sec document
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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)
(Amendment No. )(1)
Neuro-Hitech, Inc.
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(Name of Issuer)
Common Stock, $0.001 Par Value
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(Title of Class of Securities)
641244108
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(CUSIP Number)
STEVEN WOLOSKY, ESQ.
OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
Park Avenue Tower
65 East 55th Street
New York, New York 10022
(212) 451-2300
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 29, 2006
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(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 that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box / /.
NOTE. Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. SEE Rule 13d-7 for
other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 34 Pages)
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(1) The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, SEE the
NOTES).
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CUSIP No. 641244108 13D Page 2 of 34 Pages
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================================================================================
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
WHEATLEY MEDTECH PARTNERS, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 768,942(2)
OWNED BY -----------------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON WITH - 0 -
-----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
768,942(2)
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
768,942(2)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.3%
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14 TYPE OF REPORTING PERSON*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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(2) Includes 326,656 shares of Common Stock issuable upon the exercise of
currently exercisable warrants.
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CUSIP No. 641244108 13D Page 3 of 34 Pages
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================================================================================
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
WHEATLEY NEW YORK PARTNERS LP
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 1,066,987(3)
OWNED BY -----------------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON WITH - 0 -
-----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,066,987(3)
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,066,987(3)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.7%
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14 TYPE OF REPORTING PERSON*
PN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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(3) Includes 452,172 shares of Common Stock issuable upon the exercise of
currently exercisable warrants.
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CUSIP No. 641244108 13D Page 4 of 34 Pages
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The following constitutes the Schedule 13D filed by the undersigned
(the "Schedule 13D").
Item 1. SECURITY AND ISSUER.
This statement relates to shares of the common stock, $0.001 par
value per share (the "Common Stock"), of Neuro-Hitech, Inc. (the "Issuer"). The
address of the principal executive offices of the Issuer is One Penn Plaza,
Suite 1503, New York, New York 10019.
Item 2. IDENTITY AND BACKGROUND.
1)
(a) Wheatley MedTech Partners, L.P., a Delaware limited
partnership ("Wheatley MedTech")
(b) Address: 80 Cuttermill Road
Suite 302
Great Neck, New York 11021
(c) Principal Business: Investments
2)
(a) Wheatley New York Partners LP, a Delaware limited partnership
("Wheatley New York")
(b) Address: 80 Cuttermill Road
Suite 302
Great Neck, New York 11021
(c) Principal Business: Investments
Each of the following persons is either a general partner of
Wheatley MedTech or Wheatley New York or a member of either or both of such
entities.
3)
(a) Wheatley MedTech Partners, LLC, a Delaware limited liability
company
(b) Address: 80 Cuttermill Road
Suite 302
Great Neck, New York 11021
(c) Principal Business: Investments
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CUSIP No. 641244108 13D Page 5 of 34 Pages
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4)
(a) Wheatley NY Partners LLC, a Delaware limited liability company
(b) Address: 80 Cuttermill Road
Suite 302
Great Neck, New York 11021
(c) Principal Business: Investments
5)
(a) David Dantzker
(b) Address: 80 Cuttermill Road
Suite 302
Great Neck, New York 11021
(c) Principal Business: Investments
(f) Citizenship: United States
6)
(a) Barry Rubenstein
(b) Address: 80 Cuttermill Road
Suite 302
Great Neck, New York 11021
(c) Principal Business: Investments
(f) Citizenship: United States
7)
(a) Barry Fingerhut
(b) Address: 80 Cuttermill Road
Suite 302
Great Neck, New York 11021
(c) Principal Business: Investments
(f) Citizenship: United States
8)
(a) Irwin Lieber
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CUSIP No. 641244108 13D Page 6 of 34 Pages
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(b) Address: 80 Cuttermill Road
Suite 302
Great Neck, New York 11021
(c) Principal Business: Investments
(f) Citizenship: United States
9)
(a) Jonathan Lieber
(b) Address: 80 Cuttermill Road
Suite 302
Great Neck, New York 11021
(c) Principal Business: Investments
(f) Citizenship: United States
10)
(a) Seth Lieber
(b) Address: 80 Cuttermill Road
Suite 302
Great Neck, New York 11021
(c) Principal Business: Investments
(f) Citizenship: United States
11)
(a) Nancy Casey
(b) Address: 80 Cuttermill Road Suite 302
Great Neck, New York 11021
(c) Principal Business: Investments
(f) Citizenship: United States
12)
(a) Brian Rubenstein
(b) Address: 80 Cuttermill Road
Suite 302
Great Neck, New York 11021
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CUSIP No. 641244108 13D Page 7 of 34 Pages
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(c) Principal Business: Investments
(f) Citizenship: United States
13)
(a) Larry Wagenberg
(b) Address: 80 Cuttermill Road Suite 302
Great Neck, New York 11021
(c) Principal Business: Investments
(f) Citizenship: United States
No person described herein has, during the last five years, been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
No person described herein has, during the last five years, been
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.(4)
The aggregate purchase price of 62,440 shares of Common Stock and
presently exercisable warrants to purchase 31,220 shares of Common Stock at an
exercise price of $7.00 per share, subject to adjustment, held by Wheatley
MedTech was $320,005.00 and such securities were acquired and, upon the exercise
of such warrants, will be acquired, with its working capital and its other
funds.
Wheatley MedTech acquired 379,846 shares of Common Stock and
presently exercisable warrants to purchase 147,718 and 147,718 shares of Common
Stock at exercise prices of $13.00 and $18.00 per share, respectively, subject
to adjustment, as Merger (as defined below) consideration in exchange for
securities of Q-RNA, Inc., ("Q-RNA") held by Wheatley MedTech and upon the
exercise of such warrants, Wheatley MedTech will acquire such shares of Common
Stock underlying such warrants with its working capital and its other funds.
The aggregate purchase price of 93,660 shares of Common Stock and
presently exercisable warrants to purchase 46,830 shares of Common Stock at an
exercise price of $7.00 per share, subject to adjustment, held by Wheatley New
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(4) The disclosure set forth in Item 5(c) regarding the issuance of certain
shares of Common Stock upon the exchange of securities of Q-RNA, Inc. pursuant
to the Merger is incorporated herein by reference.
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CUSIP No. 641244108 13D Page 8 of 34 Pages
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York was $480,007.50 and such securities were acquired and, upon the exercise of
such warrants, will be acquired, with its working capital and its other funds.
Wheatley New York acquired 521,155 shares of Common Stock and
presently exercisable warrants to purchase 202,671 and 202,671 shares of Common
Stock at exercise prices of $13.00 and $18.00 per share, respectively, subject
to adjustment, as Merger consideration in exchange for securities of Q-RNA held
by Wheatley New York and, upon the exercise of such warrants, Wheatley New York
will acquire such shares of Common Stock underlying such warrants with its
working capital and its other funds.
Dr. David Dantzker acquired presently exercisable options to
purchase 13,432 shares of Common Stock at an exercise price of $12.66 per share,
subject to adjustment, as Merger consideration in exchange for options of Q-RNA
held by Dr. Dantzker and, upon the exercise of such options, Dr. Dantzker will
acquire such shares of Common Stock underlying such options with personal funds.
