional paragraph:
Reference is made to the Master Agreement, the Registration Rights
Agreement and the Letter Agreement described in Item 4 above.
ITEM 7 MATERIAL TO BE FILED AS EXHIBITS.
Item 7 of the Original Schedule 13D is hereby amended by adding the
following additional exhibit:
Exhibit 10: Form of Master Agreement, dated as of June 18, 1998, among HTD,
Gemini, the Issuer, EPi Sub, Mr. Herrick, the EPHI Group, the HTD
Group, and the Gemini Group, as amended on August 3, 1998.
Exhibit 11: Form of Registration Rights Agreement, dated as of June 28, 1998
among the Issuer, Mr. Herrick, the EPHI Group, the HTD Group and
the Gemini Group.
Exhibit 12: Letter Agreement, dated as of August 3, 1998, by and between
Messrs. Herrick and Feldman.
<PAGE> 7
SCHEDULE 13D
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
DATED: September 10, 1998 /s/ Norton Herrick
-----------------------
NORTON HERRICK
<PAGE> 1
Exhibit 10
MASTER AGREEMENT
THIS MASTER AGREEMENT (this "Agreement") is made as of June __, 1998,
among HEALTHTECH DEVELOPMENT, INC., a Texas corporation ("HTD"), GEMINI BIOTECH
L.P., a Texas limited partnership ("Gemini"), ELECTROPHARMACOLOGY, INC., a
Delaware corporation ("EPi"), EPi SUB INC., a Delaware corporation ("EPi Sub"),
the undersigned stockholders of EPi (the "the Pre-Closing EPi Stockholders"),
the undersigned stockholders of HTD (the "HTD Stockholders") and the undersigned
partners of Gemini (the "Gemini Partners") (the Pre-Closing EPi Stockholders,
the HTD Stockholders and the Gemini Partners are each referred to as an "Equity
Holder," and together, as the "Equity Holders").
RECITALS
A. Each Equity Holder owns or has the power to vote the number of
shares of the common stock, $.01 par value, of EPi ("EPi Common Stock") or
common stock, $.01 par value, of HTD ("HTD Common Stock") or partnership
interests of Gemini ("Gemini Interests") set forth next to his, her or its name
on the signature page of this Agreement (together with all shares of such stock
or interests in such partnership that the Equity Holder subsequently acquires or
obtains the power to vote, the "Equity Interests").
B. EPi has entered into a certain Asset Purchase Agreement with ADM
Tronics Unlimited, Inc. and AA Northvale Medical Associates, Inc. ("AA
Northvale"), dated May 27, 1998 (the "Asset Purchase Agreement"), pursuant to
which, INTER ALIA, EPi will assign certain of its assets to AA Northvale (the
"Assigned Assets") and AA Northvale will assume certain liabilities of EPi (the
"Assumed Liabilities").
C. EPi and EPi Sub have entered into a capital contribution agreement
dated June 18, 1998 (the "EPi Sub Capital Contribution Agreement"), pursuant to
which EPi will contribute all of its assets (other than the Assigned Assets) and
all of its liabilities (other than the Assumed Liabilities) to EPi Sub in
exchange for One Hundred shares of common stock, $.01 par value, of EPi Sub (the
"EPi Sub Common Stock").
D. EPi, EPi Sub and HTD have entered into a certain Agreement of Merger
and Plan of Reorganization dated June11, 1998 (the "Merger Agreement"), pursuant
to which HTD will be merged with and into EPi Sub (the "Merger") and the
stockholders of HTD will exchange their shares of HTD Common Stock for shares of
EPi Common Stock in accordance with the terms and conditions of the Merger
Agreement.
E. It is a condition to the obligations of EPi, EPi Sub and HTD under
the Merger Agreement that EPi, as the sole stockholder of EPi Sub, and the HTD
Stockholders shall have agreed to vote their shares of EPi Sub Common Stock and
HTD Common Stock, respectively, in favor of the Merger and the adoption of the
Merger Agreement.
F. EPi, EPi Sub and Gemini have entered into a certain Contribution
Agreement, dated June 18, 1998 (the "Gemini Health Technologies Contribution
Agreement"), pursuant to which EPi Sub and Gemini have agreed to transfer all of
their assets and liabilities to Gemini Health Technologies L.P., a Delaware
<PAGE> 2
limited partnership (the "Partnership") in exchange for Partnership Units in the
Partnership. Pursuant to the Unit Exchange Agreement to be entered into among
EPi, Gemini and the Partnership (the "Exchange Agreement"), Gemini shall have
certain rights to exchange its Partnership Units (the "Gemini Partnership
Units") for shares of EPi Common Stock.
G. It is a condition to the obligations of EPi Sub and Gemini under the
Gemini Health Technologies Contribution Agreement that EPi, as the sole
stockholder of EPi Sub, and the Gemini Partners shall have agreed to vote their
shares of EPi Sub Common Stock and Gemini Interests, respectively, in favor of
the transactions contemplated by the Gemini Health Technologies Contribution
Agreement.
H. This Agreement sets forth certain agreements of Ei, EPi Sub, HTD,
Gemini and the Equity Holders concerning (i) the approval of the transactions
contemplated by the Asset Purchase Agreement, the EPi Sub Capital Contribution
Agreement, the Merger Agreement and the Gemini Health Technologies Contribution
Agreement (collectively, the "Reorganization Transactions"), (ii) the election
of directors of EPi following the Reorganization Transactions, and (iii) certain
changes to the capitalization of EPi to be effected in connection with the
Reorganization Transactions, as described in Sections 4, 5 and 6 of this
Agreement (collectively, the "Capitalization Changes").
AGREEMENT
Accordingly, the parties agree as follows:
1. AGREEMENTS TO VOTE REGARDING THE REORGANIZATION TRANSACTIONS.
a. The Reorganization Transactions and the Capitalization Changes do
not require the approval or ratification of the shareholders of EPi
and it is not intended that the shareholders of EPi will be asked to
approve or ratify the Reorganization Transactions or the
Capitalization Changes. Nevertheless, if such approval or
ratification is at any time sought by EPi, each Pre-Closing EPi
Stockholder irrevocably agrees to vote his, her or its shares of EPi
Common Stock in favor of the approval or ratification of the
Reorganization Transactions and the Capitalization Changes at any
meeting of the stockholders of EPi at which any or all of the
Reorganization Transactions and/or the Capitalization Changes are
considered, or if applicable, in any consent concerning the approval
or ratification of any or all of the Reorganization Transactions
and/or the Capitalization Changes.
b. EPi and each HTD Stockholder irrevocably agrees to vote his, her or
its shares of EPi Sub Common Stock or HTD Common Stock, as
applicable, in favor of the adoption or ratification of the Merger
Agreement (including without limitation all schedules and exhibits
thereto as finalized pursuant to the provisions thereof) and the
approval or ratification of the Merger at any meeting of the
stockholders of EPi Sub or the stockholders of HTD, as applicable,
at which the Merger Agreement is considered, or if applicable, in
any consent concerning the Merger Agreement.
c. EPi and each Gemini Partner irrevocably agrees to vote his, her or
its shares of EPi Sub Common Stock or Gemini Interests, as
applicable, in favor of the approval or ratification of the Gemini
Health Technologies Contribution Agreement (including without
limitation all schedules and exhibits thereto as finalized pursuant
to the provisions thereof) at any
2
<PAGE> 3
meeting of the stockholders of EPi Sub or the partners of Gemini, as
applicable, at which the Gemini Health Technologies Contribution
Agreement is considered, or if applicable, in any consent concerning
the Gemini Health Technologies Contribution Agreement.
d. Each Equity Holder agrees to vote against the approval or
ratification of any proposal relating to a competing merger or
business combination involving the acquisition of EPi, EPi Sub, HTD
or Gemini, as applicable, or the purchase of all or a substantial
portion of the assets of EPi, EPi Sub, HTD or Gemini, as applicable,
other than as contemplated by the Reorganization Transactions.
e. EPi, EPi Sub, HTD, Gemini and each Equity Holder agrees to vote
against any transaction that is inconsistent with the obligations of
EPi, EPi Sub, HTD or Gemini, as applicable, to consummate the
Reorganization Transactions and the Capitalization Changes.
f. It is intended that the Reorganization Transactions shall be
consummated in the following order on the same day (the "Effective
Date"): (1) the transactions contemplated by the EPi Sub Capital
Contribution Agreement shall be consummated, (2) the transactions
contemplated by the Merger Agreement shall be consummated and the
Merger shall become effective, (3) the transactions contemplated by
the Gemini Health Technologies Contribution Agreement shall be
consummated, (4) the Capitalization Changes shall be consummated and
(5) the transactions contemplated by the Asset Purchase Agreement
shall be consummated; provided, however, that except as provided in
the two immediately subsequent sentences, it shall be deemed to be a
condition subsequent to each Reorganization Transaction that all
subsequent Reorganization Transactions, if any, are consummated and
no Reorganization Transaction shall be deemed to be consummated
unless all of the Reorganization Transactions have been consummated.
