-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HvqZzq/VyRRz7tH2Q8f1BYt2dzv03ilWbOHeavY3Cc+Y4+g45wgXTGYTqxxnHSsE 5X09dt1B3ToHOWHuCyMwUg== 0000950144-98-010585.txt : 19980911 0000950144-98-010585.hdr.sgml : 19980911 ACCESSION NUMBER: 0000950144-98-010585 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19980910 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ELECTROPHARMACOLOGY INC CENTRAL INDEX KEY: 0000934849 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 954315412 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-47193 FILM NUMBER: 98707150 BUSINESS ADDRESS: STREET 1: 2301 NW 33RD COURT STREET 2: STE 102 CITY: POMPANO STATE: FL ZIP: 33069 BUSINESS PHONE: 9549759818 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HERRICK NORTON CENTRAL INDEX KEY: 0000904829 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 2295 CORPORATE BLVD N W SUITE 222 CITY: BOCA RATON STATE: FL ZIP: 33431 MAIL ADDRESS: STREET 1: AUDIO BOOK CLUB INC STREET 2: 2295 CORPORATE BLVD STE 222 CITY: BOCA RATON STATE: FL ZIP: 33431 SC 13D/A 1 ELECTROPHARMACOLOGY/NORTON HERRICK SC 13D AM.#4 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: [ ] 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 - -------------------------------------------------------------------------------- 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 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 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 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. 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 EX-10 2 FORM OF MASTER AGREEMENT 6/18/98 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. 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 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 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 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 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 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 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: ---------------------------------------- -------------------------------------------- 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: --------------------------------
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 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 - --------------- --------------------- ---------------- ------------ -------------- -------------------------------------
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 N. Herrick 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 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 ============== ======================= ================== =================== ================ ======================
- ---------- * Including Common Shares to be issued upon conversion of 242,950 shares of Preferred Stock currently held by Mr. Herrick. 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 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." 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: ------------------------------- EX-11 3 FORM OF REGISTRATION RIGHTS AGREEMENT 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. 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 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 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 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 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 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 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 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 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 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 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 EX-12 4 LETTER AGREEMENT 8/3/98 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 -----END PRIVACY-ENHANCED MESSAGE-----