Item 4. PURPOSE OF TRANSACTION.
Other than Dr. Dantzker's capacity as a director of the Issuer and
representative of the former Q-RNA stakeholders, no person described herein has
any present plan or proposal which would relate to or result in any of the
matters set forth in subparagraphs (a)-(j) of Item 4 of Schedule 13D except as
set forth herein.
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The aggregate percentage of shares of Common Stock reported
owned by each person named herein is based upon 11,853,706 shares of Common
Stock outstanding, which comprises 9,441,506 shares of Common Stock outstanding
as of October 10, 2006, as reported in the Issuer's Quarterly Report on Form
10-Q as filed with the Securities and Exchange Commission ("SEC") on November
14, 2006, PLUS 1,800,000 shares of Common Stock issued as Merger consideration
as reported in the Issuer's Periodic Report on Form 8-K as filed with the SEC on
December 5, 2006 (the "December 5 Filing"), PLUS 612,200 shares of Common Stock
issued in a private placement of securities as reported in the December 5
Filing.
As of the close of business on November 29, 2006, Wheatley MedTech
beneficially owned 768,942 shares of Common Stock (including 31,220, 147,718 and
147,718 shares of Common Stock issuable upon the exercise of presently
exercisable warrants at exercise prices of $7.00, $13.00 and $18.00 per share,
respectively, subject to adjustment) constituting approximately 6.3% of the
shares of Common Stock outstanding. Wheatley MedTech Partners, LLC, the general
partner of Wheatley MedTech, and Nancy Casey, a member of Wheatley MedTech
Partners LLC, may be deemed to beneficially own such shares of Common Stock. Ms.
Casey has shared voting and dispositive power with respect to the 768,942 shares
of Common Stock beneficially owned by Wheatley MedTech. Wheatley MedTech
Partners, LLC and Ms. Casey disclaim beneficial ownership of these securities
except to the extent of its/her respective equity interest therein.
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CUSIP No. 641244108 13D Page 9 of 34 Pages
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As of the close of business on November 29, 2006, Wheatley New York
beneficially owned 1,066,987 shares of Common Stock (including 46,830, 202,671
and 202,671 shares of Common Stock issuable upon the exercise of presently
exercisable warrants at exercise prices of $7.00, $13.00 and $18.00 per share,
respectively, subject to adjustment) constituting approximately 8.7% of the
shares of Common Stock outstanding. Wheatley NY Partners LLC, the general
partner of Wheatley New York, and Brian Rubenstein and Larry Wagenberg, members
of Wheatley NY Partners LLC, may be deemed to beneficially own such shares of
Common Stock. Messrs. Rubenstein and Wagenberg have shared voting and
dispositive power with respect to the 1,066,987 shares of Common Stock
beneficially owned by Wheatley New York. Wheatley NY Partners LLC and Messrs.
Rubenstein and Wagenberg disclaim beneficial ownership of these securities
except to the extent of its/their respective equity interest therein.
As members of both Wheatley MedTech Partners, LLC and Wheatley NY
Partners LLC, the general partner of Wheatley MedTech and Wheatley New York,
respectively, Barry Rubenstein, Barry Fingerhut, Irwin Lieber, Jonathan Lieber
and Seth Lieber may be deemed to beneficially own the 1,835,929 shares of Common
Stock beneficially owned by Wheatley MedTech and Wheatley New York, constituting
approximately 14.5% of the shares of Common Stock outstanding. Messrs.
Rubinstein, Fingerhut, Lieber, Lieber and Lieber have shared voting and
dispositive power with respect to such shares of Common Stock beneficially owned
by Wheatley MedTech and Wheatley New York. Each of Messrs. Rubenstein,
Fingerhut, Lieber, Lieber and Lieber disclaim beneficial ownership of these
securities except to the extent of his respective equity interest therein.
As a member of both Wheatley MedTech Partners, LLC and Wheatley NY
Partners LLC, the general partner of Wheatley MedTech and Wheatley New York,
respectively, Dr. David Dantzker may be deemed to beneficially own 1,835,929
shares of Common Stock beneficially owned by Wheatley MedTech and Wheatley New
York and 13,432 shares of Common Stock underlying presently exercisable options
of the Issuer, constituting approximately 14.6% of the shares of Common Stock
outstanding. Dr. Dantzker has shared voting and dispositive power with respect
to the 1,835,929 shares of Common Stock beneficially owned by Wheatley MedTech
and Wheatley New York. Dr. Dantzker disclaims beneficial ownership of these
securities except to the extent of his equity interest therein. Dr. Dantzker has
sole voting and dispositive power with respect to 13,432 shares of Common Stock
underlying the presently exercisable options.
(b) By virtue of their positions with Wheatley MedTech Partners
LLC, Ms. Casey, Dr. Dantzker and Messrs. Barry Rubenstein, Fingerhut, Lieber,
Lieber and Lieber share the power to vote and dispose of the shares of Common
Stock reported in this Schedule 13D as beneficially owned by Wheatley MedTech.
By virtue of their positions with Wheatley NY Partners LLC, Dr.
Dantzker and Messrs. Rubenstein, Fingerhut, Lieber, Lieber, Lieber, Rubenstein
and Wagenberg share the power to vote and dispose of the shares of Common Stock
reported in this Schedule 13D as beneficially owned by Wheatley New York.
Dr. Dantzker has sole voting and dispositive power with respect to
the 13,432 shares of Common Stock underlying presently exercisable options.
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CUSIP No. 641244108 13D Page 10 of 34 Pages
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(c) Schedule A annexed hereto lists all transactions by all the
persons described herein in the Issuer's securities effected during the past
sixty days. Such transactions were effected in the private placement of
securities or in connection with the Merger.
(d) No person other than the persons described herein is known to
have the right to receive, or the power to direct the receipt of dividends from,
or proceeds from the sale of, the shares of Common Stock.
(e) Not applicable.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
In connection with the Merger:
(a) Dr. David Dantzker, as Representative of the former Q-RNA
stakeholders, entered into an escrow agreement with the Issuer pursuant to which
20% of the shares of Common Stock issued as Merger consideration was deposited
with an escrow agent as security for the indemnification obligations of the
former Q-RNA stakeholders, including Wheatley MedTech and Wheatley New York. The
duration of the escrow period will be 18 months from November 29, 2006, the
closing date of the Merger. During the escrow period, all voting rights and
rights to dividends or other distributions declared and paid on such shares
shall inure to the benefit of and be enjoyed by the holders thereof.
(b) the Controlling Stockholders (as defined therein) agreed to
vote all of the shares of Issuer voting capital stock held by them so as to
elect up to two individuals nominated by Dr. Dantzker, as Representative of the
former Q-RNA stakeholders, to the board of directors of the Issuer, subject to
such former Q-RNA stakeholders continuing to own, beneficially and of record, at
least a specified percentage of the total number of shares of Common Stock
issued by the Issuer on the effective date of the Merger as consideration
therefor.
