UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

AMENDMENT NO. 1

TO

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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MANHATTAN PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware	2834	36-3898269
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

Manhattan Pharmaceuticals, Inc.

48 Wall Street

New York, NY 10005

Telephone: (212) 582-3950

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

Mr. Michael G. McGuinness

Chief Financial Officer

Manhattan Pharmaceuticals, Inc.

48 Wall Street

New York, NY 10005

Telephone: (212) 582-3950

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

Copies to:

Anthony O. Pergola, Esq. Lowenstein Sandler PC 65 Livingston Avenue Roseland, New Jersey 07068 Telephone: (973) 597-2500

Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement.

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities act of 1933, check the following box. x 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

 

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If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨ 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨   

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company x

CALCULATION OF REGISTRATION FEE

 

Title of Each Class of Securities to be Registered		Amount to be Registered (1)(2)			Proposed Maximum Offering Price Per Share(3)			Proposed Maximum Aggregate Offering Price(3)			Amount of Registration Fee
Common Stock, par value $0.001 per share			33,928,571		$	0.13		$	4,410,715		$	174(4	)

 

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(1)	Pursuant to Rule 416 under the Securities Act of 1933, as amended, this registration statement also covers such indeterminate number of shares of common stock as may be required to prevent dilution resulting from stock splits, stock dividends or similar events.

 

(2)	Includes (i) 26,785,714 shares of common stock issuable upon exercise of a put right and (ii) 7,142,857 shares of common stock issuable upon exercise of an outstanding warrant.

 

(3)

Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based upon the average of the high and low sales prices of the registrant’s common stock on April 28, 2008, as reported on the Over the Counter Bulletin Board.

 

(4)	The registration fee has been paid previously.

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, as amended, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Preliminary Prospectus

Subject to completion, dated October 3, 2008

 

Manhattan Pharmaceuticals, Inc.

33,928,571 Shares

Common Stock

 

This prospectus relates to 33,928,571 shares of common stock of Manhattan Pharmaceuticals, Inc. for the sale from time to time by a certain holder of our securities, or by its pledgees, assignees and other successors-in-interest. Of these shares, (i) 26,785,714 shares are issuable upon exercise of the selling securityholder’s right to put all or a portion of the selling securityholder’s equity interest in a limited partnership of which we and the selling securityholder are partners and (ii) 7,142,857 shares are issuable upon exercise of an outstanding warrant held by the selling securityholder. We will not receive any proceeds from the sales of the shares of common stock by the selling securityholder. We will not receive cash proceeds from the exercise of all or any portion of the put right exercisable for shares of common stock being registered in this offering; however, in the event of any such exercise, we will receive all or a portion of the selling securityholder's equity interest in the limited partnership. We will receive the proceeds of any cash exercise of the warrant.

The distribution of securities offered hereby may be effected in one or more transactions that may take place on the Over the Counter Bulletin Board, including ordinary brokers' transactions, privately negotiated transactions or through sales to one or more dealers for resale of such securities as principals, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. Usual and customary or specifically negotiated brokerage fees or commissions may be paid by the selling securityholder.

The prices at which the selling securityholder may sell the shares in this offering will be determined by the prevailing market price for the shares or in negotiated transactions. Our common stock is traded on the Over the Counter Bulletin Board under the symbol “MHAN.” On September 30, 2008, the last reported sales price for our common stock on the Over the Counter Bulletin Board was $0.09 per share.

 

These securities involve a high degree of risk. See “Risk Factors” beginning on page 7 of this prospectus for factors you should consider before buying shares of our common stock.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus, including the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” and elsewhere in this prospectus contains forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among other things, those listed under “Risk Factors” and elsewhere in this prospectus. In some cases, you can identify forward-looking statements by terminology such as “indicates,” “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.

 

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We caution you not to place undue reliance on these statements, which speak only as of the date of this prospectus. We are under no duty to update any of the forward-looking statements after the date of this prospectus to conform such statements to actual results.

USE OF PROCEEDS

 

Item 13. Other Expenses of Issuance and Distribution.

 

The following table sets forth an estimate of the fees and expenses relating to the issuance and distribution of the securities being registered hereby, other than underwriting discounts and commissions, all of which shall be borne by Manhattan Pharmaceuticals, Inc. (the “Registrant” or the “Company”). All of such fees and expenses, except for the SEC Registration Fee, are estimated:

SEC registration fee		$	175.00
Legal fees and expenses			10,000.00
Printing fees and expenses			1,000.00
Accounting fees and expenses			10,000.00
Miscellaneous fees and expenses			2,000.00
Total		$	23,175.00

 

Item 14. Indemnification of Officers and Directors

 

Under provisions of the amended and restated certificate of incorporation and bylaws of the Registrant, directors and officers will be indemnified for any and all judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys fees, in connection with threatened, pending or completed actions, suits or proceedings, whether civil, or criminal, administrative or investigative (other than an action arising by or in the right of the Registrant), if such director or officer has been wholly successful on the merits or otherwise, or is found to have acted in good faith and in a manner he or she reasonably believes to be in or not opposed to the best interests of the Registrant, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. In addition, directors and officers will be indemnified for reasonable expenses in connection with threatened, pending or completed actions or suits by or in the right of Registrant if such director or officer has been wholly successful on the merits or otherwise, or is found to have acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Registrant, except in the case of certain findings by a court that such person is liable for negligence or misconduct in his or her duty to the Registrant unless such court or the Delaware Court of Chancery also finds that such person is nevertheless fairly and reasonably entitled to indemnity. The Registrant’s certificate of incorporation also eliminates the liability of directors of the Registrant for monetary damages to the fullest extent permissible under Delaware law.

 

Section 145 of the Delaware General Corporation Law states:

(a)   A corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action arising by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

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(b)   A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expense which the Court of Chancery or such other court shall deem proper.

 

Securities and Securities and Exchange Commission Position Regarding Indemnification Liabilities Arising Under the Securities Act

 

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Registrant pursuant to the foregoing provisions, the Registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable.

Item 15. Recent Sales of Unregistered Securities.

In connection with the Registrant’s merger of its wholly-owned subsidiary Tarpan Acquisition Corp., with Tarpan Therapeutics, Inc. (“Tarpan”), effective as of April 1, 2005, it issued an aggregate of 10,731,052 shares of its common stock to the former stockholders of Tarpan in exchange for their shares of Tarpan common stock. The Registrant relied on the exemption from federal registration under Section 4(2) of the Securities Act, based on its belief that the issuance of such securities did not involve a public offering, as there were fewer than 35 “non-accredited” investors, all of whom, either alone or through a purchaser representative, had such knowledge and experience in financial and business matters so that each was capable of evaluating the risks of the investment.

In August 2005, the Registrant sold in a private placement offering to accredited investors units of its securities consisting of shares of common stock and warrants to purchase additional shares of common stock. The private placement was completed in two separate closings held on August 26, 2005 and August 30, 2005. In the August 26 closing, the Registrant sold a total of 10,763,926 shares of common stock and five-year warrants to purchase 2,152,758 shares for total gross proceeds of approximately $11.95 million. The warrants issued at the August 26 closing are exercisable at a price of $1.44 per share, which represented approximately 110% of the average closing price of the Registrant’s common stock during the five trading days preceding such closing date. On August 30, 2005, the Registrant sold an additional 1,108,709 shares of common stock and five-year warrants to purchase 221,741 shares of common stock, which resulted in gross proceeds of approximately $1.28 million. The warrants issued in connection with the August 30 closing are exercisable at a price of $1.49 per share, which represented approximately 110% of the average closing price of the Company's common stock during the five trading days preceding such closing date. The total gross proceeds resulting from this offering was approximately $13.22 million, before deducting selling commissions and expenses. The Registrant paid total cash commissions of approximately $925,000 to selling agents engaged in connection with the offering and issued 5-year warrants to purchase an aggregate of 593,196 shares of common stock, of which warrants to purchase 538,196 shares are exercisable at a price of $1.44 per share and the remaining are exercisable at a price of $1.49 per share. In connection with this offering, the Registrant relied on the exemption from federal registration under Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder, based on its belief that the offer and sale of the shares and warrants did not involve a public offering as each investor was “accredited” and no general solicitation was involved in the offering.

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On March 30, 2007, the Registrant entered into a series of subscription agreements with various institutional and other accredited investors for the issuance and sale in a private placement of an aggregate of 10,185,502 shares of the Registrant’s common stock for total gross proceeds of approximately $8.56 million. Of the total amount of shares issued, 10,129,947 were sold at a per share price of $0.84, and an additional 55,555 shares were sold to an entity affiliated with Neil Herskowitz, a director of Manhattan, at a per share price of $0.90, the closing sale price of the Registrant’s common stock on March 29, 2007. Pursuant to the subscription agreements, the Registrant also issued to the investors 5-year warrants to purchase an aggregate of 3,564,897 shares of the Registrant’s common stock at an exercise price of $1.00 per share. The warrants are exercisable during the period commencing September 30, 2007 and ending March 30, 2012. Pursuant to the subscription agreements, the Registrant agreed to file a registration statement with the Securities and Exchange Commission on or before May 14, 2007 covering the resale of the shares issued in the private placement, including the shares issuable upon exercise of the investor warrants. The Registrant engaged Paramount BioCapital, Inc., as its placement agent in connection with the private placement. In consideration for its services, the Registrant paid aggregate cash commissions of approximately $600,000 and issued to Paramount a 5-year warrant to purchase an aggregate of 509,275 shares at an exercise price of $1.00 per share. The sale of the shares and warrants was not registered under the Securities Act of 1933. Rather, the offer and sale of such securities was made in reliance on the exemption from registration requirements provided by Section 4(2) of the Securities Act and Regulation D promulgated thereunder. Each of the investors was “accredited” (as defined under Regulation D) and no general solicitation was used in connection with the offer and sale of such securities.

In April 2007, in partial consideration for entering into a license agreement, the Registrant issued to Thornton & Ross Ltd., the licensor, a total of 125,000 shares of the Registrant’s common stock in accordance with the terms thereof. The issuance of such common stock was considered to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act, or Regulation D promulgated thereunder, as a transaction by an issuer not involving a public offering. The recipient of such common stock represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates issued in this transaction. All recipients either received adequate information about us or had access to such information.

In June 2007, in consideration for entering into a license agreement, the Registrant issued to each of Thornton & Ross, Ltd. and Kerra, S.A., each a licensor thereunder, 75,000 shares of the Registrant’s common stock in accordance with the terms thereof. The issuances of such common stock were considered to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act, or Regulation D promulgated thereunder, as transactions by an issuer not involving a public offering. The recipients of such common stock represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates issued in these transactions. All recipients either received adequate information about the Registrant or had access to such information.