If, pursuant to Section 7(b), this Agreement terminates as to Gemini
and the Gemini Partners, the Reorganization Transactions (other than
those contemplated by the Gemini Health Technologies Contribution
Agreement) shall be consummated unless either HTD or EPi elects to
terminate this Agreement pursuant to Section 7(b). If, pursuant to
Section 7(b), this Agreement terminates as to HTD and the HTD
Stockholders, the Reorganization Transactions (other than those
contemplated by the Merger Agreement) shall be consummated unless
either Gemini or EPi elects to terminate this Agreement pursuant to
Section 7(b).
2. AGREEMENTS TO VOTE REGARDING BOARD OF DIRECTORS.
a. As of the Effective Date, the Board of Directors of EPi shall be
comprised of seven directors. Of such directors, two directors shall
be nominated (the "EPi Nominees") by a 75% supermajority vote of
Messrs. George Levine, Murray Feldman, David Saloff and Norton
Herrick, based on the number of shares of EPi held by each (the "EPi
Representatives"), two directors shall be nominated (the "HTD
Nominees") by majority vote of Messrs. Arup Sen, James Kaput and
Richard Kneipper, based on the number of shares of EPi held by each
(the "HTD Representatives"), two directors (the "Gemini Nominees")
shall be nominated by Gemini (the "Gemini Representative"), and the
Chief Executive Officer of EPi shall be nominated as a Director
unless otherwise determined by a majority vote of the EPi
Representatives, the HTD Representatives and the Gemini
Representative;
3
<PAGE> 4
provided, however, that if the number of members of the Board of
Directors of EPi shall be fixed by the board as a number other than
seven, the number of EPi Nominees, the number of HTD Nominees and
the number of Gemini Nominees shall be adjusted accordingly. The EPi
Representatives hereby nominate David Saloff and Murray Feldman as
the initial EPi Nominees, the HTD Representatives hereby nominate
Bernard Carrico and Richard Kneipper as the initial HTD Nominees and
the Gemini Representative hereby nominates Dr. Krishna Jayaraman and
Dr. Gary Wilcox as the initial Gemini Nominees.
b. Subject to the provisions of Subsection 2(c) below, each Pre-Closing
EPi Stockholder, HTD Stockholder, and Gemini (collectively, the
"Post-Closing EPi Stockholders") agrees at all times in any election
of directors of EPi, whether at a meeting of directors or
stockholders, by consent or otherwise, and in any election or action
to replace any director or fill vacancies occurring between annual
meetings, to vote the shares of EPi now or hereafter owned by him,
her or it for (i) the EPi Nominees, the HTD Nominees, and the Gemini
Nominees and (ii) Arup Sen as long as he continues to be the Chief
Executive Officer of EPi (unless otherwise determined by the EPi
Representatives, the HTD Representatives and the Gemini
Representative). All certificates evidencing EPi Common Stock issued
to the Post-Closing EPi Stockholders shall be legended as follows
(the "Legend"): "The Shares of EPi Common Stock represented by this
Certificate are subject to the Master Agreement dated as of June __,
1998, a copy of which is on file at the office of the Corporation."
Each Post-Closing EPi Stockholder currently holding certificates
representing shares of EPi Common Stock agrees to promptly exchange
such certificates for new certificates containing the Legend. The
Legend shall remain on such certificates until, pursuant to Section
2(f) or Section 7 of this Agreement, the Post-Closing EPi
Stockholder is no longer subject to Section 2 of this Agreement. The
provisions of this Section 2(b) shall be binding upon the
successors, assigns, designees and transferees of each Post-Closing
EPi Stockholder as if they were a signatory hereto.
c. Prior to each nomination of directors, the EPi Representatives, the
HTD Representatives and the Gemini Representative shall disclose to
EPi the identity of the EPi Nominees, the HTD Nominees and the
Gemini Nominees. In the event that the election of any EPi Nominee,
HTD Nominee or Gemini Nominee to the Board of Directors would
reasonably be expected to have a material adverse effect on the
operation, financial condition, properties or business of EPi in the
good faith judgment (as evidenced by a written summary of the
specific reasons therefor) of the non-nominating EPi
Representatives, HTD Representatives, or Gemini Representatives, as
the case may be, EPi and the Post-Closing EPi Stockholders shall not
be required to comply with their respective obligations under this
Agreement solely with respect to such EPi Nominee, HTD Nominee, or
Gemini Nominee, as the case may be, and the respective
representatives nominating the EPi Nominee, the HTD Nominee or the
Gemini Nominee, as the case may be, shall be entitled to name a
replacement for such nominee.
d. The EPi Representatives (by a 75% supermajority vote), the HTD
Representatives (by a majority vote) and the Gemini Representative,
as the case may be, may at any time and for any reason (or for no
reason) designate for removal any individual that is elected as a
director of EPi as a result of the nomination of such individual by
such Representatives. Each Post-Closing EPi Stockholder hereby
agrees to vote for or provide the required consent
4
<PAGE> 5
to effect a Removal contemplated by the immediately prior sentence.
If at any time a vacancy is created on the Board of Directors by
reason of the death, removal or resignation of a director, the EPi
Representatives, the HTD Representatives or the Gemini
Representatives, as the case may be, that nominated such director
shall be entitled to nominate an individual to fill such vacancy
until his or her successor is elected or qualified, and the
Post-Closing EPi Stockholders shall, as soon as practicable after
the date such vacancy first occurs and in any event prior to the
transaction of any other business by the Board of Directors, take
action to elect such nominee to fill such vacancy.
e. In order to effectuate the provisions of this Section 2, the
Post-Closing EPi Stockholders hereby agree that when any action or
vote is required to be taken by EPi or the shareholders of EPi
pursuant to this Section 2, the Post-Closing EPi Stockholders shall
each use his, her or its best efforts to call, or cause the
appropriate officers and directors of EPi to call, a stockholders'
meeting or to execute or cause to be executed a written consent
pursuant to Section 228(a) of the Delaware General Corporation Law
to effectuate such stockholder action.
f. Notwithstanding anything in this Agreement to the contrary, from and
after the date that any EPi Representative, any HTD Representative
or the Gemini Representative beneficially holds individually less
than two percent (2%) of the outstanding shares of EPi Common Stock
(or, in the case of Gemini, Partnership Units that are exchangeable
for such amount of shares of EPi Common Stock) and is not an officer
of EPi, such individual shall no longer be an EPi Representative, an
HTD Representative or a Gemini Representative entitled to
participate in the selection and nomination of the EPi Nominees, the
HTD Nominees or the Gemini Nominees, as the case may be, and shall
no longer be bound to vote his, her or its Equity Interests in
accordance with this Section 2. If, pursuant to this Section 2(f),
at any time there is no EPi Representative, no HTD Representative or
no Gemini Representative, then in any such case, the directors
nominated by such Representatives shall complete their term and
thereafter the Board of Directors of EPi shall be reduced by the
number of EPi Nominees, HTD Nominees or Gemini Nominees, as
applicable, and such directors shall no longer have any right
hereunder to be nominated as a director of EPi.
3. LIMITATION ON VOTING POWER. It is expressly understood and acknowledged
that nothing contained herein is intended to restrict any Post-Closing EPi
Stockholder from voting on any matter (other than the election of
directors of EPi) or otherwise from acting, in the Post-Closing EPi
Stockholder's capacity as a director or officer of EPi, EPi Sub, HTD,
Gemini, or the Partnership with respect to any matter, including but not
limited to, the management or operation of EPi, EPi Sub, HTD, Gemini, or
the Partnership.
4. CERTAIN AGREEMENTS WITH NORTON HERRICK.
a. As of the Effective Date, that certain Stockholders Agreement, dated
as of November 13, 1995, among EPi, Norton Herrick and David Saloff
and that certain Registration Rights Agreement dated as of November
13, 1995, between EPi and Norton Herrick shall each be terminated
and of no further force and effect.