(c) Dr. David Dantzker, as Representative of the former Q-RNA
stakeholders, entered into a registration rights agreement with the Issuer
pursuant to which the Issuer granted to the former Q-RNA stakeholders certain
registration rights in respect of certain shares of Common Stock issued or
issuable by the Issuer, including the shares of Common Stock issued on the
effective date of the Merger and underlying the Common Stock purchase warrants
issued on the effective date of the Merger. Each former Q-RNA stakeholder,
including Wheatley MedTech and Wheatley New York, agreed not to sell or
otherwise transfer or dispose of such shares until the earlier of (1) November
29, 2008 or (2) the date on which certain trading volume or average closing
price thresholds are satisfied. Such stockholders further agreed not to sell or
otherwise transfer or dispose of such shares for a period of up to 180 days from
the date of the final prospectus of the Issuer's initial underwritten public
offering, subject to certain conditions described therein.
In connection with the private placement of shares of Common Stock
and Common Stock purchase warrants, a closing of which occurred on November 29,
2006, the Issuer agreed to register the resale of such shares on a continuing
basis, including the shares of Common Stock issuable upon exercise of such
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CUSIP No. 641244108 13D Page 11 of 34 Pages
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warrants, prior to the earlier of (1) 60 days following such closing or (2) two
business days following an Additional Closing (as defined therein). The
purchasers of such privately placed shares and warrants agreed not to sell or
otherwise transfer or dispose of such shares for a period of up to 180 days from
the date of the final prospectus of the Issuer's initial underwritten public
offering, subject to certain conditions described therein.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Joint Filing Agreement by and between Wheatley MedTech and Wheatley New
York, dated December 8, 2006.
2. Escrow Agreement, dated as of November 29, 2006, by and among the
Issuer, David Dantzker as Representative of the former Q-RNA, Inc.
stakeholders, and Empire Stock Transfer, as escrow agent.
3. Stockholders' Agreement by Reuben Seltzer and Alan Kestenbaum and the
individuals listed on Schedule A thereto, dated as of November 29,
2006.
4. Registration Rights Agreement by and among the Issuer and David
Dantzker as Representative of the former Q-RNA, Inc. stakeholders,
dated as of November 29, 2006 (incorporated by reference to Exhibit 4.1
of the Issuer's Periodic Report on Form 8-K filed with the SEC on
December 5, 2006).
5. Registration Rights Agreement between the Issuer and the individuals
listed on Schedule A thereto, dated as of November 29, 2006
(incorporated by reference to Exhibit 4.2 of the Issuer's Periodic
Report on Form 8-K filed with the SEC on December 5, 2006).
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CUSIP No. 641244108 13D Page 12 of 34 Pages
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SIGNATURES
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After reasonable inquiry and to the best of his knowledge and
belief, each of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: December 8, 2006 WHEATLEY MEDTECH PARTNERS, L.P.
By: Wheatley MedTech Partners, LLC
its general partner
By: /s/ Barry Rubenstein
---------------------------------
Barry Rubenstein, Chief Executive
Officer
WHEATLEY NEW YORK PARTNERS LP
By: Wheatley NY Partners LLC
its general partner
By: /s/ Barry Rubenstein
---------------------------------
Barry Rubenstein, Chief Executive
Officer
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CUSIP No. 641244108 13D Page 13 of 34 Pages
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SCHEDULE A
TRANSACTIONS IN SHARES OF THE ISSUER
DURING THE PAST SIXTY DAYS
Where and
Number of how the
Reporting Class Shares Date of transaction
Person of Security Acquired Consideration Purchase/Sale was effected
------------ ------------ ---------- --------------- -------------- ------------
Wheatley Common 62,440 $320,005.00 November 29, Private
MedTech Stock 2006 Placement
Warrants 31,220
Wheatley Common 379,846 (5) November 29, Merger
MedTech Stock 2006
Warrants 147,718
Warrants 147,718
Wheatley Common 93,660 $480,007.50 November 29, Private
New York Stock 2006 Placement
Warrants 46,830
Wheatley Common 521,155 (5) November 29, Merger
New York Stock 2006
Warrants 202,671
Warrants 202,671
David Options 13,432 (5) November 29, Merger
Dantzker 2006
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(5) The persons set forth above acquired the shares of Common Stock and Common
Stock purchase warrants pursuant to an Agreement and Plan of Reorganization (the
"Merger Agreement") dated as of November 29, 2006. The Merger Agreement
contemplated that the stockholders of Q-RNA would exchange their securities of
Q-RNA for shares of Common Stock and warrants to purchase Common Stock of the
Issuer (the "Merger"). In addition, certain of these shares of Common Stock are
being held in escrow and scheduled to be issued subject to the satisfaction of
certain conditions.
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CUSIP No. 641244108 13D Page 14 of 34 Pages
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EXHIBIT INDEX
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Exhibit Page
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1. Joint Filing Agreement by and between Wheatley MedTech and 15
Wheatley New York, dated December 8, 2006.
2. Escrow Agreement, dated as of November 29, 2006, by and among 16
the Issuers, David Dantzker as Representative of the former
Q-RNA, Inc. stakeholders, and Empire Stock Transfer, as escrow
agent.
3. Stockholders' Agreement by Reuben Seltzer and Alan Kestenbaum 29
and the individuals listed on Schedule A thereto, dated as of
November 29, 2006.
4. Registration Rights Agreement by and among the Issuer and David
Dantzker - as Representative of the former Q-RNA, Inc.
stakeholders dated as of November 29, 2006 (incorporated by
reference to Exhibit 4.1 of the Issuer's Periodic Report on Form
8-K filed with the SEC on December 5, 2006).
5. Registration Rights Agreement between the Issuer and the
individuals - listed on Schedule A thereto, dated as of November
29, 2006 (incorporated by reference to Exhibit 4.2 of the
Issuer's Periodic Report on Form 8-K filed with the SEC on
December 5, 2006).
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CUSIP No. 641244108 13D Page 15 of 34 Pages
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EXHIBIT 1
JOINT FILING AGREEMENT
----------------------
The undersigned hereby agree that the Statement on Schedule 13D
dated December 8, 2006 with respect to the shares of Common Stock of
Neuro-Hitech, Inc. and any further amendments thereto executed by each and any
of the undersigned shall be filed on behalf of each of the undersigned pursuant
to and in accordance with the provisions of Rule 13d-1(k)(1) under the
Securities Exchange Act of 1934, as amended.
Dated: December 8, 2006 WHEATLEY MEDTECH PARTNERS, L.P.
By: Wheatley MedTech Partners, LLC
its general partner
By: /s/ Barry Rubenstein
---------------------------------
Barry Rubenstein, Chief Executive
Officer
WHEATLEY NEW YORK PARTNERS LP
By: Wheatley NY Partners LLC
its general partner
By: /s/ Barry Rubenstein
---------------------------------
Barry Rubenstein, Chief Executive
Officer
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CUSIP No. 641244108 13D Page 16 of 34 Pages
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ESCROW AGREEMENT
This Escrow Agreement, dated as of November 29, 2006 ("ESCROW Agreement"),
is by and among Neuro-Hitech, Inc., a Delaware corporation (the "BUYER"); David
Dantzker (the "REPRESENTATIVE"); and Empire Stock Transfer Inc., a ________
corporation (the "ESCROW AGENT").