In January 2008, the Registrant and Nordic Biotech Venture Fund II K/S ("Nordic"), entered into a joint venture agreement the Registrant, as amended on February 18, 2008 and June 9, 2008 (the "Joint Venture Agreement"), pursuant to which in February 2008, (i) Nordic contributed cash in the amount of $2.5 million to Hedrin Pharmaceuticals K/S, a newly formed Danish limited partnership(the "Hedrin JV") in exchange for 50% of the equity interests in the Hedrin JV, and (ii) the Registrant contributed certain assets to North American rights (under license) to our Hedrin product to the Hedrin JV in exchange for $2.0 million in cash and 50% of the equity interests in the Hedrin JV. On or around June 30, 2008, in accordance with the terms of the Joint Venture Agreement, Nordic contributed an additional $1.25 million in cash to the Hedrin JV, $1.0 million of which was distributed to us and equity in the Hedrin JV was distributed to each of us and Nordic sufficient to maintain our respective ownership interests at 50%. Pursuant to the Joint Venture Agreement, upon the classification by the U.S. Food and Drug Administration, or the FDA, of Hedrin as a Class II or Class III medical device, Nordic will be required to contribute to the Hedrin JV an additional $1.25 million in cash, $0.5 million of which will be distributed to us and equity in the Hedrin JV will be distributed to each of us and Nordic sufficient to maintain our respective ownership interests at 50%. Upon classification by the FDA of Hedrin as a Class II or Class III medical device, the Hedrin JV will have received a total of $1.5 million cash to be applied toward the development and commercialization of Hedrin in North America. If classification of Hedrin by the FDA as a Class II or Class III medical device is not received by June 30, 2009, then Nordic will not be obligated to make the final payment of $1.25 million and Nordic will receive an additional 20% ownership of the joint venture and enhanced control over the joint venture's operations and other important decision-making. Pursuant to the terms of the Joint Venture Agreement, Nordic has the right to nominate one person for election or appointment to our board of directors.

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Pursuant to the Joint Venture Agreement, Nordic has the right to put all or a portion of its interest in the Hedrin JV in exchange for such number of shares of common stock equal to the amount of Nordic’s investment in the Hedrin JV divided by $0.14, as adjusted from time to time for stock splits and other specified events, multiplied by a conversion factor, which is (i) 1.00 for so long as Nordic's distributions from the Hedrin JV are less than the amount of its investment, (ii) 1.25 for so long as Nordic's distributions from the Hedrin JV are less than two times the amount of its investment but greater than or equal to the amount of its investment amount, (iii) 1.50 for so long as Nordic's distributions from the Hedrin JV are less than three times the amount of its investment but greater than or equal to two times the amount of its investment amount, (iv) 2.00 for so long as Nordic's distributions from the Hedrin JV are less than four times the amount of its investment but greater than or equal to three times the amount of its investment amount and (v) 3.00 for so long as Nordic’s distributions from Hedrin JV are greater than or equal to four times the amount of its investment. The put right expires upon the earlier to occur of (i) February 25, 2018 and (ii) 30 days after the date when Nordic's distributions from the Hedrin JV exceed five times the amount Nordic has invested in the Hedrin JV (or 10 days after such date if the Registrant has provided Nordic notice thereof). Pursuant to the Joint Venture Agreement, the Registrant has the right to call all or a portion of Nordic's equity interest in the Hedrin JV in exchange for such number of shares of common stock equal to the portion of Nordic's investment in the Hedrin JV that the Registrant calls by the dollar amount of Nordic's investment as of such date in the Hedrin JV, divided by $0.14, as adjusted from time to time for stock splits and other specified events. The call right is only exercisable by the Registrant if the price of common stock has closed at or above $1.40 per share for 30 consecutive trading days. During the first 30 consecutive trading days in which the common stock closes at or above $1.40 per share, the Registrant may exercise up to 25% of the call right. During the second 30 consecutive trading days in which the common stock closes at or above $1.40 per share, the Registrant may exercise up to 50% of the call right on a cumulative basis. During the third consecutive 30 trading days in which the common stock closes at or above $1.40 per share, the Registrant may exercise up to 75% of the call right on a cumulative basis. During the fourth consecutive 30 days in which the common stock closes at or above $1.40 per share, the Registrant may exercise up to 100% of the call right on a cumulative basis. Nordic may refuse the call, either by paying $1.5 million multiplied by the percentage of Nordic's investment being called or forfeiting an equivalent portion of the put right, calculated on a pro rata basis for the percentage of the Nordic equity interest called by us. The call right expires on February 25, 2013.

In connection with the Joint Venture Agreement, on February 25, 2008, Nordic paid the Registrant a non-refundable fee of $150,000 in exchange for the right to receive a warrant to purchase up to 7,142,857 shares of common stock at $0.14 per share, as adjusted from time to time for stock splits and other specified events, if Nordic did not exercise all or part of its put right on or before April 30, 3008. As of April 30, 2008, Nordic had not exercised all or any portion of its put right and the Registrant issued the warrant to Nordic.

  

The offering and sale of the securities under the Joint Venture Agreement were considered to be exempt from registration under the Securities Act, by virtue of Section 4(2) thereof and the provisions of Regulation D promulgated thereunder. Nordic has represented to the Registrant that it is an "accredited investor," as that term is defined in Rule 501(a) of Regulation D under the Securities Act.

On September 11, 2008, the Registrant entered into a series of 10% secured promissory notes with certain of its directors and officers and an employee of the Registrant (the “Note Holders”) for aggregate of $70,000. Principal and interest on the notes shall be paid in cash on March 10, 2009 unless paid earlier by the Registrant. In connection with the issuance of the notes, the Registrant also issued to the Note Holders 5-year warrants to purchase an aggregate of 140,000 shares of the Registrant's common stock at an exercise price of $0.20 per share. The Registrant granted to the Note Holders a continuing security interest in certain specific refunds, deposits and repayments due to the Registrant and expected to be repaid to the Registrant in the next several months. . The issuance of such securities was considered to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act, or Regulation D promulgated thereunder, as a transaction by an issuer not involving a public offering. The recipient of such securities represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the warrant certificates issued in this transaction. All recipients either received adequate information about us or had access to such information.

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Item 16.  Exhibits and Financial Statement Schedules.

 

a)

Exhibits.

 

The following documents are included or incorporated by reference in this report.

 

Exhibit No.		Description
2.1		Agreement and Plan of Merger among the Company, Manhattan Pharmaceuticals Acquisition Corp. and Manhattan Research Development, Inc. (formerly Manhattan Pharmaceuticals, Inc.) dated December 17, 2002 (incorporated by reference to Exhibit 2.1 from Form 8-K filed March 5, 2003).
2.2		Agreement and Plan of Merger among the Registrant, Tarpan Therapeutics, Inc. and Tarpan Acquisition Corp., dated April 1, 2005 (incorporated by reference to Exhibit 2.1 of the Registrant’s Form 8-K/A filed June 15, 2005).
3.1		Certificate of incorporation, as amended through September 25, 2003 (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 10-QSB for the quarter ended September 30, 2003).
3.2		Bylaws, as amended to date (incorporated by reference from Registrant’s registration statement on Form SB-2, as amended (File No.33-98478)).
4.1		Specimen common stock certificate (incorporated by reference from Registrant’s registration statement on Form SB-2, as amended (File No.33-98478)).
4.2		Form of warrant issued by Manhattan Research Development, Inc., which automatically converted into warrants to purchase shares of the Registrant’s common stock upon the merger transaction with such company (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 10-QSB for the quarter ended March 31, 2003).
4.3		Form of warrant issued to placement agents in connection with the Registrant’s November 2003 private placement of Series A Convertible Preferred Stock and the Registrant’s January 2004 private placement (incorporated by reference to Exhibit 4.18 to the Registrant’s Registration Statement on Form SB-2 filed January 13, 2004 (File No. 333-111897)).
4.4		Form of warrant issued to investors in the Registrant’s August 2005 private placement (incorporated by reference to Exhibit 4.1 of the Registrant’s Form 8-K filed September 1, 2005).
4.5		Form of warrant issued to placement agents in the Registrant’s August 2005 private placement (incorporated by reference to Exhibit 4.2 of the Registrant’s Form 8-K filed September 1, 2005).

 

4.6

Warrant, dated April 30, 2008, issued to Nordic Biotech Venture Fund II K/S (incorporated by reference to Exhibit 4.6 of the Registrant’s Registration Statement on Form S-1 filed on May 1, 2008 (File No. 333-150580).

 

4.7		Form of Warrant issued to Noteholders on September 11, 2008 (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on September 15, 2008)
5.1		Opinion of Lowenstein Sandler PC
10.1		1995 Stock Option Plan, as amended (incorporated by reference to Exhibit 10.18 to the Registrant’s Form 10-QSB for the quarter ended September 30, 1996).

 

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10.2		Form of Notice of Stock Option Grant issued to employees of the Registrant from April 12, 2000 to February 21, 2003 (incorporated by reference to Exhibit 99.2 of the Registrant’s Registration Statement non Form S-8 filed March 24, 1998 (File 333-48531)).
10.3		Schedule of Notices of Stock Option Grants, the form of which is attached hereto as Exhibit 4.2.
10.4		Form of Stock Option Agreement issued to employees of the Registrant from April 12, 2000 to February 21, 2003 (incorporated by reference to Exhibit 99.3 to the Registrant’s Registration Statement on Form S-8 filed March 24, 1998 (File 333-48531)).
10.5		License Agreement dated on or about February 28, 2002 between Manhattan Research Development, Inc. (f/k/a Manhattan Pharmaceuticals, Inc.) and Oleoyl-Estrone Developments SL (incorporated by reference to Exhibit 10.6 to the Registrant’s Amendment No. 2 to Form 10-QSB/A for the quarter ended March 31, 2003 filed on March 12, 2004).
10.6		License Agreement dated April 4, 2003 between the Registrant and NovaDel Pharma, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Amendment No. 1 to Form 10-QSB/A for the quarter ended June 30, 2003 filed on March 12, 2004).++
10.7		2003 Stock Option Plan (incorporated by reference to Exhibit 4.1 to Registrant’s Registration Statement on Form S-8 filed February 17, 2004).
10.8		Employment Agreement dated April 1, 2005, between the Registrant and Douglas Abel (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K/A filed June 15, 2005).
10.9		Sublicense Agreement dated April 14, 2004 between Tarpan Therapeutics, Inc., the Registrant’s wholly-owned subsidiary, and IGI, Inc. (incorporated by reference to Exhibit 10.109 to IGI Inc.’s Form 10-Q for the quarter ended March 31, 2004 (File No. 001-08568).
10.10		Form of subscription agreement between the Registrant and the investors in the Registrant’s August 2005 private placement (incorporated by reference as Exhibit 10.1 to the Registrant’s Form 8-K filed September 1, 2005).

 

10.11		Separation Agreement between the Registrant and Alan G. Harris December 21, 2007 (incorporated by reference to Exhibit 10.11 to the Registrant's Form 10-K filed March 31, 2008.)
10.12		Employment Agreement dated July 7, 2006 between the Registrant and Michael G. McGuinness (incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K filed July 12, 2006.)

 

10.13		Summary terms of compensation plan for Registrant’s non-employee directors (incorporated by reference to Exhibit 10.1 of Registrant’s Form 8-K filed February 5, 2007).
10.14		Form of Stock Option Agreement issued under the Registrant’s 2003 Stock Option Plan (Incorporated by reference to Exhibit 10.15 to the Registrant's Form 10-KSB filed April 2, 2078.)
10.15		Exclusive License Agreement for “Altoderm” between Thornton & Ross Ltd. and Manhattan Pharmaceuticals, Inc. dates April 3, 2007. (Incorporated by reference to Exhibit 10.3 of the registrant’s form 10-Q for the quarter ended June 30, 2007 filed on August 14, 2007.)