5
<PAGE> 6
b. EPi and Mr. Herrick hereby agree to (i) the redemption of all of the
issued and outstanding shares of EPi Preferred Stock owned of record
by Mr. Herrick, and (ii) the redemption and cancellation of all
warrants to purchase shares of EPi Common Stock issued and
outstanding to Mr. Herrick and which are more fully described on
Schedule A attached hereto (the "Herrick EPi Warrants"), in exchange
for the issuance by EPi of 1,575,000 shares of EPi Common Stock to
Mr. Herrick (collectively, the "Herrick Redemption"). The Herrick
Redemption shall be effective on the Effective Date and at such
time, the shares of EPi Preferred Stock and any and all of the
Herrick EPi Warrants issued and outstanding shall be automatically
redeemed and converted without further action on the part of the
holder thereof into an aggregate of 1,575,000 shares of EPi Common
Stock. Each outstanding certificate evidencing EPi Preferred Stock
and the Herrick EPi Warrants not surrendered on the Effective Date
will as of the Effective Date be deemed for all purposes to be
canceled and no longer represent shares of EPi Preferred Stock or
warrants to purchase EPi Common Stock, but instead will represent
the right to receive that number of whole shares of EPi Common Stock
into or for which the shares of EPi Preferred Stock and the Herrick
EPi Warrants will be converted pursuant to this Section 4(b).
5. CERTAIN AGREEMENTS WITH MURRAY FELDMAN. EPi and Mr. Feldman hereby agree
to the redemption and cancellation of all warrants to purchase shares of
EPi Common Stock issued and outstanding to Mr. Feldman and which are more
fully described on Schedule A attached hereto (the "Feldman EPi
Warrants"), in exchange for the issuance by EPi of 160,000 shares of EPi
Common Stock to Mr. Feldman (collectively, the "Feldman Redemption"). The
Feldman Redemption shall be effective on the Effective Date and at such
time, any and all of the Feldman EPi Warrants issued and outstanding shall
be automatically redeemed and converted without further action on the part
of the holder thereof into an aggregate of 160,000 shares of EPi Common
Stock. Each outstanding certificate evidencing the Feldman EPi Warrants
not surrendered on the Effective Date will as of the Effective Date be
deemed for all purposes to be canceled and no longer represent warrants to
purchase EPi Common Stock, but instead will represent the right to receive
that number of whole shares of EPi Common Stock into or for which the
Feldman EPi Warrants will be converted pursuant to this Section 5.
6. CERTAIN AGREEMENTS WITH GEORGE LEVINE AND PARAGON CAPITAL CORP. AT SPEAR,
LEEDS & KELLOGG ("PARAGON CAPITAL"). EPi, George Levine, and Paragon
Capital hereby agree to the redemption and cancellation of all warrants to
purchase shares of EPi Common Stock issued and outstanding to Mr. Levine
and/or Paragon Capital and which are more fully described on Schedule A
attached hereto (collectively, the "Paragon EPi Warrants"), in exchange
for the issuance by EPi of an aggregate 90,000 shares of EPi Common Stock
to George Levine and Paragon Capital (collectively, the "Paragon
Redemption"). The Paragon Redemption shall be effective on the Effective
Date and at such time, any and all of the Paragon EPi Warrants issued and
outstanding shall be automatically redeemed and converted without further
action on the part of the holder thereof into an aggregate of 90,000
shares of EPi Common Stock. Each outstanding certificate evidencing the
Paragon EPi Warrants not surrendered on the Effective Date will as of the
Effective Date be deemed for all purposes to be canceled and no longer
represent warrants to purchase EPi Common Stock, but instead will
represent the right to receive that number of whole shares of EPi Common
Stock into or for which the Paragon EPi Warrants will be converted
pursuant to this Section 6.
6
<PAGE> 7
7. TERMINATION.
a. Subject to earlier termination as provided in Section 7(b), this
Agreement shall terminate if the Effective Date has not occurred on
or before August 31, 1998.
b. If the Merger Agreement is terminated in accordance with Article X
of the Merger Agreement, this Agreement will terminate as to HTD and
the HTD Stockholders at the time of such termination (a "Partial
Termination") and this Agreement may be terminated by either EPi or
Gemini (a "Complete Termination"). If the Gemini Health Technologies
Contribution Agreement is terminated in accordance with Article X of
the Gemini Health Technologies Contribution Agreement, this
Agreement will terminate as to Gemini and the Gemini Partners at the
time of such termination (a "Partial Termination") and this
Agreement may be terminated by either HTD or EPi (a "Complete
Termination"). In the event of a Partial Termination pursuant to
this Section 7(b), there shall be five (5) directors pursuant to
Section 2(a) and the parties as to which this Agreement terminates
(and their respective Representatives) shall not have the right to
nominate directors of EPi.
c. In the event of the termination of this Agreement pursuant to
Section 7(a) or 7(b), Sections 4, 5 and 6 of this Agreement shall
likewise be of no force and effect.
d. From and after the Effective Date, the provisions of this Agreement
(other than Section 1, which shall have expired pursuant to its
terms), shall terminate on the earlier of (a) two years from the
Effective Date, or (b) the date on which the market capitalization
of EPi equals or exceeds Forty Million Dollars ($40,000,000) for any
period of twenty (20) trading days within any six (6) month period;
PROVIDED, HOWEVER, the provisions of Sections 4, 5 and 6 of this
Agreement shall survive the termination of this Agreement pursuant
to this Section 7(d).
8. REPRESENTATIONS, WARRANTIES, AND ADDITIONAL COVENANTS. Each Equity Holder
and each Post-Closing EPi Stockholder hereby represents and warrants that
such Equity Holder or Post-Closing EPi Stockholder has the capacity and
all necessary power and authority to vote the Equity Interests or shares
of EPi Common Stock owned by it, as applicable, and that this Agreement
constitutes a legal, valid, and binding obligation of the Equity Holder or
Post-Closing EPi Stockholder, enforceable in accordance with its terms,
except as may be limited by bankruptcy, insolvency, or similar laws
affecting enforcement of creditors rights generally. Each Equity Holder
further agrees that from the date hereof until the Effective Date or until
the earlier termination of this Agreement pursuant to Section 7 of this
Agreement, such Equity Holder will not sell or otherwise voluntarily
dispose of any of the Equity Interests that are owned by such Equity
Holder or take any other voluntary action that (i) would have the effect
of removing such Equity Holder's obligations under this Agreement with
respect to such Equity Holder's Equity Interests or (ii) would be
inconsistent with this Agreement; PROVIDED, HOWEVER, that this sentence of
Section 8 shall not apply to (i) Paragon Capital, (ii) the HTD
Stockholders if this Agreement terminates as to HTD and the HTD
Stockholders pursuant to Section 7(b) or (iii) the Gemini Partners if this
Agreement terminates as to Gemini and the Gemini Partners pursuant to
Section 7(b). EPi, EPi Sub, HTD and Gemini each hereby represents and
warrants that it has the capacity and all necessary power and authority to
enter into this Agreement, that it has taken all necessary action to enter
into and perform its obligations pursuant to this Agreement, and
7
<PAGE> 8
that this Agreement constitutes its legal, valid, and binding obligation,
enforceable against it in accordance with its terms, except as may be
limited by bankruptcy, insolvency, or similar laws affecting enforcement
of creditors rights generally.
9. REPRESENTATIONS, WARRANTIES AND ADDITIONAL COVENANTS OF EPI AND THE
POST-CLOSING EPI STOCKHOLDERS. The shares of EPi Common Stock to be issued
pursuant to Sections 4, 5 and 6 above, when issued, will be duly
authorized, validly issued, fully paid and non-assessable. EPi shall use
its reasonable best efforts to register as promptly as practicable after
the Effective Date, the shares of EPi Common Stock issued pursuant to the
Merger Agreement, the shares of EPi Common Stock into which the Gemini
Partnership Units are exchangeable pursuant to the Exchange Agreement and
the shares of EPi Common Stock issued pursuant to the Herrick Redemption,
the Feldman Redemption, and the Paragon Redemption, in accordance with the
Registration Rights Agreement attached hereto as Exhibit A.