BACKGROUND
A Buyer, Q-RNA, Inc., a Delaware corporation ("Q-RNA"), and the
Representative, among others, are parties to an Agreement and Plan of Merger
(the "MERGER AGREEMENT"), dated as of November 16, 2006, pursuant to which a
subsidiary of Buyer merged with and into Q-RNA and Buyer issued its common stock
and warrants to former securityholders of Q-RNA. Capitalized terms used herein
and not defined shall have the respective meanings assigned thereto in the
Merger Agreement.
B. The Merger Agreement provides that the "Escrow Shares" (as defined
below) shall be deposited in escrow as security for the indemnification
obligations of the Company Securityholders under Section 9 of the Merger
Agreement, to be held and distributed by Escrow Agent in accordance with the
terms of this Escrow Agreement.
C. Escrow Agent has agreed to accept, hold, and distribute the Escrow
Shares deposited with it in accordance with the terms of this Escrow Agreement.
D. The Representative has been appointed to act on behalf of Company
Securityholders for all purposes in connection with the Escrow Shares to be
deposited with Escrow Agent, the Merger Agreement, and this Escrow Agreement.
E. In order to establish the escrow of the Escrow Shares and to effect
the provisions of the Merger Agreement, the parties hereto have entered into
this Escrow Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, for
themselves, their successors and assigns, hereby agree as follows:
1. DEFINITIONS. The following terms shall have the following
meanings when used herein:
"ESCROW SHARES" shall mean the 360,000 shares of Buyer Stock
(representing 20% of the Buyer Stock issued as a part of the Merger
Consideration) deposited with Escrow Agent as security for the Company
Securityholders' indemnification obligations under Section 9 of the Merger
Agreement, as adjusted for any stock split, stock dividend, combination or
similar recapitalization.
"ESCROW PERIOD" shall mean the period commencing on the date hereof
and ending on the date that is eighteen (18) months from the date hereof;
provided, that the Escrow Period shall not terminate with respect to all or any
portion of the Escrow Shares that are the subject of a pending claim, if an
Indemnification Demand Certificate with respect to such claim shall have been
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CUSIP No. 641244108 13D Page 17 of 34 Pages
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timely given in accordance with the provisions of this Escrow Agreement, until
the applicable claim has been satisfied or otherwise resolved as provided
herein.
"INDEMNIFICATION DEMAND CERTIFICATE" shall mean a certificate,
signed by the Buyer and received by the Escrow Agent and the Representative
prior to the end of the Escrow Period, (i) stating that Buyer (or other person
entitled to indemnity pursuant to Section 9.2 of the Merger Agreement
(collectively with the Buyer, the "BUYER INDEMNIFIED PARTY")), has suffered,
incurred or sustained Damages for which it is entitled to indemnification
pursuant to the Merger Agreement, (ii) setting forth the amount of
indemnification to which the Buyer Indemnified Party is entitled pursuant to the
Merger Agreement ("INDEMNIFICATION AMOUNT"), (iii) specifying in reasonable
detail the individual items of Damages included in the Indemnification Amount so
stated, the calculation of such amount or amounts and the factual basis of such
claim; and (iv) stating the number of Escrow Shares to which the Buyer believes
it is entitled pursuant to Section 9 of the Merger Agreement.
"JOINT WRITTEN DIRECTION" shall mean a written direction executed by
the Representative and the Buyer directing Escrow Agent to distribute all or a
portion of the Escrow Shares or to take or refrain from taking an action
pursuant to this Escrow Agreement.
2. APPOINTMENT OF AND ACCEPTANCE BY ESCROW AGENT. The parties
hereby appoint Escrow Agent to serve as escrow agent hereunder. Escrow Agent
hereby accepts such appointment and, upon receipt of the Escrow Shares in
accordance with SECTION 3 below, agrees to hold and distribute the Escrow Shares
in accordance with this Escrow Agreement.
3. CREATION OF ESCROW.
a. DEPOSITS BY BUYER. Concurrently with the execution
hereof, Buyer delivered to the Escrow Agent one stock
certificate for each Company Securityholder, in each
case representing the Escrow Shares, registered in the
name of the respective Company Securityholder, and in
the denomination set forth on SCHEDULE A attached
hereto; and
b. DEPOSITS BY REPRESENTATIVE. Concurrently with the
execution hereof, the Representative has delivered to
the Escrow Agent five (5) stock powers and assignments
separate from certificate for EACH of the Company
Securityholders, all endorsed in blank on behalf of the
appropriate Company Securityholder by the
Representative.
4. DISTRIBUTIONS OF ESCROW SHARES.
a. JOINT WRITTEN DIRECTION. Escrow Agent shall distribute
Escrow Shares, and related stock powers, at any time and
from time to time, in accordance with a Joint Written
Direction.
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CUSIP No. 641244108 13D Page 18 of 34 Pages
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b. DISTRIBUTIONS PURSUANT TO SECTION 5. Escrow Agent shall
distribute Escrow Shares, and related stock powers, in
accordance with the procedures set forth in SECTION 5
below.
c. EXPIRATION OF ESCROW PERIOD. Upon the expiration of
the Escrow Period, Escrow Agent shall, as promptly as
practicable, without any further instruction or
direction from the Buyer or the Representative,
distribute all of the Escrow Shares, and related
stock powers, then remaining in escrow hereunder to
the Representative, less a number of Escrow Shares,
and related stock powers, sufficient to satisfy all
then pending claims for Escrow Shares made by Buyer,
if any. Upon the final determination of any pending
claims, the Escrow Shares, and related stock powers,
being held pending such determination, shall be
distributed by the Escrow Agent in accordance with
the terms of this Escrow Agreement.
5. CLAIMS UPON ESCROW ACCOUNT.
a. CLAIMS. In the event of a claim for indemnification
by an Indemnified Party pursuant to Section 9 of the
Merger Agreement, the Buyer may, at any time on or
before the last day of the Escrow Period, deliver an
Indemnification Demand Certificate with respect
thereto to the Representative and to the Escrow
Agent; provided, however, that Buyer must allocate
the entire Indemnification Amount among all of the
Merger Consideration (including the Buyer Warrants
but excluding the Buyer Options), as set forth in
Section 9.9 of the Merger Agreement, and therefore
may not seek the entire Indemnification Amount
through forfeiture of the Escrow Shares.
b. DISTRIBUTION OF ESCROW SHARES. If, within thirty
(30) days after receipt an Indemnification Demand
Certificate by the Representative and the Escrow
Agent, the Escrow Agent does not receive a written
notice from the Representative objecting to the claim
made in the Indemnification Demand Certificate in
accordance with the provisions of subsections c. and
d. below, the Escrow Agent shall deliver to the
Buyer, as promptly as practicable, the number of
Escrow Shares claimed by the Buyer pursuant to such
Indemnification Demand Certificate.