 

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10.16		Exclusive License Agreement for “Altolyn” between Thornton &Ross Ltd. and Manhattan Pharmaceuticals, Inc. dated April 3, 2007. (Incorporated by reference to Exhibit 10.4 of the registrant’s form 10-Q for the quarter ended June 30, 2007 filed on August 14, 2007.)
10.17		Exclusive License Agreement for “Hedrin” between Thornton &Ross Ltd. , Kerris, S.A. and Manhattan Pharmaceuticals, Inc. dated June 26, 2007. (Incorporated by reference to Exhibit 10.5 of the registrant’s form 10-Q for the quarter ended June 30, 2007 filed on August 14, 2007.)
10.18		Supply Agreement for “Hedrin” between Thornton & Ross Ltd. and Manhattan Pharmaceuticals, Inc. dated June 26, 2007. (Incorporated by reference to Exhibit 10.6 of the registrant’s form 10-Q for the quarter ended June 30, 2007 filed on August 14, 2007.)
10.19		Joint Venture Agreement between Nordic Biotech Fund II K/S and Manhattan Pharmaceuticals, Inc. to develop and commercialize “Hedrin” dated January 31, 2008.
10.20		Amendment No. 1, dated February 25, 2008, to the Joint Venture Agreement between Nordic Biotech Fund II K/S and Manhattan Pharmaceuticals, Inc. to develop and commercialize “Hedrin” dated January 31, 2008 (Incorporated by reference to Exhibit 10.20 to the Registrant's Form 10-K filed March 31, 2008).
10.21		Omnibus Amendment to Joint Venture Agreement and Additional Agreements, dated June 9, 2008, among Manhattan Pharmaceuticals, Inc., Hedrin Pharmaceuticals K/S, Hedrin Pharmaceuticals General Partner ApS and Nordic Biotech Venture Fund II K/S.
10.22		Assignment and Contribution Agreement between Hedrin Pharmaceuticals K/S and Manhattan Pharmaceuticals, Inc. dated February 25, 2008. (Incorporated by reference to Exhibit 10.21 to the Registrant's Form 10-K filed March 31, 2008.)
10.23		Registration Rights Agreement between Nordic Biotech Venture Fund II K/S and Manhattan Pharmaceuticals, Inc. dated February 25, 2008. (Incorporated by reference to Exhibit 10.22 to the Registrant's Form 10-K filed March 31, 2008.)
10.24		Letter Agreement, dated September 17, 2008, between Nordic Biotech Venture Fund II K/S and Manhattan Pharmaceuticals, Inc.
10.25		Amendment to Employment Agreement by and between Manhattan Pharmaceuticals, Inc. and Douglas Abel (Incorporated by reference to Exhibit 10.23 to the Registrant's Form 10-K filed March 31, 2008.)
10.26		Form of Secured Promissory Note, dated September 11, 2008 (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on September 15, 2008)
23.1		Consent of J.H. Cohn LLP.
23.2		Consent of Lowenstein Sandler PC (incorporated by reference to Exhibit 5.1)
24.1		Powers of Attorney (Included in Signature Page of this Registration Statement)

 

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++	Confidential treatment has been granted as to certain portions of this exhibit pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

II-7

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Item 17. Undertakings.

 

The undersigned Registrant hereby undertakes:

 

	(1)		To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
		(i)		To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended;
		(ii)		To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
		(iii)		To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
	provided, however , that subparagraphs (i) and (ii) above do not apply if the information required to be included in a post-effective amendment by these subparagraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this registration statement.
	(2)		That, for the purpose of determining any liability under the Securities Act of 1933, as amended, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
	(3)		To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

 

The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, as amended, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers, and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

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SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of New York, State of New York, on the 3rd day of October 2008.

	Manhattan Pharmaceuticals, Inc.
	By:	/s/ Michael G. McGuinness
		Mr. Michael G. McGuinness Chief Operating and Financial Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Douglas Abel and Michael G. McGuinness, and each of them, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for the undersigned and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this Registration Statement and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, the following persons in the capacities and on the dates indicated have signed this Registration Statement below.

 

/s/ Douglas Abel		Chief Executive Officer, President and	October 3, 2008
Douglas Abel		Director (principal executive officer)
/s/ Michael G. McGuinness		Chief Operating and Financial	October 3, 2008
Michael G. McGuinness		Officer & Secretary (principal financial and accounting and officer)
/s/ Neil Herskowitz		Director	October 3, 2008
Neil Herskowitz
/s/ Malcolm Hoenlein		Director	October 3, 2008
Malcolm Hoenlein
/s/ Timothy McInerney
Timothy McInerney		Director	October 3, 2008
/s/ Richard Steinhart
Richard Steinhart		Director	October 3, 2008
/s/ Michael Weiser
Michael Weiser		Director	October 3, 2008

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October 3, 2008

Manhattan Pharmaceuticals, Inc.

48 Wall Street

New York, NY 10005

Dear Sirs:

We have acted as special counsel to Manhattan Pharmaceuticals, Inc., a Delaware corporation (the “Company”), in connection with its preparation and filing with the Securities and Exchange Commission of a Registration Statement on Form S-1 (the “Registration Statement”), under the Securities Act of 1933, as amended (the “Securities Act”). The Registration Statement covers the resale of an aggregate of 33,928,571 shares (the “Shares”) of common stock, par value $0.001 per share, of the Company (the “Common Stock”), including: (i) 26,785,714 shares of Common Stock (the "Put Shares"), which are issuable upon exercise of the right of Nordic Biotech Venture Fund II K/S ("Nordic") to put all or a portion of Nordic's equity interest in a limited partnership of which the Company and Nordic are partners, in accordance with and subject to the terms and conditions of the Joint Venture Agreement, dated as of January 31, 2008, between the Company and Nordic, as amended on February 25, 2008 and on June 9, 2008 (the "Joint Venture Agreement"); and (ii) 7,142,857 shares of the Common Stock (the "Warrant Shares") issuable upon exercise of a currently outstanding warrant (the “Warrant”).

In connection with this opinion, we have examined the Registration Statement. We have also examined such corporate records, certificates and other documents and such questions of law as we have considered necessary or appropriate for the purpose of this opinion. We have assumed: (A) the genuineness and authenticity of all documents submitted to us as originals and (B) the conformity to originals of all documents submitted to us as copies thereof. As to certain factual matters, we have relied upon certificates of officers of the Company and have not sought independently to verify such matters.

Based upon the foregoing, it is our opinion that:

(1) the Put Shares have been duly authorized and, when issued in accordance with the terms and conditions of the Joint Venture Agreement (including the due payment of any consideration therefor specified in the Joint Venture Agreement), will be validly issued, fully paid and non-assessable; and

(2) the Warrant Shares have been duly authorized and, when issued in accordance with the terms and conditions of the Warrant (including the due payment of any exercise price therefor specified in the Warrant), will be validly issued, fully paid and non-assessable.

Our opinion herein is expressed solely with respect to the federal laws of the United States and the laws of the State of Delaware. Our opinion is based on these laws as in effect on the date hereof.

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Manhattan Pharmaceuticals, Inc.

Page 2

October 3, 2008

 

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the references to this firm under the heading "Legal Matters" in the prospectus, which is part of the Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act.

Very truly yours,

 

/s/ Lowenstein Sandler PC

 

Lowenstein Sandler PC

 

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Exhibit 10.19

 

JOINT VENTURE AGREEMENT

 

THIS JOINT VENTURE AGREEMENT (this “Agreement”) is entered into as of January 31, 2008 by and between Manhattan Pharmaceuticals, Inc., a Delaware corporation (“MHA”) and Nordic Biotech Venture Fund II K/S, a Danish limited liability partnership (“Nordic”).

 

WITNESSETH:

 

WHEREAS, MHA and Nordic wish to enter into a joint venture arrangement by which Nordic contributes capital to a newly formed limited partnership known as Hedrin Pharmaceuticals K/S or such other name as is selected by MHA and Nordic (“Newco”), and MHA assigns and contributes the Assets (as defined below) to Newco;

WHEREAS, upon the consummation of the transactions contemplated by the Contribution Agreement (as defined below), and the execution and delivery by each of MHA and Nordic of the Partnership Agreement, MHA will own 50% of the partnership shares of Newco and Nordic will own 50% of the partnership shares of Newco (as such interest may be constituted from time to time, including as reduced pursuant to the terms hereof, the “Nordic Interest”);

WHEREAS, MHA desires to grant to Nordic a put option with respect to the Nordic Interest, and Nordic desires to grant to MHA a call option with respect to the Nordic Interest, each in accordance with the terms and conditions of this Agreement, which shall be effective as of the Closing Date (as defined below); and

WHEREAS, in consideration of the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, MHA will (i) grant a warrant to purchase the Warrant Shares (as defined below) to Nordic and (ii) nominate a Nordic representative to MHA’s board of directors.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

1. Definitions. The following terms shall have the following meanings given to them:

 

“Additional Agreements” means the Contribution Agreement, the Partnership Agreement, the Services Agreement, the Warrant, the Registration Rights Agreement and any officer’s certificate delivered at the Closing.

 

“Adjusted Transaction Price” means the Transaction Price as adjusted in accordance with Section 5 hereof.

 

“Assets” means that term as defined in the Contribution Agreement.

“Business Day” means any day except Saturday, Sunday and any day that is a federal legal holiday or a day on which banking institutions in the state of New York are authorized or required by law or other governmental action to close.

 

“Call Closing” shall have the meaning set forth in Section 4.3 of this Agreement.

 

“Call Closing Date” shall have the meaning set forth in Section 4.3 of this Agreement.

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“Call Consideration” means a number of shares of Common Stock determined in accordance with the following formula:

 

(Investment Amount)*(1 - Call Reduction Factor)

(Adjusted Transaction Price)

 

“Call Event” means the occurrence of thirty consecutive business days on which the closing sale price of the Common Stock as reported on the Trading Market exceeds seven and a half times the Transaction Price (the “Threshold Price”).

 

“Call Notice” shall have the meaning set forth in Section 4.1 of this Agreement.

 

“Call Option” shall have the meaning set forth in Section 4.1 of this Agreement.

 

“Call Reduction Factor” shall have the meaning set forth in Section 4.3 of this Agreement.

 

“Common Stock” means the common stock of MHA, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed into.

 

“Common Stock Equivalents” means any securities of MHA which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

“Contribution Agreement” means that certain Assignment and Contribution Agreement to be entered into by and between MHA and Nordic in the form attached hereto as Exhibit A.

 

“Conversion Factor” means (i) 1.00 at such time as Nordic Distributions are less than the Investment Amount, (ii) 1.25 at such time as Nordic Distributions are less than two times the Investment Amount but greater than or equal to the Investment Amount, (iii) 1.50 at such time as Nordic Distributions are less than three times the Investment Amount but greater than or equal to two times the Investment Amount, (iv) 2.00 at such time as Nordic Distributions are less than four times the Investment Amount but greater than or equal to three times the Investment Amount, and (v) 3.00 at such time as Nordic Distributions are greater than or equal to four times the Investment Amount.

“Conversion Percentage” means the percentage of the Nordic Interest that Nordic chooses to put pursuant to the Put Option set forth in Section 3.1.

 

“Conversion Shares” means the shares of Common Stock issuable upon exercise of the Warrants, the Put Option and the Call Option.

 

“Disclosure Schedules” means the Disclosure Schedules of MHA delivered concurrently herewith.