Notwithstanding anything to the contrary contained in this Section 9, no
shares of EPi Common Stock covered by Section 10 of this Agreement may be
offered, sold or otherwise disposed of (i) in contravention of Section 10
of this Agreement or (ii) unless the transferee agrees in writing to be
bound by the provisions of this Agreement as if he, she or it were a
signatory hereto.
10. LOCK-UP OF SALE OF EQUITY INTERESTS OF EPI COMMON STOCK. Each of the
Post-Closing EPi Stockholders (other than Paragon Capital) hereby
irrevocably agrees that he, she or it will not, directly or indirectly,
without the prior written consent of each of the other Equity Holders
(other than Paragon Capital), for a period of 365 days after the Effective
Date, sell, offer to sell, contract to sell, pledge, grant any option for
the sale of or otherwise transfer or dispose of, or cause the disposition
of (or agree to do any of the foregoing), any shares of EPi Common Stock
(i) received in the Merger, the Herrick Redemption, the Feldman Redemption
or the Paragon Redemption that are issued to Mr. Levine or (ii) issued
pursuant to the Exchange Agreement, other than any pledge of such shares
in connection with a bona fide loan transaction where the pledgee takes
any such shares of EPi Common Stock subject to this Section 10, except
that such shares of EPi Common Stock may be sold for the account of the
Post-Closing EPi Stockholder if the amount of all shares of EPi Common
Stock sold for the account of such Post-Closing EPi Stockholder within the
preceding three months shall not exceed the greater of
(i) One percent of the shares of EPi Common Stock outstanding as
shown by the most recent report or statement filed with the
Securities and Exchange Commission by EPi; or
(ii) The average weekly reported volume in trading in such
securities reported through the automated quotation system of
a registered securities association during the four calendar
weeks preceding the date of placing the order to execute the
transaction with the broker or the date of execution of the
transaction directly with a market maker; or
(iii) The average weekly volume of trading in such securities
reported through the consolidated transaction reporting system
contemplated by Rule 11Aa3-1 under the Securities Exchange Act
of 1934 (Section 240.11A3-1) during the four-week period
specified in paragraph (ii) of this Section.
8
<PAGE> 9
Prior to the expiration of such 365-day period, the undersigned will not
announce or disclose any intention to do anything after the expiration of
such period that the undersigned is prohibited, as provided in the
preceding sentence, from doing during such period except as required by
applicable law.
11. SPECIFIC PERFORMANCE. Each of the undersigned acknowledges that damages
would be an inadequate remedy for any breach of the provisions of this
Agreement and agrees that the obligations of the Equity Holders and
Post-Closing EPi Stockholders hereunder shall be specifically enforceable
and that each party hereto shall be entitled to injunctive or other
equitable relief upon such a breach by any other party hereto or such
party's transferees or assigns. Each Equity Holder and Post-Closing EPi
Stockholder further agrees, on behalf of itself and its transferees and
assigns, to waive any bond in connection with the obtaining of any such
injunctive or equitable relief. This provision is without prejudice to any
other rights that each party hereto may have against another party hereto
for any failure to perform his, her or its obligations under this
Agreement.
12. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware, without regard to its
conflicts of laws principles. Each Equity Holder and each Post-Closing EPi
Stockholder agrees that the provisions of this Agreement shall be binding
also upon the successors, assigns, transferees, heirs and personal
representatives of the such Equity Holder or Post-Closing EPi Stockholder.
13. COUNTERPART AND FACSIMILE SIGNATURES. This Agreement may be executed in
multiple counterparts, each of which will be deemed to be an original, and
all such counterparts will constitute but one instrument. This Agreement
may be executed by any party hereto by facsimile, and each such executed
counterpart shall be deemed to be validly executed and enforceable against
each such party in accordance with its terms.
[INTENTIONALLY LEFT BLANK]
9
<PAGE> 10
IN WITNESS WHEREOF, the undersigned have executed this Equity Holder
Agreement as of the day and year first above written.
<TABLE>
<S> <C>
ELECTROPHARMACOLOGY, INC. HEALTHTECH DEVELOPMENT, INC.
By: By:
--------------------------------- -------------------------------
Its: Its:
-------------------------------- ------------------------------
GEMINI BIOTECH L.P. EPI SUB INC.
By: By:
--------------------------------- -------------------------------
Its: Its:
-------------------------------- ------------------------------
PRE-CLOSING EPI STOCKHOLDERS:
By: By:
---------------------------------------- --------------------------------------------
David Saloff George Levine
(259,199 shares of EPi Common Stock) (25,000 shares of EPi Common Stock)
20TH CENTURY ASSOCIATES: PARAGON CAPITAL AT
SPEAR, LEEDS & KELLOGG:
By: By:
---------------------------------------- --------------------------------------------
John Banas, President George Levine, Chairman
(250,000 shares of EPi Common Stock) (604,104 shares of EPi Common Stock)
By: By:
---------------------------------------- --------------------------------------------
Norton Herrick Murray Feldman
(318,950 shares of EPi Common Stock and (692,361 shares of EPi Common Stock)
242,950 shares of EPi Preferred Stock)
HTD STOCKHOLDERS:
- ------------------------------------------- ----------------------------------------------
Arup Sen James Kaput
( shares of HTD Common Stock) ( shares of HTD Common Stock)
----------- -----------
- -------------------------------------------
Richard Kneipper
( shares of HTD Common Stock)
GEMINI PARTNERS:
- ------------------------------------------- ----------------------------------------------
Krishna Jayaraman (_% Partnership Interest) Shashikala Jayaraman (_% Partnership Interest)
GEMINI BIOTECH INC.
By:
---------------------------------
Its:
--------------------------------
</TABLE>
10
<PAGE> 11
SCHEDULE A
OUTSTANDING EPi WARRANTS TO BE REDEEMED AND CANCELED
<TABLE>
<CAPTION>
Number of
Original Equity
Issue Interests (Post- Exercise Expiration
Date Issued To split) Price Date Registration Rights/Other Terms
=============== ===================== ================ ============ ============== =====================================
<S> <C> <C> <C> <C> <C>
08/04/93 M. Feldman 11,622 5.03 08/04/98 Yes (in pre-split agreement only)
05/25/94 M. Feldman 38,741 5.03 05/25/99 Yes (in pre-split agreement only)
09/20/94 M. Feldman 23,244 5.03 09/20/99 Yes (in pre-split agreement only)
05/19/95 Paragon Capital 125,000 7.00 05/12/00 Yes; Section 3.2 - cashless exercise
05/19/95 Paragon Capital 62,500 6.00 05/12/00 Yes; Section 3.2 - cashless exercise
11/21/95 M. Feldman 300,000 6.25 11/21/00 Yes
11/13/95 N. Herrick 800,000 6.00 11/13/05 Yes
11/13/95 N. Herrick 250,000 7.50 11/13/05 Yes
11/13/95 N. Herrick 250,000 9.00 11/13/05 Yes
- --------------- --------------------- ---------------- ------------ -------------- -------------------------------------
</TABLE>
OUTSTANDING EPi PREFERRED EQUITY INTERESTS TO BE REDEEMED AND CANCELED
<TABLE>
<CAPTION>
Original Number of Equity
Issue Date Issued To Interests (Post-split) Exercise Price Expiration Date
================= ========================== =========================== ==============================================
<S> <C> <C>
11/13/95 N. Herrick 242,950 N/A N/A
- ----------------- -------------------------- --------------------------- ----------------------------------------------
</TABLE>
11
<PAGE> 12
SCHEDULE A-1
CERTAIN EPi WARRANTS
<TABLE>
<CAPTION>
TOTAL NUMBER
ORIGINAL NUMBER OF OF COMMON
ISSUE SHARES EXERCISE EXPIRATION SHARES TO
DATE ISSUED TO (POST-SPLIT) PRICE DATE BE ISSUED
- -------------- ----------------------- ----------------- ------------------- --------------- --------------------
<S> <C> <C> <C> <C> <C>
08/04/93 Murray Feldman 11,622 5.03 08/04/98
05/25/94 38,741 5.03 05/25/99
09/20/94 23,244 5.03 09/20/99
11/21/95 300,000 6.25 11/21/00 160,000
05/19/95 Paragon Capital 125,000 7.00 05/12/00
05/19/95 62,500 6.00 05/12/00 90,000
11/13/95 Norton Herrick 800,000 6.00 11/13/05
11/13/95 250,000 7.50 11/13/05
11/13/95 250,000 9.00 11/13/05 1,575,000*
12/15/95 MESA Consulting 100,000 5.79 12/15/00 47,000
----------- -----------
Total 1,961,107 1,872,000
============== ======================= ================== =================== ================ ======================
</TABLE>
- ----------
* Including Common Shares to be issued upon conversion of 242,950 shares of
Preferred Stock currently held by Mr. Herrick.