c. OBJECTIONS TO CLAIMS. For a period of thirty (30)
days after receipt of an Indemnification Demand
Certificate by the Representative and the Escrow
Agent, the Escrow Agent shall make no delivery to the
Buyer of any Escrow Shares pursuant to subsection b.
above unless the Escrow Agent shall have received
written authorization from the Representative to make
such delivery. After the expiration of such thirty
---------------------- ----------------------
CUSIP No. 641244108 13D Page 19 of 34 Pages
---------------------- ----------------------
(30) day period, the Escrow Agent shall make delivery
of Escrow Shares in accordance with subsection b,
unless the Representative shall object to the claim
made in the Indemnification Demand Certificate in a
written statement delivered to the Escrow Agent and
the Buyer prior to the expiration of such thirty (30)
day period. If the Representative so objects prior
to the expiration of the prescribed period, no such
delivery of Escrow Shares may be made by the Escrow
Agent until: (i) receipt by Escrow Agent of a Joint
Written Direction regarding such delivery, or (ii) a
court of competent jurisdiction shall issue a final
written decision or judgment, subject to no further
appeal, with respect to such delivery and the Escrow
Agent has received evidence reasonably satisfactory
to it of such final written decision or judgment.
d. GROUNDS FOR OBJECTIONS. The Representative shall not
object to any claim unless: (i) it believes in good
faith that the Buyer is not entitled to be
indemnified with respect to all or any portion of the
Indemnification Amount specified in an
Indemnification Demand Certificate; or (ii) it lacks
sufficient information to assess the validity or
amount of the claim. If the Representative objects
to a claim on the basis that it lacks sufficient
information, it shall promptly request from the Buyer
any additional information reasonably necessary in
order for it to assess such claim and the Buyer
shall, to the extent the Buyer reasonably can,
provide the additional information reasonably
requested. Upon receipt of such additional
information, the Representative shall review it as
soon as reasonably practicable and notify the Buyer
and the Escrow Agent of any withdrawal or
modification of the objection.
6. DIVIDENDS AND DISTRIBUTIONS; VOTING RIGHTS. Notwithstanding
the escrow of the Escrow Shares, dividends (other than dividends payable in
shares of the Buyer's capital stock), or other distributions declared and paid
on such shares shall continue to be paid by Buyer to the respective Company
Securityholders in whose names the Escrow Shares are registered and all voting
rights with respect to such shares shall inure to the benefit of and be enjoyed
by such Company Securityholders. Any securities received by the Escrow Agent in
respect of any Escrow Shares as a result of any stock split, reclassification,
subdivision or combination of shares, payment of a stock dividend or other stock
distribution, or change of shares into any other securities pursuant to or as
part of a merger, consolidation, reorganization, or liquidation of Buyer, or
otherwise, shall be held by the Escrow Agent as, and shall be included within
the definition of, Escrow Shares.
7. SUSPENSION OF PERFORMANCE; DISTRIBUTION INTO COURT. If at any
time Escrow Agent is unable to determine, to Escrow Agent's sole satisfaction,
the proper disposition of any portion of the Escrow Shares or Escrow Agent's
proper actions with respect to its obligations hereunder, or if the Buyer and
the Representative have not within 30 days of the furnishing by Escrow Agent of
a notice of resignation pursuant to SECTION 9 below, appointed a successor
---------------------- ----------------------
CUSIP No. 641244108 13D Page 20 of 34 Pages
---------------------- ----------------------
Escrow Agent to act hereunder, then Escrow Agent may, in its sole discretion,
take either or both of the following actions:
a. suspend the performance of any of its obligations
(including, without limitation, any distribution
obligations) under this Escrow Agreement until such
dispute or uncertainty shall be resolved to the sole
satisfaction of Escrow Agent or until a successor Escrow
Agent shall have been appointed (as the case may be);
and/or
b. petition (by means of an interpleader action or any
other appropriate method) any court of competent
jurisdiction in any venue convenient to Escrow Agent,
for instructions with respect to such dispute or
uncertainty, and to the extent required by law,
transfer to such court, for holding and disposition
in accordance with the instructions of such court,
all of the Escrow Shares.
Escrow Agent shall have no liability to Buyer, the Company Securityholders, the
Representative or any other person with respect to any such suspension of
performance or distribution into court, specifically including, without
limitation, any liability or claimed liability that may arise, or be alleged to
have arisen, out of or as a result of any delay in the distribution of the
Escrow Shares or any delay in or with respect to any other action required or
requested of Escrow Agent.
8. DISTRIBUTIONS OF ESCROW SHARES. All distributions of Escrow
Shares authorized hereunder shall be made by the Escrow Agent to the applicable
party at the address set forth in SECTION 14 below. In the event of the
distribution of less than all of the then-remaining Escrow Shares to Buyer
pursuant to the terms of this Escrow Agreement, Buyer will promptly cause to be
prepared and delivered to the Escrow Agent new certificates representing the
balance of the Escrow Shares. All distributions of Escrow Shares authorized
hereunder shall be made on a pro rata basis, in accordance with the percentages
set forth on SCHEDULE A hereto.
9. RESIGNATION AND REMOVAL OF ESCROW AGENT. Escrow Agent may
resign from the performance of its duties hereunder at any time by giving ten
(10) days' prior written notice to the Buyer and the Representative or may be
removed, with or without cause, by the Buyer and the Representative, acting
jointly by furnishing a Joint Written Direction to Escrow Agent at least ten
(10) days prior to the effectiveness of such removal. Such resignation or
removal shall take effect upon the appointment of a successor Escrow Agent as
provided below. Upon any such notice of resignation or removal, the Buyer and
the Representative jointly shall appoint a successor Escrow Agent hereunder.
Upon the acceptance in writing of any appointment as Escrow Agent hereunder by a
successor Escrow Agent, such successor Escrow Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Escrow Agent, and the retiring Escrow Agent shall be discharged from
its duties and obligations under this Escrow Agreement, but shall not be
discharged from any liability for actions taken as Escrow Agent hereunder prior
to such succession. After any retiring Escrow Agent's resignation or removal,
the provisions of this Escrow Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Escrow Agent under this
Escrow Agreement. The retiring Escrow Agent shall transmit the Escrow Shares and
all records pertaining to the Escrow Shares to the successor Escrow Agent, after
making copies of such records as the retiring Escrow Agent deems advisable.
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CUSIP No. 641244108 13D Page 21 of 34 Pages
---------------------- ----------------------
10. LIABILITY OF ESCROW AGENT.
a. Escrow Agent shall have no liability for any action
taken or omitted by it in the performance of its
duties hereunder, except for Escrow Agent's bad faith
or willful misconduct. Escrow Agent's sole
responsibility shall be for the safekeeping and
distribution of the Escrow Shares in accordance with
the terms of this Escrow Agreement. Escrow Agent
shall have no implied duties or obligations and shall
not be charged with knowledge or notice of any fact
or circumstance not specifically set forth herein.