 

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of MHA pursuant to any stock or option plan in effect on the date hereof or hereafter duly adopted for such purpose by a majority of the non-employee members of the Board of Directors of MHA or a majority of the members of a committee of non-employee directors, (b) securities upon the exercise or exchange of or conversion of any securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date hereof, provided that such securities have not been amended since the date hereof to increase the number of such securities or to decrease the exercise, exchange or conversion price of such securities, (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of MHA, but shall not include a transaction in which MHA is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, and (d) less than 50,000 shares of Common Stock (subject to adjustment for stock splits, stock combinations, and the like), in the aggregate, which do not otherwise meet the conditions of clauses (a), (b) or (c) of this definition.

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“General Partner” means a Danish private limited company that is the general partner of Newco.

 

“Investment Amount” means $2,500,000 if the Milestone Payment has not occurred, and $5,000,000 if the Milestone Payment has occurred.

 

“Maximum Return Date” means the later to occur of (i) the date that is thirty days after the date that Nordic Distributions exceed five times the Investment Amount, and (ii) the date that is ten days after the Nordic Distributions exceed five times the Investment Amount and MHA has provided written notice thereof to Nordic.

 

“Milestone Payment” means the payment by Nordic of an additional $2,500,000 to Newco after the satisfaction of the Payment Milestone (as defined in the Contribution Agreement).

 

“Nordic Distributions” means aggregate dividends or distributions from Newco actually received by Nordic.

 

“Partnership Agreement” means the Limited Partnership Agreement to be entered into by Nordic, MHA and the General Partner in the form attached hereto as Exhibit B.

“Person” means any individual, corporation, general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or governmental body.

 

“Proceeding” means any action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

 

“Put Consideration” means a number of shares of Common Stock determined in accordance with the following formula:

 

(Investment Amount)*(Conversion Percentage)

(Adjusted Transaction Price)*(Conversion Factor)

 

“Put Closing” shall have the meaning set forth in Section 3.2 of this Agreement.

 

“Put Closing Date” shall have the meaning set forth in Section 3.2 of this Agreement.

 

“Put Notice” shall have the meaning set forth in Section 3.1 of this Agreement.

 

“Put Option” shall have the meaning set forth in Section 3.1 of this Agreement.

 

“Registration Rights Agreement” means that certain Registration Rights Agreement to be entered into by and between MHA and Nordic in the form attached hereto as Exhibit C.

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“Representative” means with respect to a particular Person, any director, officer, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors.

 

“Securities” means, collectively, the Warrant and the Put Option.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Trading Day” means any day on which the principal national securities exchange on which the Common Stock is admitted to trading or listed is open for trading, or if there is no such exchange or market, then any day except Saturdays, Sundays or federal holidays.

 

“Trading Market” means whichever of the New York Stock Exchange, the American Stock Exchange, the Nasdaq Global Market, the Nasdaq Global Select Market, the Nasdaq Capital Market or the OTC Bulletin Board on which the Common Stock is listed or quoted on the date in question.

 

“Transaction Price” means $0.14, as adjusted for stock dividends, combinations, stock splits, recapitalizations and reorganizations.

 

“Warrant Shares” means 7,142,857 shares of Common Stock.

2. Joint Venture Closing.

2.1 Closing Mechanics. The closing shall be held on February 18, 2008, or such earlier date as MHA and Nordic agree following the satisfaction or waiver of the closing conditions set forth in Section 2.3 hereof (the “Closing Date”). The Closing shall occur at the offices of MHA.

 

2.2 Deliveries.

 

(a) Upon satisfaction or waiver of all conditions of Nordic to the Closing, Nordic shall:

 

(i) execute and deliver the Partnership Agreement and capitalize Newco in accordance with the terms thereof;

 

(ii) execute and deliver the Shareholders Agreement attached hereto as Exhibit D and capitalize the General Partner in accordance with the terms thereof;

 

(iii) cause Newco to execute, deliver and perform under the Contribution Agreement;

 

(iv) cause Newco to execute and deliver the Services Agreement, in the form attached hereto as Exhibit E (the “Services Agreement”);

 

(v) execute and deliver the Registration Rights Agreement; and

 

(vi) pay US$150,000 to MHA in consideration of the right to the issuance of the Warrant in the form attached hereto as Exhibit F for the Warrant Shares (the “Warrant”) pursuant to Section 3.3.

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(b) Upon satisfaction or waiver of all conditions of MHA to the Closing, MHA shall:

 

(i) execute and deliver the Partnership Agreement and capitalize Newco in accordance with the terms thereof;

 

(ii) execute and deliver the Shareholders Agreement attached hereto as Exhibit C and capitalize the General Partner in accordance with the terms thereof;

 

(iii) execute, deliver and perform under the Contribution Agreement;

 

(iv) execute and deliver the Services Agreement; and

(v) execute and deliver the Registration Rights Agreement.

2.2 Closing Conditions.

 

(a) MHA’s obligations in connection with the Closing hereunder are subject to the fulfillment on or prior to the Closing of the following conditions, which conditions may be waived at the option of MHA to the extent permitted by law:

(i) Representations and Warranties Correct. The representations and warranties made by Nordic in Section 7 hereof shall be true and correct when made, and shall be true and correct in all material respects (if not qualified by materiality) and all respects (if qualified by materiality) on and as of the Closing Date (except for any representation or warranty that speaks as of a specific date, which shall be true and correct as of such date).

 

(ii) Covenants. All covenants, agreements and conditions contained in this Agreement to be performed by Nordic on or prior to the Closing Date shall have been performed or complied with in all material respects.

 

(iii) Closing Certificate. MHA shall have received a certificate executed by an officer of Nordic certifying that each of the conditions described in Sections 2.2(a)(i) and (ii) of this Agreement have been satisfied as of the Closing Date.

 

(iv) No Legal Order Pending. There shall not then be in effect any legal or other order enjoining or restraining the transactions contemplated by this Agreement.

 

(b) Nordic’s obligations in connection with the Closing hereunder are subject to the fulfillment on or prior to the Closing of the following conditions, which conditions may be waived at the option of each Nordic to the extent permitted by law:

 

(i) Representations and Warranties Correct. The representations and warranties made by MHA in Section 8 hereof shall be true and correct when made, and shall be true and correct in all material respects (if not qualified by materiality) and all respects (if qualified by materiality) on and as of the Closing Date (except for any representation or warranty that speaks as of a specific date, which shall be true and correct as of such date).

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(ii) Covenants. All covenants, agreements and conditions contained in this Agreement to be performed by MHA on or prior to the Closing Date shall have been performed or complied with in all material respects.

 

(iii) Closing Certificate. Nordic shall have received a certificate executed by the chief executive officer or chief financial officer of MHA certifying that each of the conditions described in Sections 2.2(b)(i) and (ii) of this Agreement have been satisfied as of the Closing Date.

 

(iv) No Legal Order Pending. There shall not then be in effect any legal or other order enjoining or restraining the transactions contemplated by this Agreement.

 

(v) Legal Opinion. Nordic shall have received an opinion of counsel to MHA in a form reasonably acceptable to Nordic that contains the opinions set forth in Exhibit G.

 

(vi) Consent of Third Parties. MHA shall have received all requisite consents and approvals of all third parties whose consent or approval is required in order for each of MHA and Nordic to consummate the transactions contemplated by this Agreement.

(vii) Approval of MHA’s Board of Directors and Stockholders. MHA’s Board of Directors, and if necessary, MHA’s stockholders, shall have approved the transactions contemplated by this Agreement.

 

(viii) Due Diligence. The results of Nordic’s financial, technical and legal due diligence of MHA, the Securities and the Assets shall be satisfactory to Nordic in its commercially reasonable discretion.

 

(ix) Material Adverse Effect. There shall be no Material Adverse Effect, and since the date of this Agreement, there shall have been no Material Adverse Effect.

 

(x) Registration Rights. Any outstanding registration rights relating to MHA securities shall have been subordinated to the rights of Nordic under the Registration Rights Agreement.

 

(xi) Shareholder Notice. MHA shall have satisfied all of the requirements of Section 710(b) of the Amex Company Guide of the American Stock Exchange, if applicable, including the submission of the written application to the Exchange’s Listing Qualifications Department, the notice to MHA’s shareholders and the public announcement of the transaction.

 

3. Put Option.

3.1 At any time or times after the Closing Date and prior to the earlier of the Maximum Return Date and the tenth anniversary of the Closing Date, Nordic may, by written notice to MHA (the “Put Notice”), elect to sell to MHA (and MHA hereby agrees to purchase from Nordic) all or a part of the Nordic Interest, as specified in the Put Notice, for the Put Consideration (the “Put Option”).

 

3.2 The closing of the Put Option (the “Put Closing”) shall take place simultaneously with the receipt by MHA of the Put Notice together with certificates evidencing the portion of the Nordic Interest being put, together with assignments, duly executed in blank, in proper form to transfer such portion of the Nordic Interest. MHA will, no later than three Trading Days following the Put Closing, deliver or cause to be delivered to Nordic a certificate representing the Put Consideration to Nordic. If such shares do not require a legend in accordance with this Agreement, the certificates representing the Put Consideration shall be transmitted by the transfer agent of MHA to Nordic by crediting the account of Nordic’s prime broker with the Depository Trust Company System.

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3.3 In the event that Nordic achieves its Put Option milestone by not exercising its Put Option, in whole or in part, on or before April 30, 2008, MHA shall within five (5) Business Days thereafter issue and deliver the Warrant to Nordic.

4. Call Option.

4.1 Upon the occurrence of a Call Event and prior to the fifth anniversary of the Closing Date, MHA may, by written notice to Nordic (the “Call Notice”), elect to purchase from Nordic (and Nordic hereby agrees to sell to MHA) portions of the Nordic Interest for the Call Consideration at the following rate (the “Call Option”):

 

(a) during the first thirty-day period following the occurrence of a Call Event, MHA may purchase up to 25% of the Nordic Interest;

 

(b)  during the second thirty-day period following the occurrence of a Call Event, MHA may purchase up to 50% of the Nordic Interest less that portion of the Nordic Interest previously purchased by MHA pursuant to Section 4.1(a);

 

(c) during the third thirty-day period following the occurrence of a Call Event, MHA may purchase up to 75% of the Nordic Interest less that portion of the Nordic Interest previously purchased by MHA pursuant to Section 4.1(a) or (b); and

 

(d) during the fourth thirty-day period following the occurrence of a Call Event, MHA may purchase up to 100% of the Nordic Interest less that portion of the Nordic Interest previously purchased by MHA pursuant to Section 4.1(a), (b) or (c).

 

4.2 Notwithstanding anything to the contrary contained herein, in order to exercise the Call Option, the closing sale price of the Common Stock as reported on the Trading Market must exceed the Threshold Price on each consecutive trading day from the date of occurrence of the Call Event until the date of delivery of the Call Notice.

 

4.3 Notwithstanding Section 4.1, Nordic may elect to reduce by a percentage specified by Nordic (the “Call Reduction Factor”) the amount of the Nordic Interest that may be called pursuant to the Call Option, by delivering to MHA, within fifteen days after receipt of the Call Notice, a written notice indicating the Call Reduction Factor and agreeing to one of the following: (i) that the amount of the Nordic Interest that may be put by Nordic shall be reduced by the same factor (i.e., the Call Reduction Factor), or (ii) that Nordic shall pay an amount, within fifteen days of the date of such notice, to MHA equal to $2,000,000 times the Call Reduction Factor.