12
<PAGE> 13
FIRST AMENDMENT TO MASTER AGREEMENT
THIS FIRST AMENDMENT TO THE MASTER AGREEMENT ("Master Agreement") made
as of June __, 1998, among HEALTHTECH DEVELOPMENT, INC., a Texas corporation
("HTD"), GEMINI BIOTECH L.P., a Texas limited partnership ("Gemini"),
ELECTROPHARMACOLOGY, INC., a Delaware corporation ("EPi"), EPI HEALTHTECH INC.,
a Delaware corporation ("EPi Sub"), certain stockholders of EPi, certain
stockholders of HTD and the partners of Gemini (the "Gemini Partners") is made
as of August __, 1998, among EPi, EPi SUB, GEMINI AND THE GEMINI PARTNERS.
RECITALS
A. EPi, EPi Sub, Gemini, and the Gemini Partners have agreed that it is
in the best interests of the parties hereto that the Gemini Health Technologies
Contribution Agreement be modified to provide that in lieu of Gemini agreeing to
contribute all its assets and liabilities to the Partnership in exchange for
Partnership Units in the Partnership, Krishna and Shashikala Jayaraman
(collectively, the "Jayaramans") have agreed to contribute all of their
partnership interests in Gemini and 100% of the stock of Gemini Biotech, Inc.
("AGBI") to the Partnership in exchange for Partnership Units in the
Partnership.
B. EPi, EPi Sub, Gemini and the Gemini Partners have also agreed that
the it is in the best interests of the parties hereto that the Unit Exchange
Agreement entered into among EPI, Gemini and the Partnership be modified so that
the Jayaramans, in lieu of Gemini, shall have certain rights to exchange their
Partnership Units for shares of EPI Common Stock.
C. This First Amendment to the Master Agreement (the "Amendment")
amends certain agreements of EPi, EPi Sub, Gemini and the Gemini Partners
concerning the election of directors of EPi following the Reorganization
Transactions to provide for the nomination of the two Gemini Nominees by the
Jayaramans in lieu of Gemini.
IT IS HEREBY AGREED:
1. Section 2. AGREEMENTS TO VOTE REGARDING BOARD OF DIRECTORS of the
Master Agreement is hereby amended in subsection (a) thereof to replace the
phrase, "two directors (the "Gemini Nominees") shall be nominated by Gemini (the
"Gemini Representative")" with the phrase, "two directors (the "Gemini
Nominees") shall be nominated by Krishna Jayaraman and Shashikala Jayaraman (the
Gemini Representatives")."
2. In Section 2(f), the word "Gemini" shall be replaced with the words
"Gemini Representatives."
<PAGE> 14
3. Whenever the words "Gemini Representative" appear in the agreement,
they shall be replaced with the words "Gemini Representatives."
4. Terms used in this Amendment shall have the same meaning ascribed to
them in the Master Agreement. Other than the specific changes noted herein, all
other terms and conditions of the Master Agreement still remain in force and
effect.
ALL IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
day and year first above written.
ELECTROPHARMACOLOGY, INC. EPI HEALTHTECH INC.
By: By:
-------------------------------- --------------------------------
Its: Its:
------------------------------- -------------------------------
GEMINI BIOTECH L.P.
By:
--------------------------------
Its:
-------------------------------
GEMINI PARTNERS
- --------------------------------------------
KRISHNA JAYARAMAN (49% Partnership Interest)
- --------------------------------------------
SHASHIKALA JAYARAMAN (49% Partnership Interest)
- --------------------------------------------
GEMINI BIOTECH INC. (2% Partnership Interest)
By:
--------------------------------
Its:
-------------------------------
<PAGE> 1
Exhibit 11
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated as of July ______, 1998, is
made by and between Electropharmacology, Inc., a Delaware corporation (the
"Company") and the Holders (as hereinafter defined).
The parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms have the
following respective meanings:
"AGREEMENT" means this Registration Rights Agreement.
"BUSINESS DAY" means a day other than a Saturday, Sunday, or New York
State holiday or other day on which commercial banks in New York City are
authorized or required by law to close.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means Common Stock, par value $.01 per share, of the
Company.
"COMPANY" shall have the meaning set forth in the preamble and shall
include the Company's successors.
"COMPANY BOARD" means the Board of Directors of the Company.
"COMPANY CERTIFICATE" shall have the meaning assigned thereto in Section
6.
"COMPANY INDEMNITEE" shall have the meaning assigned thereto in Section
11.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, or any successor
thereto, as the same shall be amended from time to time.
"EXCHANGE ACT DOCUMENTS" shall have the meaning assigned thereto in
Section 5.4(a)(vi).
"HOLDER" means those persons whose names are set forth on Schedule A
hereto.
"HOLDER INDEMNITEE" shall have the meaning assigned thereto in Section 11.
"INDEMNIFIED PERSON" means a Holder Indemnitee or Company Indemnitee.
"INDEMNIFYING PERSON" shall have the meaning assigned thereto in Section
12.
"PERSON" means a natural person, partnership (whether general or limited),
limited liability company, trust, estate, association, corporation,
custodian, nominee or any other individual or entity in its own or any
representative capacity.
<PAGE> 2
"PROCESS AGENT" shall have the meaning assigned thereto in Section 19.
"REGISTERABLE SECURITIES" means those shares of Common Stock set forth
next to the name of each Holder on Schedule A; PROVIDED, that if
nationally recognized securities counsel to the Company delivers to the
Company a written legal opinion to the effect that any particular shares
of Common Stock may be disposed of by the Holder thereof in the manner
proposed by such Holder without registration under the Securities Act in
accordance with Rule 144(k) thereunder, such shares of Common Stock shall
not be Registerable Securities.
"RULE 144" shall have the meaning assigned thereto in Section 9.
"SECURITIES ACT" means the Securities Act of 1933, or any successor
thereto, as the same shall be amended from time to time.
"SUSPENSION NOTICE" shall have the meaning assigned thereto in Section
4(c).
2. INTERPRETATION. The following provisions shall govern the interpretation
of this Agreement:
(a) The singular form of any word used herein, including the terms
defined in Section 1.1, shall include the plural, and vice versa,
unless the context otherwise requires. The use herein of a pronoun
of any gender shall include correlative words of the other gender.
(b) Unless otherwise expressly indicated, all references herein to
"ARTICLES," "SECTIONS" and other subdivisions hereof are to the
corresponding Articles, Sections or subdivisions of this Agreement;
and the words "herein," "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, Section or subdivision hereof.
(c) The headings or titles of the several Articles and Sections hereof,
and any table of contents appended to copies hereof, shall be solely
for convenience of reference and shall not affect the meaning,
construction or effect of this Agreement.
(d) Each reference herein to any agreement, instrument or other document
shall mean such agreement, instrument or document as from time to
time amended, modified or supplemented in accordance with the terms
hereof and thereof. The term "including" shall be construed to mean
"including but not limited to."
