FIRST MODIFICATION
TO
INVESTMENT AGREEMENT
FIRST MODIFICATION TO INVESTMENT AGREEMENT ("AGREEMENT") dated December ____,
1998 by and between PIONEER VENTURES ASSOCIATES LIMITED PARTNERSHIP, a
Connecticut limited partnership with offices at 000 Xxx Xxxx Xxxx, Xxxxxxx,
Xxxxxxxxxxx 00000 ("PIONEER VENTURES"), AND NEUROCORP, LTD., a Nevada
corporation with offices at 000 Xxxxx Xxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000
(the "COMPANY").
WHEREAS, Pioneer Ventures and the Company entered into a certain
Investment Agreement dated July 30, 1998 (the "INVESTMENT AGREEMENT").
WHEREAS, the Company desires to obtain funds under the terms of the
Investment Agreement to finance its operations and products, market certain
development efforts, develop memory centers and engage in clinical research
studies pertaining to the human brain and memory function.
WHEREAS, Pioneer Ventures desires to provide funds under the terms of
the Investment Agreement to the Company for such purposes on the terms and
conditions set forth below.
NOW THEREFORE, in consideration of the investment to be made, mutual
benefits to be derived hereby and the representations, warranties, covenants and
agreements herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and Pioneer
Ventures agree to modify the Investment Agreement as follows:
FIRST: Section.1.1 OF ARTICLE I IS HEREBY DELETED AND REPLACED WITH THE
FOLLOWING:
1.1 SERIES C SENIOR CONVERTIBLE PREFERRED STOCK. (a) Upon the terms and
subject to the conditions hereinafter set forth, at the various closings (as
hereinafter defined and set forth), the Company shall issue, sell, transfer and
deliver to Pioneer Ventures a minimum of an aggregate of one million five
hundred thousand sixty-six thousand six hundred sixty-seven (*1,566,667*) shares
of the Company's Series C Senior Convertible Preferred Stock, $.001 par value
(the "PREFERRED STOCK") at the Purchase Price set forth in Section 1.2 hereof;
the Preferred Stock shall have the terms
First Modification To Investment Agreement
Page 2
and be issued subject to the conditions as set forth herein and in the Series C
Certificate of Designation to be filed and recorded with the Secretary of State
of the State of Nevada upon the occurrence of the First Closing as set forth
below. (b) At the first closing ("FIRST CLOSING") on July 30, 1998, the Company
shall issue, sell, transfer and deliver to Pioneer Ventures three hundred
thirty-three thousand three hundred thirty-four (*333,334*) shares of Preferred
Stock upon payment of the Purchase Price therefor and satisfaction of the
conditions contemplated herein. (c) At the second closing ("SECOND CLOSING")
which shall not occur prior to the hire and commencement of full time service of
a chief executive officer which hiring shall be made by the reconstituted board
of directors and shall be approved in writing by Pioneer Ventures (the
"CEO-TO-BE-HIRED"), as well as completion of the Milestones for such closing set
forth in Section 1.13 hereof, the Company shall issue, sell, transfer and
deliver to Pioneer Ventures four hundred thousand (*400,000*) shares upon
payment of the Purchase Price therefor and satisfaction of the conditions
contemplated herein. (d) At one or more subsequent closings ("SUBSEQUENT
CLOSINGS"), the Company shall issue, sell, transfer and deliver to Pioneer
Ventures at least an additional eight hundred thirty-three thousand three
hundred thirty-three (*833,333*) shares of Preferred Stock upon payment of the
Purchase Price therefor and satisfaction of the conditions contemplated herein
and upon the conditions to be determined in accordance herewith as well as
completion of the Milestones for such closing set forth in Section 1.13 hereof.
