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
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
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. Xxxxxx Xxxxxx, Xxxxxx Xxxxxxx, Xxxxx Xxxxxx and Xxxxxx
Xxxxxxx, 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. Xxxx Xxx, Xxxxx Xxxxx and
Xxxxxxx Xxxxxxxx, 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
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 Xxxxx Xxxxxx and Xxxxxx Xxxxxxx as
the initial EPi Nominees, the HTD Representatives hereby nominate
Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxxx as the initial HTD Nominees and
the Gemini Representative hereby nominates Xx. Xxxxxxx Xxxxxxxxx and
Xx. Xxxx Xxxxxx 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) Xxxx Xxx 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
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 XXXXXX XXXXXXX.
a. As of the Effective Date, that certain Stockholders Agreement, dated
as of November 13, 1995, among EPi, Xxxxxx Xxxxxxx and Xxxxx Xxxxxx
and that certain Registration Rights Agreement dated as of November
13, 1995, between EPi and Xxxxxx Xxxxxxx shall each be terminated
and of no further force and effect.
5
6
b. EPi and Xx. Xxxxxxx hereby agree to (i) the redemption of all of the
issued and outstanding shares of EPi Preferred Stock owned of record
by Xx. Xxxxxxx, and (ii) the redemption and cancellation of all
warrants to purchase shares of EPi Common Stock issued and
outstanding to Xx. Xxxxxxx and which are more fully described on
Schedule A attached hereto (the "Xxxxxxx EPi Warrants"), in exchange
for the issuance by EPi of 1,575,000 shares of EPi Common Stock to
Xx. Xxxxxxx (collectively, the "Xxxxxxx Redemption"). The Xxxxxxx
Redemption shall be effective on the Effective Date and at such
time, the shares of EPi Preferred Stock and any and all of the
Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx
EPi Warrants will be converted pursuant to this Section 4(b).
5. CERTAIN AGREEMENTS WITH XXXXXX XXXXXXX. EPi and Xx. Xxxxxxx hereby agree
to the redemption and cancellation of all warrants to purchase shares of
EPi Common Stock issued and outstanding to Xx. Xxxxxxx and which are more
fully described on Schedule A attached hereto (the "Xxxxxxx EPi
Warrants"), in exchange for the issuance by EPi of 160,000 shares of EPi
Common Stock to Xx. Xxxxxxx (collectively, the "Xxxxxxx Redemption"). The
Xxxxxxx Redemption shall be effective on the Effective Date and at such
time, any and all of the Xxxxxxx 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 Xxxxxxx 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
Xxxxxxx EPi Warrants will be converted pursuant to this Section 5.
6. CERTAIN AGREEMENTS WITH XXXXXX XXXXXX AND PARAGON CAPITAL CORP. AT SPEAR,
LEEDS & XXXXXXX ("PARAGON CAPITAL"). EPi, Xxxxxx Xxxxxx, and Paragon
Capital hereby agree to the redemption and cancellation of all warrants to
purchase shares of EPi Common Stock issued and outstanding to Xx. Xxxxxx
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 Xxxxxx Xxxxxx 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
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
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 Xxxxxxx Redemption,
the Xxxxxxx 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 Xxxxxxx Redemption, the Xxxxxxx Redemption
or the Paragon Redemption that are issued to Xx. Xxxxxx 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
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
10
IN WITNESS WHEREOF, the undersigned have executed this Equity Holder
Agreement as of the day and year first above written.
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:
---------------------------------------- --------------------------------------------
Xxxxx Xxxxxx Xxxxxx Xxxxxx
(259,199 shares of EPi Common Stock) (25,000 shares of EPi Common Stock)
20TH CENTURY ASSOCIATES: PARAGON CAPITAL AT
SPEAR, LEEDS & XXXXXXX:
By: By:
---------------------------------------- --------------------------------------------
Xxxx Xxxxx, President Xxxxxx Xxxxxx, Chairman
(250,000 shares of EPi Common Stock) (604,104 shares of EPi Common Stock)
By: By:
---------------------------------------- --------------------------------------------
Xxxxxx Xxxxxxx Xxxxxx Xxxxxxx
(318,950 shares of EPi Common Stock and (692,361 shares of EPi Common Stock)
242,950 shares of EPi Preferred Stock)
HTD STOCKHOLDERS:
------------------------------------------- ----------------------------------------------
Xxxx Xxx Xxxxx Xxxxx
( shares of HTD Common Stock) ( shares of HTD Common Stock)
----------- -----------
-------------------------------------------
Xxxxxxx Xxxxxxxx
( shares of HTD Common Stock)
GEMINI PARTNERS:
------------------------------------------- ----------------------------------------------
Xxxxxxx Xxxxxxxxx (_% Partnership Interest) Xxxxxxxxxx Xxxxxxxxx (_% Partnership Interest)
GEMINI BIOTECH INC.
By:
---------------------------------
Its:
--------------------------------
10
11
SCHEDULE A
OUTSTANDING EPi WARRANTS TO BE REDEEMED AND CANCELED
Number of
Original Equity
Issue Interests (Post- Exercise Expiration
Date Issued To split) Price Date Registration Rights/Other Terms
=============== ===================== ================ ============ ============== =====================================
08/04/93 X. Xxxxxxx 11,622 5.03 08/04/98 Yes (in pre-split agreement only)
05/25/94 X. Xxxxxxx 38,741 5.03 05/25/99 Yes (in pre-split agreement only)
09/20/94 X. Xxxxxxx 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 X. Xxxxxxx 300,000 6.25 11/21/00 Yes
11/13/95 X. Xxxxxxx 800,000 6.00 11/13/05 Yes
11/13/95 X. Xxxxxxx 250,000 7.50 11/13/05 Yes
11/13/95 X. Xxxxxxx 250,000 9.00 11/13/05 Yes
--------------- --------------------- ---------------- ------------ -------------- -------------------------------------
OUTSTANDING EPi PREFERRED EQUITY INTERESTS TO BE REDEEMED AND CANCELED
Original Number of Equity
Issue Date Issued To Interests (Post-split) Exercise Price Expiration Date
================= ========================== =========================== ==============================================
11/13/95 X. Xxxxxxx 242,950 N/A N/A
----------------- -------------------------- --------------------------- ----------------------------------------------
11
12
SCHEDULE A-1
CERTAIN EPi WARRANTS
TOTAL NUMBER
ORIGINAL NUMBER OF OF COMMON
ISSUE SHARES EXERCISE EXPIRATION SHARES TO
DATE ISSUED TO (POST-SPLIT) PRICE DATE BE ISSUED
-------------- ----------------------- ----------------- ------------------- --------------- --------------------
08/04/93 Xxxxxx Xxxxxxx 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 Xxxxxx Xxxxxxx 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
============== ======================= ================== =================== ================ ======================
----------
* Including Common Shares to be issued upon conversion of 242,950 shares of
Preferred Stock currently held by Xx. Xxxxxxx.
12
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 Xxxxxxxxxx Xxxxxxxxx
(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 Xxxxxxx Xxxxxxxxx and Xxxxxxxxxx Xxxxxxxxx (the
Gemini Representatives")."
2. In Section 2(f), the word "Gemini" shall be replaced with the words
"Gemini Representatives."
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
--------------------------------------------
XXXXXXX XXXXXXXXX (49% Partnership Interest)
--------------------------------------------
XXXXXXXXXX XXXXXXXXX (49% Partnership Interest)
--------------------------------------------
GEMINI BIOTECH INC. (2% Partnership Interest)
By:
--------------------------------
Its:
-------------------------------