Escrow Agent may rely upon any instrument, not only
as to its due execution, validity and effectiveness,
but also as to the truth and accuracy of any
information contained therein, which Escrow Agent
shall in good faith believe to be genuine, to have
been signed or presented by the person or parties
purporting to sign the same and to conform to the
provisions of this Escrow Agreement. In no event
shall Escrow Agent be liable for incidental,
indirect, special, consequential or punitive
damages. Escrow Agent shall not be obligated to take
any legal action or commence any proceeding in
connection with the Escrow Shares, this Escrow
Agreement or the Merger Agreement, or to appear in,
prosecute or defend any such legal action or
proceeding. Escrow Agent may consult legal counsel
selected by it in the event of any dispute or
question as to the construction of any of the
provisions hereof or of any other agreement or of its
duties hereunder, or relating to any dispute
involving any party hereto, and shall incur no
liability and shall be fully indemnified from any
liability whatsoever in acting in accordance with the
opinion or instruction of such counsel. Buyer shall
promptly pay, upon demand, the reasonable fees and
expenses of any such counsel, and shall be entitled
to receive reimbursement for one-half of such fees
and expenses so paid from the Company
Securityholders. Any such fees and expenses payable
by the Company Securityholders shall be deemed, for
purposes of Section 5 above, to be a claim for
indemnification by the Buyer pursuant to Section 9 of
the Merger Agreement.
b. The Escrow Agent is authorized, in its sole
discretion, to comply with orders issued or process
entered by any court with respect to the Escrow
Shares, without determination by the Escrow Agent of
such court's jurisdiction in the matter. If any
portion of the Escrow Shares is at any time attached,
garnished or levied upon under any court order, or in
case the assignment, transfer, conveyance or delivery
of any such property shall be stayed or enjoined by
any court order, or in case any order, judgment or
decree shall be made or entered by any court
---------------------- ----------------------
CUSIP No. 641244108 13D Page 22 of 34 Pages
---------------------- ----------------------
affecting such property or any part thereof, then and
in any such event, the Escrow Agent is authorized, in
its sole discretion, to rely upon and comply with any
such order, writ, judgment or decree which it is
advised by legal counsel selected by it is binding
upon it without the need for appeal or other action;
and if the Escrow Agent complies with any such order,
writ, judgment or decree, it shall not be liable to
any of the parties hereto or to any other person or
entity by reason of such compliance even though such
order, writ, judgment or decree may be subsequently
reversed, modified, annulled, set aside or vacated.
11. INDEMNIFICATION OF ESCROW AGENT. From and at all times after
the date of this Escrow Agreement, Buyer and the Company Securityholders shall,
jointly and severally, to the fullest extent permitted by law, indemnify and
hold harmless Escrow Agent and each partner, associate, employee, agent and
affiliate of Escrow Agent (collectively, the "Indemnified Parties") against any
and all actions, claims (whether or not valid), losses, damages, liabilities,
costs and expenses of any kind or nature whatsoever (including without
limitation reasonable attorneys' fees, costs and expenses) incurred by or
asserted against any of the Indemnified Parties from and after the date hereof,
whether direct, indirect or consequential, as a result of or arising from or in
any way relating to any claim, demand, suit, action or proceeding (including any
inquiry or investigation) by any person, including without limitation Buyer or
Representative; PROVIDED, HOWEVER, that no indemnified party shall have the
right to be indemnified hereunder for any liability finally determined by a
court of competent jurisdiction, subject to no further appeal, to have resulted
solely from the bad faith or willful misconduct of such indemnified party. The
obligations of Buyer and the Company Securityholders under this SECTION 11 shall
survive any termination of this Escrow Agreement.
12. FEES AND EXPENSES OF ESCROW AGENT. Buyer shall compensate
Escrow Agent for its services hereunder as set forth on SCHEDULE B hereto. All
of the compensation and reimbursement obligations set forth on SCHEDULE B shall
be paid by Buyer, and shall be payable, upon demand by Escrow Agent. The
obligations of Buyer under this SECTION 12 shall survive any termination of this
Escrow Agreement and the resignation or removal of Escrow Agent.
13. REPRESENTATIONS, WARRANTIES AND COVENANTS. Representative
represents and warrants to Escrow Agent that Representative has full power and
authority, on behalf of the Company Securityholders, to execute, deliver, and
perform this Escrow Agreement, to execute and deliver any Joint Written
Direction, to amend, modify or waive any provision of this Agreement and to take
any and all other actions as the Representative under this Agreement, all
without further consent or direction from any party. Representative will give
prior written notice to the Escrow Agent before any resignation or replacement
of the Representative shall become effective, and Escrow Agent shall be entitled
to deal exclusively with the Representative until it receives such notice.
14. NOTICE. Any notice or other communication required or
permitted to be given under this Agreement will be in writing, will be delivered
personally, or by confirmed facsimile transmission, or by reputable overnight
delivery service, or by certified mail, postage prepaid, and will be deemed
given upon delivery, if delivered personally, or one business day after
transmission by confirmed facsimile, or one business day after dispatch by
reputable overnight delivery service, or three days after deposit in the mails,
if mailed, to the following addresses:
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CUSIP No. 641244108 13D Page 23 of 34 Pages
---------------------- ----------------------
If to Buyer:
Neuro-Hitech, Inc.
One Penn Plaza, Suite 2514
New York, NY 10119
Attention: President
with a copy to:
Arent Fox PLLC
1050 Connecticut Avenue, NW
Washington, DC 20036
Attn: Jeffrey E. Jordan, Esq.
If to the Representative:
Dr. David Dantzker
c/o Wheatley Partners
80 Cuttermill Road
Great Neck, NY 11021
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CUSIP No. 641244108 13D Page 24 of 34 Pages
---------------------- ----------------------
with a copy to:
Duane Morris LLP
470 Atlantic Ave, Suite 500
Boston, MA 02210
Attn: Daniel R. Pierce, Esq.
If to the Escrow Agent:
EMPIRE STOCK TRANSFER INC.
7251 West Lake Mead Blvd Suite 300
Las Vegas, NV 89128
Fax 702.974.1444
Attn: Patrick Mokros
or to such other address as each party may designate for itself by like
notice.
15. AMENDMENT OR WAIVER. This Escrow Agreement may be changed,
waived, discharged or terminated only by a writing signed by Buyer, the
Representative and Escrow Agent. No delay or omission by any party in exercising
any right with respect hereto shall operate as a waiver. A waiver on any one
occasion shall not be construed as a bar to, or waiver of, any right or remedy
on any future occasion.
16. SEVERABILITY. To the extent any provision of this Escrow
Agreement is prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Escrow Agreement.
17. GOVERNING LAW. This Escrow Agreement shall be construed and
interpreted in accordance with the internal laws of the State of Delaware
without giving effect to the conflict of laws principles thereof.
18. ENTIRE AGREEMENT. This Escrow Agreement, along with the Merger
Agreement, constitutes the entire agreement between the parties relating to the
holding and distribution of the Escrow Shares and sets forth in their entirety
the obligations and duties of Escrow Agent with respect to the Escrow Shares. In
the event of any conflict between the terms of this Escrow Agreement (other than
those terms that affect the rights, duties or obligations of the Escrow Agent,
which shall be governed exclusively by this Escrow Agreement) and the Merger
Agreement, the Merger Agreement shall prevail.