3.1 REGISTRATION. The Company shall (a) file with the Commission as soon as
reasonably practicable a Registration Statement (the "Registration
Statement") on Form S-1 to register the Registerable Securities in
connection with their sale by the Holders and (b) use its reasonable
efforts to have the Registration Statement declared effective by the
Commission and remain continuously effective for a period of not less than
one (1) year or, if earlier, until the date on which all Registerable
Securities covered by such registration have been disposed of by the
Holders either pursuant to the Registration Statement or otherwise;
provided, that the Company shall use its reasonable efforts to regain its
eligibility to use Form S-3 and thereafter to refile the Registration
Statement on Form S-3 and maintain its effectiveness until all of the
Holders can resell their shares under Rule 144(k). Such one (1) year
period shall be extended by (A) the period that any Suspension Notice is
in effect under
2
<PAGE> 3
Section 4(c) and (B) the period that any deferral is in effect under
Section 6. The Company further agrees that if permitted by the rules and
regulations of the Commission, the registration contemplated by this
Section 3 shall be made pursuant to Rule 415 of the Securities Act. In the
event of an underwritten public offering of the Registrable Securities, if
the underwriters of such offering advise the Company and the Holders in
writing that in their opinion the amount of the Registrable Securities to
be included in such offering would adversely affect the success of such
offering, then the Company shall include, on behalf of such Holders, only
the amount of Registrable Securities that in the opinion of such
underwriters, can be sold without any such adverse affect, and such
securities shall be allocated pro rata among all such Holders. Following
the period of effectiveness set forth in this Section 3.1 above, at the
request of any Holder, the Company shall keep the Registration Statement
effective, subject to the other terms and conditions of this Agreement, so
long as such Holder (and any other Holders that desire for the
Registration Statement to remain effective) pays to the Company the cost
of maintaining the effectiveness of such Registration Statement, which
costs shall include the cost of legal fees to amend or supplement the
Registration Statement, accounting fees related to obtaining the auditors'
consent and any filing fees related thereto, but which costs shall not
include any costs required to keep the Company in compliance with the
reporting requirements of the Exchange Act. All Holders who desire to pay
the costs to keep the Registration Statement effective shall share such
costs on a pro rata basis based on the number of shares of Common Stock
covered by the Registration Statement, and the Company shall not be
required to keep the Registration Statement effective with respect to any
shares of any Holder who does not agree to pay such costs.
3.2 PIGGYBACK REGISTRATION. In the event that the Registration Statement
required by Section 3.1 is no longer effective, the Company agrees that
whenever it proposes to file a registration statement (other than a
registration statement on Form S-4 or S-8 or any successor forms) for the
registration of securities of the Company to be sold by the Company or any
other Person for cash, it will, at least 15 days prior to such filing,
give written notice to all Holders of its intention to do so and, upon the
written request of a Holder given within 10 days after the Company
provides such notice (which request shall state the number and intended
method of disposition of such Registrable Securities), the Company shall
use its best efforts to cause all Registrable Securities which the Company
has been requested by such Holder to be registered under the Securities
Act to the extent necessary to permit their sale or other disposition in
accordance with the intended methods of distribution specified in the
request of such Holder; PROVIDED, HOWEVER, that the Company shall have the
right to postpone or withdraw any registration effected pursuant to this
Section 3.2 without any obligation to any Holder whatsoever. In the event
of an underwritten public offering of the Registrable Securities, if the
underwriters of such offering advise the Company and the Holders in
writing that in their opinion the amount of the Registrable Securities to
be included in such offering would adversely affect the success of such
offering, then the Company shall include, on behalf of such Holders, only
the amount of Registrable Securities that in the opinion of such
underwriters, can be sold without any such adverse affect, and such
securities shall be allocated pro rata among all such Holders.
3
<PAGE> 4
4. REGISTRATION STATEMENT.
(a) In connection with the obligations of the Company under Section 3, the
Company shall:
(i) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus
as may be necessary to maintain the effectiveness of the
Registration Statement for the period required by Section 3
and to comply with the provisions of the Securities Act with
respect to the sale or other disposition of the Registrable
Securities covered by the Registration Statement;
(ii) for a reasonable period prior to the filing of the
Registration Statement, and throughout the period of
effectiveness required by Section 3 upon reasonable notice,
make available for inspection by a representative of the
Holders, any underwriter participating in any distribution
pursuant to the Registration Statement, and any attorney or
accountant designated by the Holders, at a reasonable time and
in a reasonable manner, financial and other information and
books and records of the Company, and cause the officers,
directors and employees of the Company to respond to such
inquiries and supply information reasonably requested by any
such representative, underwriter, attorney or accountant in
the course of conducting a reasonable investigation within the
meaning of Section 11(b) of the Securities Act; PROVIDED,
HOWEVER, that such representatives, attorneys or accountants
shall be acceptable to the Company in its judgment reasonably
exercised and shall agree to enter into written
confidentiality agreements acceptable to the Company regarding
any records, information or documents that are designated by
the Company as confidential unless such records, information
or documents are available to the public or disclosure of such
records, information or documents is required by court or
administrative order after the exhaustion of appeals therefrom
and to use such information obtained pursuant to this
provision only in connection with the transaction for which
such information was obtained, and not for any other purpose;
(iii) promptly advise the Holders, and the managing underwriter or
underwriters, if any, and confirm such advice in writing when,
to its knowledge, (A) the Registrable Securities or supplement
or post-effective amendment has been declared or becomes
effective, (B) the Commission has issued any stop order
suspending the effectiveness of the Registration Statement or
has initiated or threatened any proceedings for that purpose,
(C) the qualification of the Registrable Securities for sale
in any jurisdiction has been suspended or any proceeding for
such purpose has been initiated or threatened, or (D) any
event has occurred that makes any statement made in the
Registration Statement or the related prospectus untrue in any
material respect or that requires the making of any changes in
the Registration Statement or prospectus in order to make the
statements therein not misleading;
(iv) upon the occurrence of any event contemplated by Section
4(a)(iii)(D) hereof, use its reasonable efforts , as promptly
as possible, to prepare and distribute to the Holders, and the
managing underwriter or underwriters, if any, and file with
the Commission, as applicable, a supplement or post-effective
amendment to the Registration Statement or the prospectus
contained therein or any document incorporated therein by
reference or distribute or file any other required document so
that, as thereafter delivered to the purchasers of the
Registrable Securities, such prospectus will not contain any
untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein not
misleading;
4
<PAGE> 5
(v) use its reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto at the
earliest practicable date;
(vi) provide copies of any prospectus, any amendment to the
Registration Statement or amendment or supplement to any
prospectus or any document that is to be incorporated by
reference into the Registration Statement or any prospectus
after initial filing of the Registration Statement, a
reasonable time prior to the filing of any such prospectus,
amendment, supplement or document, to the Holders and
underwriters, if any, and make the representatives of the
Company available on a reasonable basis if reasonably
requested by the Holders; PROVIDED that the requirements of
this paragraph shall not apply to documents filed pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (the
"EXCHANGE ACT DOCUMENTS"); and PROVIDED FURTHER that the
Company shall promptly notify Holders of the filing of any
Exchange Act Documents except for such Exchange Act Documents
specifically related to the offering of other securities and
not to the Registerable Securities;
(vii) furnish to each Holder and to each underwriter and selling
agent, if any, at the expense of the Holders as many copies of
the prospectus, including each preliminary prospectus, and any
amendment or supplement thereto and such other documents as
such Holder or managing underwriter may reasonably request, in
order to facilitate the public sale or other disposition of
the Registrable Securities;
(viii) use its reasonable efforts to (A) register or qualify the
Registrable Securities to be included in the Registration
Statement under such securities laws or blue sky laws of such
jurisdictions as any Holders and each placement or sales
agent, if any, therefor and each underwriter, if any, thereof
shall reasonably request in writing on a timely basis, (B)
take any and all other actions as may be reasonably necessary
or advisable to enable each such holder, agent if any, and
each underwriter, if any, to consummate the disposition in
such jurisdictions of the Registrable Securities; PROVIDED
that the Company shall not be required for any such purpose to
(A) qualify as a foreign corporation or foreign limited
partnership in any jurisdiction wherein it would not otherwise
be required to qualify but for the requirements of this
paragraph 4(a)(viii), (B) file a general consent to service of
process in any such jurisdiction, (C) subject itself to
taxation in any jurisdiction where it is not already subject
to taxation or (D) make any changes to its Certificate of
Incorporation or Bylaws, or any agreement between it and its
stockholders;
(ix) use its reasonable efforts to obtain the consent or approval
of each governmental agency or authority, whether federal,
state or local, that may be required to effect the
registration or the offering or sale in connection therewith
or to enable the Holders to offer, or to consummate the
disposition of, their Registrable Securities;
(x) furnish to each Holder, without charge, at least three (3)
conformed copies of the Registration Statement and any
post-effective amendment thereto (without documents
incorporated therein by reference or exhibits thereto, unless
requested);
5
<PAGE> 6
(xi) cooperate with the Holders and the managing underwriters, if
any, to facilitate the timely preparation and delivery of
certificates representing the Registrable Securities to be
sold, which shall not bear any restrictive legends; and, in
the case of an underwritten offering, enable such Registrable
Securities to be in such denominations and registered in such
names as the managing underwriters may request at least two
Business Days prior to any sale of the Registrable Securities;
and
(xii) enter into and deliver all such customary agreements
(including underwriting or purchase agreements), documents and
take such other actions (including causing the delivery of
opinions of counsel and "comfort" letters of independent
certified public accountants) as are reasonably requested of
the Company to expedite or facilitate the disposition of the
Registrable Securities.