(e) At the Second Closing, the Company shall reserve one million four hundred
thousand (*1,400,000*) shares of which at least 1,233,333 shares are to be
delivered in whole or in part at the Second Closing and at the Subsequent
Closings. (f) Upon sale and issuance to Pioneer Ventures each share of Preferred
Stock shall be free and clear of all manner of liens, pledges, encumbrances,
charges and claims thereon. Certificates evidencing the Preferred Stock shall be
delivered by the Company to Pioneer Ventures at the Closing. Such certificates
shall also be accompanied by evidence satisfactory to Pioneer Ventures of the
Company's payment of any applicable transfer and franchise taxes. Said stock
will not be issued in a transaction registered with the U.S. Securities and
Exchange Commission ("COMMISSION") and shall, therefore, be restricted from
resale to the public. The Preferred Stock Certificate shall be in the form
annexed hereto as EXHIBIT 1.1.
First Modification To Investment Agreement
Page 3
SECOND: ARTICLE VII OF THE INVESTMENT AGREEMENT IS HEREBY AMENDED BY ADDING
Section.7.19 AS FOLLOWS.
7.19 ADDITIONAL CONDITIONS PRECEDENT TO THE SECOND CLOSING
(a) The Company shall represent and warrant that the July 30, 1998
First Modification to Employment Agreement between the Company
and Xx. Xxxxx M. Itil is of full force and effect, and it is
binding and a legal obligation on the Company and Xx. Xxxxx M.
Itil.
(b) Any and all legal fees of the firm Akabas & Xxxxx incurred
with respect to modifying Xx. Xxxxx Itil's employment
agreement shall be paid by Xx. Xxxxx Itil directly. If any
payments have been made by the Company, such legal fees shall
be deducted from Dr. Itil's compensation. The Company warrants
it has not and shall not pay such fees.
(c) The life insurance policy premiums for any and all life
insurance policies insuring the life of Xx. Xxxxx Itil
accruing after or paid after July 30, 1998 shall be Dr. Itil's
sole responsibility. If any such payments have been made by
the Company, the Company shall be reimbursed by deducting the
costs of such premiums from Dr. Itil's compensation. The
Company warrants it has not and shall not pay such premiums.
(d) All Conditions Precedent to the Second Closing, including the
condition that Xxxxxx Xxxxx shall enter into an employment
agreement satisfactory to Pioneer Ventures, shall all be
conditions precedent to the Third Closing, or any Subsequent
Closing and have not been waived by Pioneer Ventures.
(e) The condition precedent that the Company develop a business
plan/strategic plan satisfactory to Pioneer Ventures shall be
required to be submitted by February 28, 1999, and if it is
not approved by Pioneer Ventures, then the Company shall have
45 days to cure such plan. If the plan is not then cured, the
Company shall be in default under the Investment Agreement and
the 13% default dividend rate shall be in effect.
THIRD: ARTICLE XIII OF THE INVESTMENT AGREEMENT IS HEREBY AMENDED BY ADDING
Section.13.12 AS FOLLOWS:
13.12: USE OF TERM "PIONEER VENTURES". Notwithstanding any provision of the
Investment Agreement to the contrary, included in the definition and meaning of
the "Pioneer Ventures" shall be any one or more parallel limited partnerships
which have been or shall be organized by Ventures
First Modification To Investment Agreement
Page 4
Management Partners LLC as the general partner to invest in parallel with
Pioneer Ventures Associates Limited Partnership on the same economic terms and
PRO RATA based upon their aggregate subscriptions. The limited partners of
Pioneer Ventures Associates Limited Partnership and the parallel partnerships
shall be referred to herein as the "LIMITED PARTNERS".
WITNESS the execution of this First Modification to Investment
Agreement as of the date first above written.
PIONEER VENTURES ASSOCIATES LIMITED PARTNERSHIP
BY: VENTURES MANAGEMENT PARTNERS LLC
its General Partner
BY: Pioneer Ventures Corp.
Its Managing Member
BY:
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Xxxxxx X. Xxxxxx, President
NEUROCORP, LTD.
BY:
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Xxxxxx Xxxxx, Chief Executive Officer
ATTEST:
(Corporate Seal)
BY:
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Xxxx Itil, Vice President