19. CONSTRUCTION. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement. The language used in this Agreement is the language
chosen by the parties hereto to express their mutual intent, and no rule of
strict construction shall be applied against either party.
20. BINDING EFFECT. All of the terms of this Escrow Agreement, as
amended from time to time, shall be binding upon, inure to the benefit of and be
enforceable by the respective heirs, successors and assigns of Buyer, the
Representative, the Company Securityholders and Escrow Agent.
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CUSIP No. 641244108 13D Page 25 of 34 Pages
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21. EXECUTION IN COUNTERPARTS. This Escrow Agreement and any Joint
Written Direction may be executed in two or more counterparts, which when so
executed shall constitute one and the same agreement or direction.
22. TERMINATION. Upon the distribution of all of the Escrow Shares
pursuant to the terms hereof, this Escrow Agreement shall terminate and Escrow
Agent shall have no further obligation or liability whatsoever with respect to
this Escrow Agreement or the Escrow Shares.
23. TAX REPORTING. The Buyer and the Representative agree that the
Escrow Agent will not be responsible for the preparation and mailing of IRS Form
1099 or any other tax reporting, if necessary.
* * *
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CUSIP No. 641244108 13D Page 26 of 34 Pages
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IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement
to be executed under seal as of the date first above written.
NEURO-HITECH, INC.
By: /s/ David Barrett
---------------------------------
Name: David Barrett
Title: CFO
REPRESENTATIVE:
/s/ David Dantzker
-------------------------------------
David Dantzker
EMPIRE STOCK TRANSFER INC.
AS ESCROW AGENT
By: /s/ Patrick Mokros
---------------------------------
Name: Patrick Mokros
-------------------------------
Title: President
------------------------------
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CUSIP No. 641244108 13D Page 27 of 34 Pages
---------------------- ----------------------
--------------------------------------------------------------
Escrow Percentage of All
Company Securityholder Shares Escrow Shares
--------------------------------------------------------------
Abraham Grossman 31,390 8.72%
--------------------------------------------------------------
Anthony J. Janiuk 7,847 2.18%
--------------------------------------------------------------
Kathryn L. Vivian 6,399 1.78%
--------------------------------------------------------------
William P. Johnson 1,328 0.37%
--------------------------------------------------------------
Igor Roninson 1,304 0.36%
--------------------------------------------------------------
James E. Sylvester 1,207 0.34%
--------------------------------------------------------------
Daniel W. Kollin 734 0.20%
--------------------------------------------------------------
Mitchell D. Cohen 734 0.20%
--------------------------------------------------------------
Nils Walter 661 0.18%
--------------------------------------------------------------
Alexander V. Munishkin 604 0.17%
--------------------------------------------------------------
Valentin Kryukov 584 0.16%
--------------------------------------------------------------
Brian Zeiler 584 0.16%
--------------------------------------------------------------
Thomas L. Netzel 435 0.12%
--------------------------------------------------------------
Michael P. Farrell 129 0.04%
--------------------------------------------------------------
Lewis Bearden, III 60 0.02%
--------------------------------------------------------------
Durand Venture Associates, LLC 106,144 29.48%
--------------------------------------------------------------
Wheatley MedTech Partners, LP 75,969 21.10%
--------------------------------------------------------------
Wheatley New York Partners, LP 104,231 28.95%
--------------------------------------------------------------
Double D Venture Fund, LP 19,656 5.46%
------- ------
--------------------------------------------------------------
TOTAL ESCROW SHARES 360,000 100.00%
--------------------------------------------------------------
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CUSIP No. 641244108 13D Page 28 of 34 Pages
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SCHEDULE B
FEES
---------------------- ----------------------
CUSIP No. 641244108 13D Page 29 of 34 Pages
---------------------- ----------------------
NEURO-HITECH, INC.
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT (this "AGREEMENT") is made and entered into
as of November 29, 2006 (the "EFFECTIVE DATE"), by Reuben Seltzer and Alan
Kestenbaum ("CONTROLLING STOCKHOLDERS") in favor of the individuals listed on
Exhibit A hereto (the "STAKEHOLDERS").
WITNESSETH:
WHEREAS, as an inducement to the Stakeholders to authorize the Agreement
and Plan of Merger Agreement, by and among the Neuro-Hitech, Inc. (the
"CORPORATION"), QA Acquisition Corp., a Delaware corporation, QA MERGER LLC, A
DELAWARE LIMITED LIABILITY COMPANY, Q-RNA, Inc., a Delaware corporation
("Q-RNA") and Dr. David Dantzker, as "Representative" of the Stakeholders (the
"MERGER AGREEMENT"), the Controlling Stockholders hereto desire to enter into
this Agreement to set forth their agreements and understandings with respect to
how their capital stock of the Corporation, including, without limitation, the
Class A Common Stock ("CLASS A STOCK") will be voted with respect to the
election of directors of the Corporation; and
WHEREAS, capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Merger Agreement;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, and for other good and valuable consideration,
the parties hereby agree as follows:
1. ELECTION OF BOARD.
1.1 VOTING; BOARD COMPOSITION.
(a) During the term of this Agreement and for so long as the
Stakeholders in the aggregate continue to own, beneficially and of record, at
least fifty percent of the total number of shares of the Corporation's Common
Stock issued on the Effective Date as Merger Consideration (as adjusted for any
stock split, combination, recapitalization, reorganization or similar event),
the Controlling Stockholders agree to vote all of their shares of the
Corporation's voting capital stock, including, without limitation, their Class A
Stock, now or hereafter directly or indirectly owned (of record or beneficially)
by such party, in such manner as may be necessary to elect (and maintain in
office) as members of the Corporation's Board of Directors ("Board") up to two
individuals to be nominated by the Representative, which directors shall
initially be Dr. David Dantzker and William McIntosh, and hereafter shall be
identified from time to time in a writing delivered to the Corporation by the
Representative.
Stockholders' Agreement
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CUSIP No. 641244108 13D Page 30 of 34 Pages
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(b) In the event the Stakeholders in the aggregate own,
beneficially and of record, less than fifty percent but at least twenty-five
percent, of the total number of shares of the Corporation's Common Stock issued
on the Effective Date as Merger Consideration (as adjusted for any stock split,
combination, recapitalization, reorganization or similar event), the Controlling
Stockholders agree to vote all of their shares of the Corporation's voting
capital stock, including, without limitation, their Class A Stock, now or
hereafter directly or indirectly owned (of record or beneficially) by such
party, in such manner as may be necessary to elect (and maintain in office) as
members of the Board one individual to be nominated by the Representative which
director shall be identified from time to time in a writing delivered to the
Corporation by the Representative.
1.2 BOARD DESIGNEES. For purposes of this Agreement any
individual who is designated for election to the Board pursuant to the
foregoing provisions of Section 1.1 is hereinafter referred to as a "BOARD
DESIGNEE".