(b) Each Holder shall provide the Company with all assistance reasonably
necessary for the Company to comply with its obligations under this
Agreement. Without limiting the generality of the foregoing
provision, the Holders shall cause any entity that is controlled by
one or more of them, individually or together, to use all reasonable
efforts to provide the financial statements and other information
about such entity that is required to be included in the
Registration Statement.
(c) Each Holder, upon receipt of any (i) notice from the Company of the
happening of any event of the kind described in Section 4(a)(iii)
(B), (C) or (D), (ii) notice from the Company that it is in
possession of material information that has not been disclosed to
the public and the Company reasonably deems it to be advisable not
to include such information in the Registration Statement or (iii)
notice from the Company that it is in the process of an underwritten
registered offering of securities and the Company reasonably deems
it to be advisable, based on the written request of the managing
underwriter thereof, to have Holders temporarily discontinue
distribution of the Registrable Securities pursuant to the
Registration Statement (in each case, such notice being hereinafter
referred to as a "SUSPENSION NOTICE"), such Holder will forthwith
discontinue distribution of the Registrable Securities pursuant to
the Registration Statement and shall not be entitled to the benefits
provided in this Agreement with respect to any sales made by it in
contravention of this subsection, until such Holder's receipt of the
copies of the supplemented or amended prospectus or a notice from
the Company that any order suspending the effectiveness of the
Registration Statement has been withdrawn, or, in the case of (ii)
or (iii) above, until further notice from the Company that
disposition of Registerable Securities may resume, which shall be,
in the case of (ii) above, a date no later than ninety (90) days
after receipt of such notice, or, in the case of (iii) above, until
a date no later than thirty (30) days after the date on which such
offering is completed. Any Suspension Notice must be based upon a
good faith determination of the Company Board that such Suspension
Notice is reasonably necessary. In the case of a Suspension Notice,
if so directed by the Company, each Holder shall deliver to the
Company all copies in its possession, other than permanent file
copies then in such Holder's possession, of the prospectus covering
the offer and sale of the Registrable Securities that is current at
the time of receipt of such notice. If the Company shall give any
such notice to suspend the distribution of the Registrable
Securities pursuant to any Registration Statement, the Company shall
extend the period during which the
6
<PAGE> 7
Registration Statement shall be maintained effective pursuant to
this Agreement by the number of days during the period from and
including the date of the giving of such notice to and including the
date when the Holders shall have received copies of the supplemented
or amended prospectus necessary to resume such dispositions or
received notice from the Company that any order suspending
dispositions of the Registrable Securities has been withdrawn.
(d) Each Holder shall (i) furnish in writing to the Company such
information regarding such Holder and such Holder's intended method
of distribution of its Registrable Securities as the Company may
from time to time reasonably request in writing, and (ii) enter into
and deliver all such customary agreements (including underwriting or
purchase agreements) and documents (including legal opinions) as are
reasonably requested of such Holder to expedite or facilitate the
disposition of its Registrable Securities. Each such Holder shall
notify the Company as promptly as practicable of any inaccuracy or
change in information previously furnished by such Holder to the
Company or of the occurrence of any event in either case as a result
of which any prospectus relating to such registration contains or
would contain an untrue statement of a material fact regarding such
Holder or such Holder's intended method of distribution of its
Registrable Securities or omits to state any material fact regarding
such Holder or such Holder's intended method of distribution of its
Registrable Securities required to be stated therein or necessary to
make the statements therein not misleading and promptly to furnish
to the Company any additional information required to correct and
update any previously furnished information or otherwise required so
that such prospectus shall not contain, with respect to such Holder
or the distribution of its Registrable Securities, 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 not misleading. Each such Holder shall comply with the
provisions of the Securities Act and the Exchange Act applicable to
such Holder with respect to the disposition by such Holder of the
Registrable Securities covered by the Registration Statement in
accordance with the intended methods of disposition by such Holder
set forth in the Registration Statement.
5. REGISTRATION OF ADDITIONAL SECURITIES. The Registration Statement may, in
addition to the Registrable Securities, include other securities for sale
for the Company's own account or for the account of any other Person.
6. REGISTRATION DEFERRAL PERIOD. If the Company shall furnish to the Holders
a certificate (the "COMPANY CERTIFICATE") signed by the Chief Executive
Officer of the Company stating that, in the good faith judgment of the
Company Board, acting reasonably and in the best interest of the Company,
it would be detrimental to the Company and its stockholders for the
Holders to sell the Registrable Securities under any such Registration
Statement and it is therefore necessary to suspend the ability of the
Holders to sell the Registrable Securities under the Registration
Statement, the ability of such Holders to sell the Registrable Securities
shall be suspended, for a period of not more than an aggregate of ninety
(90) days from the date of the Company Certificate; PROVIDED HOWEVER, that
the Company may not utilize this right more than one time in any
twelve-month period. Upon receipt of a Company Certificate, each Holder
shall refrain from disposing of its Registrable Securities during the
above stated ninety (90) day period.
7
<PAGE> 8
7. EXPENSES. All registration expenses incurred in connection with any
registration, qualification or compliance pursuant to Sections 3 or 4,
including all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company and of the Company's accountants,
blue sky fees and expenses and the expenses of any special audits incident
to or required by any such registration, shall be borne by such Holder pro
rata on the basis of the number of shares of the Registrable Securities of
such Holder included in such registration and such Holder shall pay its
own selling expenses. Selling expenses shall mean all costs and
commissions applicable to the sale of the Registrable Securities and all
fees and disbursements of Holder's counsel and other professionals. To the
extent that the Company registers a primary offering of additional
securities pursuant to Section 5, the Company shall bear its pro rata
share of the above-referenced registration expenses and its own selling
expenses.
8. LISTING. The Company shall use its reasonable efforts to list all
Registrable Securities on each securities exchange or automated quotation
system on which any of the Common Stock is then listed .
9. RULE 144 INFORMATION. With a view to making available to the Holders the
benefits of Rule 144 under the Securities Act ("RULE 144") and any other
rule or regulation of the Commission that may at any time permit a Holder
to sell shares of Common Stock that are restricted securities to the
public without registration, the Company agrees to: (a) make and keep
public information available, as required by Rule 144; (b) use its
reasonable efforts to file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities
Act and the Exchange Act; and (c) furnish to any Holder forthwith upon
request (i) a written statement by the Company that it has complied with
the reporting requirements of Rule 144, the Securities Act and the
Exchange Act and (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the
Company.
10. INDEMNIFICATION. The Company shall indemnify and hold harmless each
Holder, officer or director of any Holder, affiliate of any Holder or any
Person deemed to control any Holder (a "Holder Indemnitee") against any
losses, claims, damages or liabilities, joint or several, to which such
Holder Indemnitee may become subject, under the Securities Act or
otherwise, that directly or indirectly arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained
in any preliminary prospectus, the Registration Statement or the
prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse such Holder Indemnitee for any
legal or other expenses reasonably incurred by such Holder Indemnitee in
connection with investigating or defending any such action or claim as
such expenses are incurred; PROVIDED, HOWEVER, that the Company shall have
no liability hereunder to the extent that any such loss, claim, damage or
liability arises out of or is based upon (a) an untrue statement or
alleged untrue statement or omission or alleged omission made in any
preliminary prospectus, the Registration Statement or the prospectus or
any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by such Holder Indemnitee
expressly for use therein, or (b) the failure of a Holder Indemnitee to
deliver the most recent version of the prospectus that is a part of the
Registration Statement.
8
<PAGE> 9
11. INDEMNIFICATION BY HOLDERS. Each Holder shall cause each Holder Indemnitee
to indemnify and hold harmless the Company, the Company's officers and
directors, affiliates of the Company and any Person deemed to control the
Company (a "Company Indemnitee") against any losses, claims, damages or
liabilities, joint or several, to which such Company Indemnitee may become
subject, under the Securities Act or otherwise, that directly or
indirectly arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement or the prospectus, or any amendment
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading and
reimburse each Company Indemnitee for any legal or other expenses
reasonably incurred by such Company Indemnitee in connection with
investigating or defending any such action or claim as such expenses are
incurred, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in any preliminary prospectus, the Registration
Statement or the prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such Holder Indemnitee expressly for use therein.