 

4.4 The closing of the Call Option (the “Call Closing”) shall take place at the offices of MHA at 10:00 a.m. (Eastern Standard Time) on the date that is thirty (30) days from the date of the delivery of the Call Notice, or such earlier date as MHA and Nordic may agree (the “Call Closing Date”). At the Call Closing, Nordic will deliver to MHA any certificates evidencing the portion of the Nordic Interest being called, together with assignments, duly executed in blank, in proper form to transfer such portion of the Nordic Interest, and MHA shall provide certificates representing the Call Consideration to Nordic.

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5. Adjustments to Transaction Price.

 

5.1  If MHA, at any time while either of the Put Option or the Call Option remains outstanding, shall sell or grant any option, warrant or right to purchase, or sell or grant any right to reprice its securities, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock, at an effective price per share less than the Transaction Price (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than the Transaction Price, such issuance shall be deemed to have occurred for less than the Transaction Price on such date of the Dilutive Issuance), then the Transaction Price shall be reduced and only reduced to equal the Base Share Price. If shares of Common Stock or Common Stock Equivalents are issued or sold together with other stock or securities or other assets of MHA for a consideration which covers both, the effective price per share shall be computed with regard to the portion of the consideration so received that may be reasonably determined in good faith by the Board of Directors, to be allocable to such Common Stock or Common Stock Equivalents. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustments shall be made, paid or issued hereunder in respect of an Exempt Issuance.

 

5.2 MHA shall notify Nordic in writing, no later than the day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section, indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice the “Dilutive Issuance Notice”). For purposes of clarification, whether or not MHA provides a Dilutive Issuance Notice pursuant to this Section, upon the occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance the Transaction Price shall equal the Base Share Price regardless of whether Nordic accurately refers to the Base Share Price in the Put Notice or MHA accurately refers to the Base Share Price in the Call Notice.

 

6. Board Representation.

 

6.1 For so long as Nordic continues to have beneficial ownership of at least ten percent (10%) of the outstanding Common Stock of MHA (including shares of Common Stock issuable upon exercise of the Put Option, the Call Option and/or the Warrant), MHA shall provide Nordic written notice of any shareholder solicitation or action relating to the election of directors thirty (30) days prior to providing notice of any shareholder meeting or any written consent to MHA’s stockholders. After receipt of such notice, Nordic may, by written notice sent to MHA within ten (10) days of receipt of such notice, request that MHA nominate, and MHA shall nominate, for election to MHA’s Board of Directors (the “Board of Directors”), in connection with such shareholder solicitation or action, one candidate designated by Nordic (the “Nordic Designee”). In the event that Nordic shall desire to appoint a Nordic Designee otherwise than in connection with a shareholder solicitation or action relating to the election of directors, then as soon as practicable upon written notice from Nordic, MHA shall appoint a Nordic Designee to the Board of Directors. If MHA reasonably determines in good faith that any Nordic Designee fails to meet any of the criteria for service on the board of directors as set forth by applicable state law, the rules and regulations of the Securities and Exchange Commission or any exchange on which the securities of MHA are then listed, then MHA shall provide written notice of such determination (and the reasons therefor) to Nordic and provide Nordic the opportunity to either designate an alternative candidate or re-designate the original candidate if Nordic reasonably determines in good faith that MHA’s reasons are invalid.

6.2  For purposes of this Agreement, all shares held by an affiliate (as defined in Rule 405 promulgated under the Securities Act) of Nordic will be deemed to be owned by Nordic.

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6.3 MHA shall use its best efforts (a) to cause to be voted the shares for which MHA’s management or the Board of Directors holds proxies or is otherwise entitled to vote in favor of the election of the Nordic Designee nominated pursuant to this Agreement; and (b) to cause the Board of Directors to recommend to its shareholders that they vote in favor of the Nordic Designee.

6.4 In the event that any Nordic Designee shall cease to serve as a director of MHA for any reason, the Board of Directors of MHA shall fill the vacancy resulting therefrom with another Nordic Designee, unless Nordic declines to designate a replacement Nordic Designee.

6.5 MHA shall provide the same compensation and rights and benefits of indemnity to the Nordic Designee as are provided to other non-employee directors.

6.6 MHA agrees that as of the Closing Date, the size of the Board of Directors shall be seven members, including the chief executive officer and the Nordic Designee (if a Nordic Designee shall have been appointed by such time).

7. Representations, Warranties and Covenants of Nordic.  

 

Nordic hereby represents, warrants and covenants, now and as of the Closing Date, as the case may be, as follows:

 

7.1 Nordic has all requisite legal power and authority to enter into this Agreement, to consummate the transactions contemplated hereby and to carry out and perform its obligations under the terms of this Agreement.

 

7.2 This Agreement has been duly executed and delivered by Nordic and constitutes a legal, valid and binding obligation of Nordic enforceable against Nordic in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies, and to limitations of public policy. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby nor compliance with any of the provisions hereof will violate or conflict with the provisions of, or constitute a default under (or give rise to any right of termination, cancellation or acceleration under), any agreement, contract or other instrument to which Nordic is bound.

 

7.3 Neither the Securities nor the Conversion Shares have not been registered under the Securities Act, or any state securities laws, and, except as set forth in Registration Rights Agreement, MHA has no present or future obligation to register either the Securities or the Conversion Shares under the Securities Act or any state securities laws. Nordic understands that the offering and sale of the Securities hereunder is intended to be exempt from registration under the Securities Act, by virtue of Section 4(2) thereof and the provisions of Regulation D promulgated thereunder, or not subject to such requirement, by virtue of Regulation S promulgated under the Securities Act, based, in part, upon the representations, warranties and agreements of Nordic contained in this Agreement.

7.4 Nordic has had access to all SEC Reports (as defined below) and has received all other documents from MHA requested by Nordic. Nordic has carefully reviewed the SEC Reports and all such other documents and understands the information contained therein.

 

7.5 Nordic has had a reasonable opportunity to ask questions of and receive answers from a person or persons acting on behalf of MHA concerning the offering and sale of the Securities and the business, financial condition, results of operations and prospects of MHA, and all such questions have been answered to the full satisfaction of Nordic. Neither such inquiries nor any other investigation conducted by or on behalf of Nordic or its representatives or counsel shall modify, amend or affect Nordic’s right to rely on the truth, accuracy and completeness of MHA’s representations and warranties contained in this Agreement.

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7.6 In evaluating the suitability of an investment in MHA, Nordic has not relied upon any representation or other information (oral or written) other than as stated in this Agreement.

 

7.7 No Securities were offered or sold to Nordic by means of any form of general solicitation or general advertising, and in connection therewith Nordic did not: (A) receive or review any advertisement, article, notice or other communication published in a newspaper or magazine or similar media or broadcast over television or radio whether closed circuit, or generally available; or (B) attend any seminar meeting or industry investor conference whose attendees were invited by any general solicitation or general advertising.

 

7.8 Nordic has taken no action which would give rise to any claim by any person for brokerage commissions, finders’ fees or the like relating to this Agreement or the transactions contemplated hereby.

 

7.9 Nordic has such knowledge and experience in financial, tax, and business matters, and, in particular, investments in securities similar to the Securities so as to enable Nordic to utilize the information made available to it in connection with the transactions contemplated by this Agreement to evaluate the merits and risks of an investment in the Securities and MHA and to make an informed investment decision with respect thereto.

 

7.10 Nordic is not relying on MHA or any of its employees, officers or agents with respect to the legal, tax, economic and related considerations as to an investment in the Securities, and Nordic has relied on the advice of, or has consulted with, only his own advisors.

 

7.11 Nordic is acquiring the Securities solely for Nordic's own account for investment and not with a view to resale, assignment or distribution thereof, in whole or in part in violation of the Securities Act or any applicable state securities laws. Nordic has no agreement or arrangement, formal or informal, with any person to sell or transfer all or any part of the Securities in violation of the Securities Act or any state securities laws and Nordic has no plans to enter into any such agreement or arrangement. Nordic will not engage in hedging transactions with respect to the Securities unless in compliance with the registration requirements of the Securities Act.

7.12 Nordic must bear the substantial economic risks of the investment in the Securities indefinitely because none of the Securities may be sold, hypothecated or otherwise disposed of unless subsequently registered under the Securities Act and applicable state securities laws or an exemption from such registration is available. Subject to the terms hereunder, legends shall be placed on the Securities to the effect that they have not been registered under the Securities Act or applicable state securities laws and appropriate notations thereof will be made in MHA’s stock books.

 

7.13 Nordic has adequate means of providing for its current financial needs and foreseeable contingencies and has no need for liquidity of the investment in the Securities for an indefinite period of time.

 

7.14 Nordic meets the requirements of the suitability standards for an “accredited investor” because Nordic is a corporation, partnership, limited liability company, limited liability partnership, other entity or similar business trust, not formed for the specific purpose of acquiring the Securities, with total assets excess of $5,000,000 or (ii) is a “non-US Person” that is a “qualified investor” as defined in the European Union Prospective Directive. Nordic further represents and warrants that it will notify and supply corrective information to MHA immediately upon the occurrence of any change occurring prior to MHA's issuance of the Securities that renders the representation made in the immediately preceding sentence. Nordic represents to MHA that any information which the undersigned has heretofore furnished under this Section 7.14 or furnishes to MHA pursuant to this Section 7.14 is complete and accurate and may be relied upon by MHA in determining the availability of an exemption from registration under Federal and state securities laws in connection with the offering and sale of the Securities.

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7.15 Nordic is able to bear the economic risk of an investment in the Securities and, at the present time, has a sufficient net worth to sustain a complete loss of such investment in MHA in the event such a loss should occur. Nordic’s overall commitment to investments which are not readily marketable is not excessive in view of its net worth and financial circumstances and the purchase of the Units will not cause such commitment to become excessive.

 

8. Representations and Warranties of MHA.

 

MHA hereby represents and warrants as of the date of this Agreement, and as of the Closing Date, as the case may be, as follows, subject to the disclosure provided in a written disclosure schedule provided to Nordic as of the date of this Agreement, if any:

 

8.1 Organization, Good Standing and Qualification. MHA is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has full corporate power and authority to conduct its business as currently conducted. MHA is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the property owned or leased by it or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or in good standing would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business, operations, conditions (financial or otherwise), properties, assets, liabilities, or results of operations of MHA (a “Material Adverse Effect”). Other than Newco, MHA has no Subsidiaries. For purposes of this Section, “Subsidiary” means any corporation, partnership, limited liability company, association, or other business entity in which MHA owns or controls, directly or indirectly, any interest, including, without limitation, any joint venture, partnership, or similar arrangement.

8.2 Capitalization. The authorized capital stock of MHA consists of 150,000,000 shares of Common Stock and 1,500,000 shares of preferred stock. As of January 29, 2008, there were 70,624,232 shares of Common Stock issued and outstanding, all of which are duly authorized, validly issued, fully paid and non-assessable, and no shares of preferred stock outstanding. In addition, as of such date, there are 8,233,838 shares of Common Stock reserved for issuance pursuant to outstanding options and 8,869,454 shares of Common Stock reserved for issuance pursuant to outstanding warrants. All of the securities issued by MHA have been issued in accordance with all applicable federal and state securities laws. Other than as set forth above, there are no other options, warrants, calls, rights, commitments or agreements of any character to which MHA is a party or by which MHA is bound or obligating MHA to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of the capital stock of MHA or obligating MHA to grant, extend or enter into any such option, warrant, call, right, commitment or agreement. There are no preemptive rights or rights of first refusal or similar rights which are binding on MHA permitting any Person to subscribe for or purchase from MHA shares of its capital stock pursuant to any provision of law, MHA’s Certificate of Incorporation as in effect on the date hereof (the “Certificate of Incorporation”) or MHA’s By-laws, as in effect on the date hereof (the “By-laws”) or by agreement or otherwise. There are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities as described in this Agreement.