1.3 CHANGES IN BOARD DESIGNEES. From time to time during the
term of this Agreement, the Representative may, in its sole discretion:
(a) elect to remove from the Board any incumbent Board
Designee who occupies a Board seat for which the Representative is entitled to
designate the Board Designee under Section 1.1; and/or
(b) designate a new Board Designee for election to a Board
seat for which the Representative is entitled to designate the Board Designee
under Section 1.1 (whether to replace a prior Board Designee or to fill a
vacancy in such Board seat);
PROVIDED such removal and/or designation of a Board Designee is approved in a
writing signed by the Representative and delivered to the Corporation, in which
case such election to remove a Board Designee and/or elect a new Board Designee
will be binding on the Controlling Stockholders. In the event of such a removal
and/or designation of a Board Designee under this Section 1.3, the Controlling
Stockholders shall vote all of their shares of the Corporation's capital stock,
including, without limitation, their shares of Class A Stock as provided in
Section 1.1 to cause: (a) the removal from the Board of the Board Designee or
Designees so designated for removal by the Representative; and (b) the election
to the Board of any new Board Designee or Designees so designated for election
to the Board by the Representative.
1.4 NOTICE; COVENANT TO VOTE IN ACCORD. The Corporation shall
promptly give each of the Controlling Stockholders written notice of any change
in composition of the Board and of any proposal by the Representative to remove
or elect a new Board Designee. In any election of directors pursuant to this
Section 1, the Controlling Stockholders shall vote all of their shares of the
Corporation's capital stock, including, without limitation, their Class A Stock
in a manner sufficient to elect to the Board the individuals to be elected
thereto as provided in this Section 1. Nothing in this Section 1 shall be
construed as a limitation on the right of the Controlling Stockholders to vote
their Class A Stock, or other capital stock of the Corporation, in a manner that
results in the election of other nominees to serve as directors, including each
of the Controlling Stockholder, in addition to the individuals designated by the
Representative.
Stockholders' Agreement
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CUSIP No. 641244108 13D Page 31 of 34 Pages
---------------------- ----------------------
2. FURTHER ASSURANCES; ENFORCEMENT. Each of the Controlling
Stockholders agree not to vote any shares of Corporation's capital stock, or to
take any other actions, that would in any manner defeat, impair, be inconsistent
with or adversely affect the stated intentions of the parties under Section 1 of
this Agreement; PROVIDED, HOWEVER, that the Corporation shall have no obligation
to enforce any right of the Stakeholders in this Agreement, to arbitrate any
dispute or to reject any vote of any party otherwise in accordance with
applicable corporate law, absent a court order to do so. The Corporation will
promptly notify the Representative of any vote by the Controlling Stockholders
in a manner that is inconsistent with the stated intention of the parties under
Section 1 of this Agreement.
3. MISCELLANEOUS PROVISIONS.
3.1 NOTICES. Any notice or other communication required or
permitted to be given under this Agreement will be in writing, will be delivered
personally or by certified mail, postage prepaid and will be deemed given upon
delivery, if delivered personally, or three days after deposit in the mails, if
mailed, to the following addresses:
(a) If to the Corporation:
Neuro-Hitech, Inc.
One Penn Plaza, Suite 2514
New York, NY 10119
Attention: President
with a copy to:
Arent Fox PLLC
1050 Connecticut Avenue, NW
Washington, DC 20036
Attn: Jeffrey E. Jordan, Esq.
(b) If to the Representative:
Dr. David Dantzker
c/o Wheatley Partners
80 Cuttermill Road
Great Neck, NY 11021
with a copy to:
Duane Morris LLP
470 Atlantic Avenue, Suite 500
Boston, MA 02210
Attn: Daniel R. Pierce and Lance A. Kawesch
or to such other address as a party may have furnished to the other
parties in writing pursuant to this Section 3.1.
Stockholders' Agreement
---------------------- ----------------------
CUSIP No. 641244108 13D Page 32 of 34 Pages
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3.2 GOVERNING LAW. The internal laws of the State of Delaware
(irrespective of its choice of law principles) will govern the validity of this
Agreement, the construction of its terms, and the interpretation and enforcement
of the rights and duties of the parties hereto.
3.3 BINDING ON SUCCESSORS AND ASSIGNS; INCLUSION WITHIN CERTAIN
DEFINITIONS. This Agreement, and the rights and obligations of the parties
hereunder, will inure to the benefit of, and be binding upon, their respective
successors, assigns, heirs, executors, administrators and legal representatives
and any transferee of Class A Stock. The Stakeholders are expressly acknowledged
to be intended third party beneficiaries of this Agreement.
3.4 SEVERABILITY. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such void
or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of the void or unenforceable provision.
3.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, will bear the signatures of
both parties reflected hereon as signatories.
3.6 AMENDMENT AND WAIVERS. Any term or provision of this Agreement
may be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof or default in the performance hereof will
not be deemed to constitute a waiver of any other default or any succeeding
breach or default. The failure of any party to enforce any of the provisions
hereof will not be construed to be a waiver of the right of such party
thereafter to enforce such provisions.
3.7 OBLIGATION OF CORPORATION; BINDING NATURE OF EXERCISE. The
Corporation agrees to use its best efforts to enforce the terms of this
Agreement, to inform the Representative of any breach hereof (to the extent the
Corporation has knowledge thereof) and to assist each Controlling Stockholder in
the performance of such Controlling Stockholder's obligations hereunder.
3.8 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties with respect to the specific subject matter hereof and
supersedes in their entirety all other agreements or understandings between or
among the parties hereto with respect to such subject matter.
[SIGNATURE PAGE NEXT]
Stockholders' Agreement
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CUSIP No. 641244108 13D Page 33 of 34 Pages
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IN WITNESS WHEREOF, the undersigned parties hereto have executed this
Stockholders' Agreement as of the date first written above.
CONTROLLING STOCKHOLDERS:
/s/ Reuben Seltzer
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REUBEN SELTZER
/s/ Alan Kestenbaum
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ALAN KESTENBAUM
ACKNOWLEDGED BY:
CORPORATION
NEURO-HITECH, INC.
By: /s/ Reuben Seltzer
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Name: REUBEN SELTZER
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Title: CHIEF EXECUTIVE OFFICER
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REPRESENTATIVE:
/s/ David Dantzker
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Dr. David Dantzker
Stockholders' Agreement
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CUSIP No. 641244108 13D Page 34 of 34 Pages
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EXHIBIT A
STAKEHOLDERS
1. Abraham Grossman
2. Anthony J. Janiuk
3. Kathryn L. Vivian
4. William P. Johnson
5. Igor Roninson
6. James E. Sylvester
7. Daniel W. Kollin
8. Mitchell D. Cohen
9. Nils Walter
10. Alexander V. Munishkin
11. Valentin Kryukov
12. Brian Zeiler
13. Thomas L. Netzel
14. Mitchell P. Farrell
15. Lewis Bearden, III
16. Durand Venture Associates, LLC
17. Wheatley MedTech Partners, LP
18. Wheatley New York Partners, LP
19. Double D Venture Fund, LP
Stockholders' Agreement