12. PROCEEDINGS. Promptly after receipt by an Indemnified Person of notice of
the commencement of any action, suit or proceeding as to which a claim in
respect thereof is to be made under Section 11 the Indemnified Person
shall notify the party against whom the Indemnified Person intends to
assert a claim for indemnification (an "INDEMNIFYING PERSON") in writing
of the commencement thereof, but the omission so to notify the
Indemnifying Person shall not relieve the Indemnifying Person from any
liability that it may have to any Indemnified Person except to the extent
the Indemnifying Person is prejudiced thereby. In case any such action
shall be brought against any Indemnified Person and it shall notify the
Indemnifying Person of the commencement thereof, the Indemnifying Person
shall be entitled to participate therein and, to the extent that it shall
wish, to assume the defense thereof, with counsel chosen by the
Indemnifying Person, and, after notice from the Indemnifying Person to
such Indemnified Person of its election so to assume the defense thereof,
the Indemnifying Person shall not be liable to such Indemnified Person
under this Section 12 for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such Indemnified Person,
in connection with the defense thereof other than reasonable costs of
investigation; PROVIDED HOWEVER, that an Indemnified Party shall have the
right to retain its own counsel, with the fees and expenses to be paid by
the Indemnifying Party, if the Indemnified Party reasonably believes based
upon a written opinion of counsel that representation of the Indemnified
Party by the counsel retained by the Indemnifying Party would be
inappropriate due to actual or potential differing interests between such
Indemnified Party and any other party represented by such counsel in such
proceeding. No Indemnified Person shall effect the settlement or
compromise of, or consent to the entry of any judgement with respect to,
any pending or threatened action or claim in respect of which
indemnification or contribution has been or may be sought hereunder
without the prior written consent of the Indemnifying Person and no
Indemnifying Person shall have any liability whatsoever in connection with
any settlement, compromise or consent entered into without such prior
written consent.
13. CONTRIBUTION. In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 11
is for any reason held to be unenforceable by an Indemnified Person
although applicable in accordance with its terms, the Indemnified Person
on the one hand and the Indemnifying Person on the other hand shall
contribute to the aggregate losses,
9
<PAGE> 10
liabilities, claims, damages and expenses of the nature contemplated by
such indemnity agreement incurred by the Indemnified Person; PROVIDED,
HOWEVER, that 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. As between the Indemnifying Person and each Indemnified
Person, such parties shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by
such indemnity agreement in such proportion as shall be appropriate to
reflect the relative benefits received by the Indemnifying Person on the
one hand and the Indemnified Person on the other hand, from the offering
of the Registrable Securities, the relative fault of the Indemnifying
Person on the one hand and the Indemnified Person on the other, with
respect to the statements or omissions that resulted in such loss,
liability, claim, damage or expense, or action in respect thereof and any
other relevant equitable considerations. It is agreed that it would not be
just and equitable if contribution pursuant to this Section 13 were to be
determined by pro rata allocation or by any other method of allocation
that does not take into account the relevant equitable considerations. For
purposes of this Section 13, each Person, if any, who controls a party
shall have the same rights to contribution as such party.
14. 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; PROVIDED that this Agreement may not be assigned by any party
hereto other than in compliance with the terms hereof.
15. NOTICES. All notices and other communications provided for in this
Agreement shall be in writing, and shall be sufficiently given if made (a)
by hand delivery or by telecopier and (b) by reputable express courier
service (charges prepaid) or by registered or certified mail (postage
prepaid and return receipt requested) (i) if to the Company, at the
following address:
Electropharmacology, Inc.
2301 NW 33rd Court
Suite 102
Pompano Beach, Florida 33060
Attention: Chief Executive Officer
Phone: (954) 975-9818
Facsimile: (954) 975-4021
or (ii) if to a Holder, at the address set forth for such Holder on
Schedule A.
All such notices and other communications shall be deemed to have been
duly given and delivered: when delivered by hand, if personally delivered;
when receipt acknowledged, if delivered by telecopier; two (2) Business
Days after being deposited with a reputable express courier service
(charges prepaid); and five (5) Business Days after being deposited in the
mail, postage prepaid if delivered by United States mail (registered or
certified mail, return receipt requested).
16. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall
be considered one and the same agreement.
17. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding of
the parties hereto with respect to the subject matter hereof and
supersedes any prior understanding among such parties.
10
<PAGE> 11
18. GOVERNING LAW; SEVERABILITY. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE
OF DELAWARE WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW
PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF DELAWARE. If it shall be determined
by a court of competent jurisdiction that any provision or wording of this
Agreement shall be invalid or unenforceable under applicable law, such
invalidity or unenforceability shall not invalidate this entire Agreement.
In that case, this Agreement shall be construed so as to limit any term or
provision so as to make it enforceable or valid within the requirements of
any applicable law, and, in the event such term or provision cannot be so
limited, this Agreement shall be construed to omit such invalid or
unenforceable provisions.
19. JURISDICTION AND SERVICE OF PROCESS. Any suit, action or proceeding
against any party with respect to this Agreement and any Holder or Holder
may be brought in a court of the United States sitting in the State of
Delaware or, if jurisdiction is lacking in such a court, in a court of
record in the State of Delaware, and each party hereto, and each Holder
(a) irrevocably waives, to the fullest extent permitted by law, any
objection that it may have, whether now or in the future, to the laying of
venue in, or to the jurisdiction of, any and each of such courts for the
purpose of any such suit, action, proceeding or judgment and further
waives any claim that any such suit, action, proceeding or judgment has
been brought in an inconvenient forum, and submits to such jurisdiction,
(b) agrees that service of all writs, process and summonses in any such
suit, action or proceeding brought in the State of Delaware may be made
upon The Corporation Trust Company, 1209 Orange Street, Wilmington,
Delaware 19801, or such alternate process agent in the United States
designated with respect to the party, or such Holder in a writing
delivered to the Company (THE "PROCESS AGENT"), (c) irrevocably appoints
the Process Agent in its name, place and stead to receive and forward such
service of any and all such writs, process and summonses, (d) agrees that
the failure of the Process Agent to give any notice of any such service of
process to such party or such Holder or shall not impair or affect the
validity of such service or of any judgment based thereon and (e) agrees
to appoint a substitute process agent, if the Process Agent is no longer
able to so act for any reason whatsoever, which substitute process agent
shall thereafter be deemed to be the Process Agent hereunder and to give
notice of such appointment to the Company.
11
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Electropharmacology, Inc.
By:
--------------------------------
Name: Arup Sen
Title: Chairman and CEO
PRE-CLOSING EPi STOCKHOLDERS:
PARAGON CAPITAL AT
SPEAR, LEEDS & KELLOGG:
By:
----------------------------------
George Levine, Chairman
By: By:
---------------------------------- --------------------------------
Norton Herrick Murray Feldman
HTD STOCKHOLDERS:
By: By:
---------------------------------- --------------------------------
Arup Sen James Kaput
By:
----------------------------------
Richard Kneipper
GEMINI PARTNERS:
By: By:
---------------------------------- --------------------------------
Krishna Jayaraman Shashikala Jayaraman
12
<PAGE> 1
Exhibit 12
July 27, 1998
Mr. Murray Feldman
8 Pilgrim Run
East Brunswick, NJ 08816
Dear Mr. Feldman:
Reference is made to the Master Agreement dated as of June 1998 (the
"Master Agreement") among HealthTech Development, Inc., Gemini Biotech L.P.,
Electropharmacology, Inc. ("EPi"), EPi Sub, Inc. and certain stockholders and
partners of such entities named therein. Capitalized terms used herein and not
defined have the meanings ascribed to them in the Master Agreement.
Pursuant to Section 2 of the Master Agreement, the EPi Representatives
have the right to nominate two directors to the Board of Directors of EPi. In
the selection of such nominees pursuant to Section 2 of the Master Agreement,
Norton Herrick hereby agrees to support the nomination of, and to vote his
shares of EPi in favor of, a person nominated by Murray Feldman, and Murray
Feldman hereby agrees to support the nomination of, and to vote his shares of
EPi in favor of, a person nominated by Norton Herrick.
Please acknowledge your agreement with the foregoing by signing in the
space provided below and returning a copy to me by fax and overnight courier.
Best regards,
/s/ Norton Herrick
Norton Herrick
Agreed and Accepted
/s/ Murray Feldman
- -------------------------------
Murray Feldman