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8.3 Authorization; Enforceability. MHA has all corporate right, power and authority to enter into this Agreement and the Additional Agreements, to consummate the transactions contemplated hereby and to carry out and perform its obligations under the terms of this Agreement and the Additional Agreements. All corporate action on the part of MHA, its directors and stockholders necessary for the (a) authorization execution, delivery and performance of this Agreement and the Additional Agreements by MHA; and (b) authorization, sale, issuance and delivery of the Securities and the Conversion Shares contemplated hereby and the performance of MHA's obligations hereunder has been taken (or, with respect to the Additional Agreements, will have been taken prior to the Closing). This Agreement has been, and the Additional Agreements will be prior to Closing, duly executed and delivered by MHA, and this Agreement constitutes, and the Additional Agreements will constitute prior to Closing, legal, valid and binding obligations of MHA, enforceable against MHA in accordance with their terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies, and to limitations of public policy. The Securities, when issued and fully paid for in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable. The Conversion Shares, when issued in accordance with the terms of the Warrant, the Put Option or the Call Option, as the case may be, will be validly issued, full paid and non-assessable. The issuance and sale of the Securities and the Conversion Shares contemplated hereby will not give rise to any preemptive rights or rights of first refusal on behalf of any person which have not been waived.

8.4 No Conflict; Governmental Consents.

 

(a) Except as would not reasonably be expected to have a Material Adverse Effect, the execution and delivery by MHA of this Agreement and the Additional Agreements, the consummation of the transactions contemplated hereby and the compliance with any of the provisions hereof will not result in the violation of any law, statute, rule, regulation, order, writ, injunction, judgment or decree of any court or governmental authority to or by which MHA is bound, or of any provision of the Certificate of Incorporation or By-Laws of MHA, and will not conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute (with due notice or lapse of time or both) a default under (or give rise to any right of termination, cancellation or acceleration under), any lease, loan agreement, mortgage, security agreement, trust indenture or other agreement or instrument to which MHA is a party or by which it is bound or to which any of its properties or assets is subject, nor result in the creation or imposition of any lien upon any of the properties or assets of MHA.

 

(b) Other than the approval of the American Stock Exchange, no consent, approval, authorization or other order of any governmental authority or other third party is required to be obtained by MHA in connection with the authorization, execution and delivery of this Agreement or with the authorization, issue and sale of the Securities and the Conversion Shares except such filings as may be required to be made with the SEC and with any state or foreign blue sky or securities regulatory authority relating to an exemption from registration thereunder.

 

8.5 Licenses. Except as would not reasonably be expected to have a Material Adverse Effect, MHA has sufficient licenses, permits and other governmental authorizations currently required for the conduct of its business or ownership of properties and is in all material respects complying therewith.

 

8.6 Litigation. There is no pending, or to MHA’s knowledge, threatened legal or governmental proceedings against MHA which (a) adversely questions the validity of this Agreement or any agreements related to the transactions contemplated hereby or the right of MHA to enter into any of such agreements, or to consummate the transactions contemplated hereby or thereby or (b) could, if there were an unfavorable decision, have a Material Adverse Effect. There is no action, suit, proceeding or investigation by MHA currently pending in any court or before any arbitrator or that MHA intends to initiate.

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8.7 Investment Company. MHA is not an “investment company” within the meaning of such term under the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder.

8.8 Financial Statements; SEC Reports. The financial statements of MHA included in the SEC Reports (as amended) (the “Financial Statements”) fairly present in all material respects the financial condition and position of MHA at the dates and for the periods indicated, have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) consistently applied throughout the periods covered thereby, except as may be otherwise specified in such Financial Statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of MHA as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. Since the date of the most recent balance sheet included as part of the Financial Statements and except as disclosed in the SEC Reports, there has not been: (i) any change in the business, conditions (financial or otherwise), properties, assets, liabilities, or results of operations of MHA from that reflected in the Financial Statements, other than changes in the ordinary course of business, none of which individually or in the aggregate would reasonably be expected to have a Material Adverse Effect; or (ii) any other event or condition of any character that, either individually or cumulatively, would reasonably be expected to have a Material Adverse Effect, except for the expenses incurred in connection with the transactions contemplated by this Agreement. MHA has filed all reports, schedules, forms, statements and other documents required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, since February 1, 2006 (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

8.9 Title to Properties and Assets; Liens, Etc. MHA has good and marketable title to its properties and assets, including the properties and assets reflected in the most recent balance sheet included in the Financial Statements, and good title to its leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than (a) those resulting from taxes which have not yet become delinquent; (b) liens and encumbrances which do not materially detract from the value of the property subject thereto or materially impair the operations of MHA; (c) those that have otherwise arisen in the ordinary course of business; and (d) those that would not reasonably be expected to have a Material Adverse Effect. MHA is in compliance with all material terms of each lease to which it is a party or is otherwise bound.

 

8.10 Compliance. MHA (a) neither is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by MHA under), nor has MHA received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (b) is not in violation of any order of any court, arbitrator or governmental body, and (c) is not and has not been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business, except in the case of each of (a), (b), and (c) as could not have a Material Adverse Effect.

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8.11 Obligations to Related Parties. There are no obligations of MHA to officers, directors, stockholders, or employees of MHA other than (a) for payment of salary or other compensation for services rendered, (b) reimbursement for reasonable expenses incurred on behalf of MHA, (c) standard indemnification provisions in the certificate of incorporation and by-laws, and (d) for other standard employee benefits made generally available to all employees (including stock option agreements outstanding under any stock option plan approved by the Board of Directors of MHA). Except as may be disclosed in the Financial Statements, MHA is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation.

 

8.12 Employee Relations; Employee Benefit Plans. MHA is not a party to any collective bargaining agreement or union contract. MHA believes that its relations with its employees are good. No executive officer (as defined in Rule 501(f) of the Securities Act) of MHA has notified MHA that such officer intends to leave MHA or otherwise terminate such officer's employment with MHA. MHA is in compliance with all federal, state, local and foreign laws and regulations respecting employment and employment practices, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. Except as disclosed in the Memorandum, MHA does not maintain any compensation or benefit plan, agreement, arrangement or commitment (including, but not limited to, “employee benefit plans”, as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) for any present or former employees, officers or directors of MHA or with respect to which MHA has liability or makes or has an obligation to make contributions, other than any such plans, agreements, arrangements or commitments made generally available to MHA’s employees.

 

8.13 Environmental Laws. MHA (i) is in compliance with any and all Environmental Laws (as hereinafter defined), (ii) has received all permits, licenses or other approvals required of it under applicable Environmental Laws to conduct its business and (iii) is in compliance with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.

 

8.14 Tax Status. MHA (a) has made or filed all federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (b) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (c) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of MHA know of no basis for any such claim.

8.15 Proprietary Rights. MHA owns or possesses adequate and enforceable rights to use all patents, patent applications, trademarks, trade names, corporate names, copyrights, trade secrets, licenses, inventions, formulations, technology and know-how and other intangible property used in the conduct of its business (the “Proprietary Rights”). MHA has not received any notice of, and there are no facts known to MHA that reasonably indicate the existence of (a) any infringement or misappropriation by any third party of any of the Proprietary Rights or (b) any claim by a third party contesting the validity of any of the Proprietary Rights. MHA has not received any notice of any infringement, misappropriation or violation by MHA or any of its employees of any Proprietary Rights of third parties.

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8.16 Insurance. MHA is insured by insurers of recognized financial responsibility against such losses and risks, including, without limitation, products liability, and in such amounts as are prudent and customary in the businesses in which MHA is engaged, including, but not limited to, directors and officers insurance coverage at least equal to $5.0 million. To the best knowledge of MHA, such insurance contracts and policies are accurate and complete. MHA has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business on terms consistent with market for MHA’s line of business.

 

8.17 Private Placement. Assuming the accuracy of Nordic’s representations and warranties set forth in Section 7, no registration under the Securities Act is required for the offer and sale of the Securities and the Conversion Shares by MHA to Nordic as contemplated hereby. The issuance and sale of the Securities and the Conversion Shares hereunder does not contravene the rules and regulations of the Trading Market.

 

8.18 Registration Rights. Other than Nordic, no Person has any right to cause MHA to effect the registration under the Securities Act of any securities of MHA.

 

8.19 Solvency and Indebtedness. Based on the financial condition of MHA, (a) MHA’s fair saleable value of its assets exceeds the amount that will be required to be paid on or in respect of MHA’s existing debts and other liabilities (including known contingent liabilities) as they mature; (b) MHA’s assets do not constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by MHA, and projected capital requirements and capital availability thereof; and (c) the current cash flow of MHA, together with the proceeds MHA would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such amounts are required to be paid. MHA does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). MHA has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. MHA is being operated pursuant to a budget which has been provided to, and reviewed by Nordic. The SEC Reports set forth as of the dates thereof all outstanding secured and unsecured Indebtedness of MHA, or for which MHA has commitments. For the purposes of this Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of Indebtedness of others, whether or not the same are or should be reflected in MHA’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. MHA is not in default with respect to any Indebtedness.

8.20 Clinical Studies. MHA has provided or will provide (i) all communications to the Food and Drug Administration (the “FDA”) of any adverse events with respect to any clinical or pre-clinical studies, tests or research that are described in the SEC Reports or the results of which are referred to in the SEC Reports, and (ii) any notices or other correspondence from the FDA or any other foreign, federal, state or local governmental or regulatory authority with respect to any clinical or pre-clinical studies, tests or research that are described in the SEC Reports or the results of which are referred to in the SEC Reports which require the termination, suspension, delay or modification of such studies, tests or research, otherwise require MHA to engage in any remedial activities with respect to such studies, test or research, or threaten to impose or actually impose any fines or other disciplinary actions, in the case of each of (i) and (ii) as such communications, notices or other correspondence relate to the Assets.

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8.21 Disclosure. The representations and warranties made by MHA herein (as modified by the Disclosure Schedule) are true and correct and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made herein, in light of the circumstances under which they were made, not misleading.

 

8.22 Absence of Certain Changes. Since September 30, 2007, there has been no material adverse change in the business, operations, conditions (financial or otherwise), prospects, assets or results of operations of MHA.

 

8.23 Other Representations and Warranties. The representations and warranties of MHA in the Additional Agreements will be true and correct when made.

 

9. Other Agreements of the Parties.

 

9.1Transfer Restrictions.

 

(a) The Securities and the Conversion Shares may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of the Securities or the Conversion Shares other than pursuant to an effective registration statement or Rule 144, to MHA or to an affiliate of Nordic or in connection with a pledge as contemplated in Section 9.1(b), MHA may require the transferor thereof to provide to MHA an opinion of counsel selected by the transferor and reasonably acceptable to MHA, the form and substance of which opinion shall be reasonably satisfactory to MHA, to the effect that such transfer does not require registration of such transferred Securities or Conversion Shares under the Securities Act.

(b)Nordic agrees to the imprinting, so long as is required by this Section 9.1(b), of a legend on any of the Securities or Conversion Shares in the following form:

 

THESE SHARES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO MHA. THESE SHARES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.

 

MHA acknowledges and agrees that Nordic may from time to time pledge or grant a security interest in some or all of the Securities or Conversion Shares to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and the Registration Rights Agreement and, if required under the terms of such arrangement, Nordic may transfer pledged or secured Securities or Conversion Shares to the pledgees or secured parties. So long as it complies in all respects with applicable state and federal securities laws, such a pledge or transfer would not be subject to approval of MHA and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At Nordic’s expense, MHA will execute and deliver such reasonable documentation as a pledgee or secured party of Securities or Conversion Shares may reasonably request in connection with a pledge or transfer of the Securities or Conversion Shares, including, if the Securities or Conversion Shares are subject to registration pursuant to the Registration Rights Agreement, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders thereunder.

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(c)Certificates evidencing the Securities and the Conversion Shares shall not contain any legend (including the legend set forth in Section 9.1(b)), (i) following the resale of the Securities or Conversion Shares pursuant to an effective registration statement covering the resale of such security under the Securities Act, or (ii) following any sale of such Securities or Conversion Shares pursuant to Rule 144 (assuming the transferor is not an Affiliate of MHA), or (iii) if such Securities or Conversion Shares are eligible for sale under Rule 144 without volume restrictions, or (iv) if such legend is not required under applicable requirements of the Securities Act and the rules and regulations promulgated thereunder (including judicial interpretations and pronouncements issued by the staff of the SEC). MHA agrees that at such time as such legend is no longer required under this Section 9.1(c), it will, no later than three Trading Days following the delivery by Nordic to MHA or MHA’s transfer agent of a certificate representing Securities or Conversion Shares, as the case may be, issued with a restrictive legend, deliver or cause to be delivered to Nordic a certificate representing such shares that is free from all restrictive and other legends. MHA may not make any notation on its records or give instructions to any transfer agent of MHA that enlarge the restrictions on transfer set forth in this Section. Certificates for the Securities or Conversion Shares subject to legend removal hereunder shall be transmitted by the transfer agent of MHA to Nordic by crediting the account of Nordic’s prime broker with the Depository Trust Company System.

9.2 Furnishing of Information.

 

(a)As long as Nordic owns Securities or Conversion Shares, MHA covenants as follows: (i) MHA shall timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by MHA after the date hereof pursuant to the Exchange Act, and (ii) all such reports filed by MHA after the date hereof pursuant to the Exchange Act shall comply in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder, and none of such reports, when filed, shall contain any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

(b)As long as Nordic owns Securities or Conversion Shares, if MHA is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to Nordic and make publicly available in accordance with Rule 144 such information as is required for Nordic to sell the Securities or Conversion Shares under Rule 144. MHA further covenants that it will take such further action as Nordic may reasonably request, all to the extent required from time to time to enable Nordic to sell Securities or Conversion Shares without registration under the Securities Act within the limitation of the exemptions provided by Rule 144.

 

9.3 Integration. MHA shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities or the Conversion Shares in a manner that would require the registration under the Securities Act of the sale of the Securities or the Conversion Shares to Nordic or that would be integrated with the offer or sale of the Securities or the Conversion Shares for purposes of the rules and regulations of any Trading Market such that it would require stockholder approval of the sale of the Securities or the Conversion Shares to Nordic unless stockholder approval is obtained before the closing of such subsequent transaction.

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9.4 Confidentiality; Required Disclosure.

 

(a) Each party agrees, and will cause its affiliates, to keep confidential and not to publish (by press release, press interview, or otherwise) or otherwise divulge or use for its own benefit or for the benefit of any third party any information of a confidential or proprietary nature furnished to it by the other party, or the existence and terms of this Agreement or the Additional Agreements or the existence or results of the parties’ collaboration hereunder or thereunder, without the prior written approval of the other party, except to those of such party’s employees and representatives as may need to know such information for purposes of the transactions contemplated by the parties’ agreements, and except as required by applicable law or by obligations pursuant to any listing agreement with or rules of any Trading Market. In the event of any such required disclosure, including the filings described in Section 9.4(b) below, the disclosing party will (i) provide the other party with written notice of the required disclosure at least 48 hours in advance of such disclosure, and (ii) limit such disclosure to the minimum required under the applicable law or obligations, whether through a request for confidential treatment or otherwise. The confidentiality obligation described above shall not apply to information of the other party which: was already known by the recipient prior to the time of its disclosure by the disclosing party to the recipient; is publicly available or later becomes publicly available through no fault of the recipient; or is disclosed to the recipient by a third party having no similar confidentiality obligation. This obligation shall terminate three years after execution of this Agreement.

 

(b) MHA shall (i) timely file with the SEC a Current Report on Form 8-K with respect to the transactions contemplated by this Agreement and the Additional Agreements, and (ii) make such other filings and notices in the manner and time required by the SEC and the Trading Market, provided, in the case of a filing or notice described in clause (i) or (ii) above, that the information contained in such filing or notice is limited to the information necessary in order for MHA to comply with the Exchange Act and the regulations promulgated thereunder or the other applicable legal or Trading Market obligations.

 

9.5 Indemnification of Nordic. Subject to the provisions of this Section 9.5, MHA will indemnify and hold Nordic and its directors, officers, stockholders, members, partners, employees and agents (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations and warranties, when made, or the covenants or agreements made by MHA in this Agreement and the Additional Agreements or (b) any action instituted against Nordic or its Affiliates, or in which Nordic becomes involved in any capacity, by any stockholder of MHA who is not an Affiliate of Nordic, with respect to any of the transactions contemplated by the Agreement or the Additional Agreements (unless such action is based upon a breach of Nordic’s representations, warranties or covenants under the Agreement or the Additional Agreements or any agreements or understandings Nordic may have with any such stockholder or any violations by Nordic of state or federal securities laws or any conduct by Nordic which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify MHA in writing, and MHA shall have the right to assume the defense thereof with counsel of its own choosing. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (a) the employment thereof has been specifically authorized by MHA in writing, (b) MHA has failed after a reasonable period of time to assume such defense and to employ counsel or (c) in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position of MHA and the position of such Purchaser Party. MHA will not be liable to any Purchaser Party under this Agreement (i) for any settlement by a Purchaser Party effected without MHA’s prior written consent, which shall not be unreasonably withheld or delayed; or (ii) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by Nordic in this Agreement or in Additional Agreements. MHA shall not approve the settlement of any claims against a Purchaser Party without the written consent of the Purchaser Party, unless such settlement holds such Purchaser Party harmless and releases the Purchaser Party from all claims.

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9.7 Reservation of Common Stock. MHA shall maintain a reserve, free of preemptive rights, from its duly authorized shares of Common Stock for issuance pursuant to the Agreement in such amount as may be required to fulfill its obligations under the Agreement in full, including the issuance of Conversion Shares.

 

9.8 Formation of Newco and General Partner. Prior to the Closing, MHA and Nordic shall cooperate in entering into such agreements and filing such certificates as are necessary to properly form Newco as a Danish limited partnership and the General Partner as a Danish private limited company, including, without limitation, by the filing of the Articles of Association of Newco, and the Articles of Association and Memorandum of Association of the General Partner, all in the form attached to the Partnership Agreement, with the Danish Commerce and Companies Agency.

 

10. Miscellaneous.

 

10.1 Termination. This Agreement may be terminated by Nordic by written notice to MHA, if the Closing has not been consummated on or before February 18, 2008.

 

10.2 Fees and Expenses. All fees and expenses incurred by MHA in connection with the transactions contemplated by this Agreement shall be borne by MHA. All fees and expenses incurred by Nordic in connection with the transactions contemplated by this Agreement shall be borne by MHA to the extent that such fees and expenses to do not exceed $125,000, and by Nordic thereafter. Nordic acknowledges that it has received $60,000 from MHA as an advance on fees and expenses. Nordic agrees to submit evidence of additional fees and expenses to MHA in order to request additional advances, and MHA agrees to make such advances for up to an additional $65,000. Nordic is under no obligation to return any portion of any advance made unless the Closing does not occur, in which case Nordic agrees to return to MHA the portion of advances made, if any, in excess of Nordic’s actual fees and expenses.

 

10.3 Entire Agreement. The Agreement and the Additional Agreements, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

10.4 Notices. Any notice, demand, offer or other written instrument (“Notice”) required or permitted to be given shall be in writing signed by the party giving such Notice and shall be hand delivered or sent, postage prepaid, by certified or registered mail, return receipt requested, or by overnight delivery such as Federal Express, addressed as follows:

If to MHA:	Manhattan Pharmaceuticals, Inc.
	810 Seventh Avenue, 4th Floor
	New York, NY 10019
	Fax: (212) 582-3957
	Attn: Chief Financial Officer
	Email: mgmcguinness@manhattanpharma.com
with a copy to:	Lowenstein Sandler PC
	65 Livingston Avenue
	Roseland, New Jersey 07068
	Telephone: (973) 597-2500
	Fax: (973) 597-2400
	Attn: Anthony O. Pergola
	Email: apergola@lowenstein.com

 

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If to Nordic:	Nordic Biotech Advisors
	Østergade 5, 3rd floor
	DK-1100 Copenhagen K
	Denmark
	Attn: Florian Schönharting
	Fax: (978) 448-3145
	Email: fs@nordicbiotech.com
	With a copy to: John M. Barberich
	Email: jmb@nordicbiotech.com
with a copy to:	Nutter, McClennen & Fish LLP
	World Trade Center West
	155 Seaport Boulevard
	Boston, MA 02210
	Fax: (617) 310-9000
	Attn: James E. Dawson, Esq.
	Email: jdawson@nutter.com

Any party shall have the right to change the place to which such Notice shall be sent or delivered by similar notice sent in like manner to all other parties hereto.

10.5 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by MHA and Nordic or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

10.6 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

 

10.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. MHA may not assign this Agreement or any rights or obligations hereunder without the prior written consent of Nordic.

 

10.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 9.6.

 

10.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement and the Additional Agreements shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof, except to the extent that the application of the General Corporation Law of the State of Delaware is mandatorily applicable. If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. Each party hereby irrevocably submits to the exclusive jurisdiction of the federal and state courts sitting in the state of New York in any action or proceeding arising out of or relating to this Agreement, the Additional Agreements or the transactions contemplated hereby or thereby. Each party hereby irrevocably agrees, on behalf of itself and on behalf of such party’s successors and permitted assigns, that all claims in respect of such action or proceeding shall be heard and determined in any such court and irrevocably waives any objection such person may now or hereafter have as to the venue of any such suit, action or proceeding brought in such a court or that such court is an inconvenient forum.

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10.10 Survival. The representations, warranties, agreements and covenants contained herein shall survive the Closing and the delivery of the Securities and Conversion Shares.

 

10.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.

 

10.12 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefore, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

10.13 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of Nordic and MHA will be entitled to specific performance under this Agreement and the Additional Agreements. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

 

10.14 Payment Set Aside. To the extent that MHA makes a payment or payments to Nordic pursuant to this Agreement or the Additional Agreements or Nordic enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to MHA, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

 

[Signature page follows]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal as of the day and year first above written.

 

MHA:
MANHATTAN PHARMACEUTICALS, INC.
By:	/s/ Michael McGuinness
Name:
Title:	CFO
NORDIC:
NORDIC BIOTECH VENTURE FUND II K/S
By:	/s/ Florian Schonharting
Name:
Title:	Partner
By:	/s/ Christian Hansen
Name:
Title:	Partner
Address:	Østergade 5, 3rd floor
	DK-1100 Copenhagen K
	Denmark

 

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DISCLOSURE SCHEDULES

DATE JANUARY 31, 2008

TO JOINT VENTURE AGREEMENT

Schedule 8.6 (Litigation)

Swiss Pharma Contract LTD (“Swiss Pharma”), a clinical site that MHA used in one of its obesity trials, gave notice to MHA that Swiss Pharma believes it is entitled to receive an additional payment of $322,776 for services in connection with that clinical trial. While the contract between MHA and Swiss Pharma provides for additional payments if certain conditions are met, Swiss Parma has not specified which conditions they believe have been achieved and MHA does not believe that Swiss Pharma is entitled to additional payments and has not accrued any of these costs as of September 30, 2007. The contract between MHA and Swiss Pharma provides for arbitration in the event of a dispute, such as this claim for an additional payment. Swiss Pharma has filed a demand for arbitration. As MHA does not believe that Swiss Pharma is entitled to additional payments, it intends to defend its position in arbitration.

Schedule 8.22 (Absence of Certain Changes)

MHA's cash balance as of January 31, 2008, is approximately $250,000.

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Exhibit A

Form of Contribution Agreement

Note: The execution version of the Assignment and Contribution Agreement, dated February 25, 2008, is filed as Exhibit 10.21 to MHA's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2008 and incorporated herein by reference.

 

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Exhibit B

Form of Partnership Agreement

Note: The execution version of the Limited Partnership Agreement, dated February 21, 2008 is attached hereto.

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LIMITED PARTNERSHIP AGREEMENT

between

Nordic Biotech Venture Fund II K/S

and

Manhattan Pharmaceuticals, Inc.

and

Hedrin Pharmaceuticals General Partner ApS (under formation)

regarding

 

---

Hedrin Pharmaceuticals K/S

---

 

February 2008

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CONTENTS

1.	Definitions	4
2.	Background and purpose	5
3.	The Partnership Shares	6
4.	Capital Increases	7
5.	Liability	9
6.	Administration of the Partnership	9
7.	The General Partner	10
8.	Management Fee	11
9.	Meetings of the Partnership	11
10.	Power to bind the Partnership	13
11.	Liquidation and Trade Sale preferences	13
12.	Pledge and assignment of Partnership Shares	14
13.	Dividends	17
14.	Auditor	18
15.	Non-competition	18
16.	Confidentiality	19
17.	Value added tax - taxes	19
18.	Exculpation and indemnities	20
19.	Amendment of the Agreement	20
20.	Notices	20
21.	Governing law and jurisdiction	21

 

Appendices

 

Appendix 2.4: Articles of Association of the Partnership

 

Appendix 7.1: Articles of Association of the General Partner

 

Appendix 7.3: Shareholders’ Agreement regarding the General Partner

 

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Nordic Biotech Venture Fund II K/S

Østergade 5 3

1100 Kopenhagen K

Denmark

Central Business Register No 29150397

(hereinafter referred to as "Nordic”)

and

Manhattan Pharmaceuticals, Inc.

810 Seventh Avenue, 4^th Floor

New York, NY 10019

United States of America

(hereinafter referred to as "MHA”)

and

Hedrin Pharmaceuticals General Partner ApS (under formation)

Østergade 5 3

1100 Copenhagen K

Denmark

(hereinafter referred to as the "General Partner”)

have entered into the following

LIMITED PARTNERSHIP AGREEMENT

1.	DEFINITIONS

 

A.	In this Agreement the following words and expressions shall have the following meanings, unless the context otherwise requires:

 

Agreement	This limited partnership agreement between MHA, Nordic and the General Partner as amended from time to time.
Assets	As defined in the Joint Venture Agreement.

 

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Business Day	A day when banks are generally open for business in New York City, New York.
Call Option	As defined in the Joint Venture Agreement.
Closing	The date on which the Partnership is established by the signatures of the parties to this Agreement or if there be several dates the latest thereof.
Connected Transferee	Any entity holding Partnership Shares in consequence of a transfer of Partnership Shares pursuant to clause 12.3.
Contribution Agreement	As defined in the Joint Venture Agreement.
Joint Venture Agreement	The joint venture agreement between MHA and Nordic defined in clause 2.1.
License Agreement	As defined in Section 13.1.
License Payment	As defined in Section 22.1.
Limited Partner	Any holder of Partnership Shares.
MHA Partnership Shares	The Partnership shares owned by MHA.
Nordic Partnership Shares	The Partnership shares owned by Nordic.
Partnership	The Danish limited liability partnership Hedrin Pharmaceuticals K/S established and governed by this Agreement.
Partnership Shares	The partnership shares described in clause 3.1 as well as any additional partnership shares issued under clause 4 of the Agreement.
Parties	The General Partner and the Limited Partners
Payment Milestone	As defined in the Joint Venture Agreement.
Put Option	As defined in the Joint Venture Agreement.
Services Agreement	As defined in the Joint Venture Agreement.

 

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Shareholders' Agreement	The shareholders' agreement between the holders' of Partnership Shares concerning their holdings of shares in the General Partner as amended from time to time (at Closing the shareholders' agreement attached hereto as Appendix 8.3).
Trade Sale	The sale of 100 percent of the Partnership Shares to a bona fide third party or related parties, or a sale or exclusive license of all or substantially all assets of the Partnership against consideration in stock or cash or similar.

 

2.	BACKGROUND AND PURPOSE

 

B.	As of January 31 2008 MHA and Nordic have entered into a joint venture agreement (the "Joint Venture Agreement") according to which Nordic shall contribute capital to a newly formed limited partnership (the "Partnership") and MHA shall assign and contribute the Assets to the Partnership.

 

C.	The Partnership is founded as a Danish limited liability partnership by the Parties' signatures to this Agreement with the General Partner as general partner and the Limited Partners as limited partners.

 

D.	It is the purpose of the Partnership to acquire, develop and commercialize the Assets and to perform all activities necessary and convenient to accomplish the foregoing purpose. The Partnership shall carry out no other activities.

 

E.	The articles of association of the Partnership are attached hereto as Appendix 2.4. In the event that there is any discrepancy between the Agreement and the articles of association the provisions of the Agreement shall prevail in the internal relationship of the Parties.

 

3.	THE PARTNERSHIP SHARES

 

F.	The Partnership is established with a nominal share capital of DKK 1,000,000 divided into 1,000 Partnership Shares of nominally DKK 1,000.

 

G.	At Closing the Partnership Shares are distributed among the Parties as follows (all amounts in DKK):

 

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	Number of Partnership Shares
Nordic	500
MHA	500
General Partner	0
Total	1,000

The Partnership Shares owned by Nordic at Closing are referred to herein as the “Nordic Closing Partnership Shares” and the Partnership Shares owned by MHA at Closing are referred to herein as the “MHA Closing Partnership Shares.” At or after the Closing, the General Partner is authorized and directed, if requested by a Limited Partner, to deliver a certificate, executed on behalf of the Partnership by the General Partner, to such Limited Partner evidencing such Limited Partner’s Partnership Shares.

H.	None of the Partnership Shares have been paid in to the Partnership at Closing.

 

I.

The payment for the MHA Closing Partnership Shares shall be paid in to the Partnership at the Closing upon the Partnership's execution of the Contribution Agreement and MHA’s consummation of the assignment of the Assets to the Partnership as contemplated thereunder. Thus, the value of the Assets exceeds the cash payments payable under the Contribution Agreement and the excess value is contributed to the Partnership in return for the MHA Partnership Shares.

 

J.	The payment for the Nordic Closing Partnership Shares shall be paid in to the Partnership at the Closing upon the payment by Nordic to the Partnership of $2,500,000 by wire transfer to a bank account designated by the Partnership.

 

K.

No later than 15 Business Days after satisfaction, if any, of the Payment Milestone, Nordic shall pay to the Partnership an additional $2,500,000 by wire transfer to a bank account designated by the Partnership as payment for an additional 500 Partnership Shares. The satisfaction of the Payment Milestone shall constitute payment by MHA for an additional 500 Partnership Shares. Accordingly, after satisfaction of the Payment Milestone, the Partnership Shares shall be distributed among the Parties as follows (all amounts in DKK):

 

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	Number of Partnership Shares
Nordic	1,000
MHA	1,000
General Partner	0
Total	2,000

For the avoidance of doubt, if the Payment Milestone is not achieved Nordic shall not be obliged to make any payment to the Partnership pursuant to clause 3.6.

 

II.	CAPITAL INCREASES

 

A.	Except as provided herein, the number of Partnership Shares may not be increased without the express unanimous written consent of the Parties.

 

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B.

Notwithstanding Section 4.1, in the event that either Party determines, in its reasonable good faith discretion, that the Partnership requires additional capital for the proper and efficient conduct of its business and to avoid insolvency (other than additional capital obtained through indebtedness for borrowed money from a bank), such Party shall provide each Limited Partner with a written request for contribution of such Limited Partner’s proportionate share of such requested additional capital amount (i.e., pro rata according to the Limited Partners’ then respective equity ownership in the Partnership) in exchange for the Partnership’s issuance of Partnership Shares in the Partnership to such Limited Partner so that, after giving effect to such issuance, each Limited Partner will continue to maintain its same proportionate equity interest in the Partnership (assuming all Limited Partners elect to so contribute their proportionate shares of such requested additional capital amount) as of the date of such request. The Limited Partners shall have fifteen (15) days to make such election to contribute all or part of their proportionate share of the requested additional capital amount by the delivery of written notice to the Partnership of such election and, if such written notice is timely delivered, fifteen (15) days after delivery of such written notice to contribute the requested additional capital amount to the Partnership. If a Limited Partner declines to so contribute, elects to so contribute but thereafter fails to do so timely, or elects to contribute and timely does contribute some, but not all of, its proportionate share of the requested additional capital amount, the other Limited Partners shall have the option, for a period of fifteen (15) days next following the expiration of the applicable fifteen (15) day period, to contribute the remaining balance of such requested additional capital amount on the terms and conditions set forth in the written notice, which option shall be exercised by the delivery of written notice to the Partnership within such fifteen (15) day period, and to receive in exchange therefor the Partnership Shares in the Partnership that otherwise would have been issuable to the Limited Partner so declining or failing to contribute, or contributing less than all of, its proportionate share of the requested additional capital amount. The General Partner shall determine the fair market value of the shares for purposes of determining how to allocate the number of Partnership Shares issuable to each Limited Partner in consideration for its contribution of capital. If the General Partner is unable to determine the fair market value of the shares (because, among other reasons, the members of the board of directors of the General Partner cannot agree on the fair market value of the shares, as that decision is not a decision over which the chairman of the board has a casting vote), the fair market value of the shares shall be equal to the amount determined in good faith by the contributing Limited Partner if such amount is equal to or greater than the most recent valuation of such Partnership Shares calculated by or on behalf of the Partnership (the “Most Recent Valuation”), or, if such amount is lower than the Most Recent Valuation, then the fair market value shall be fixed as the average of two valuations made by impartial valuators (the “Independent Valuation”) appointed by the Institute of State-Authorised Public Accountants (in Danish: Foreningen af Statsautoriserede Revisorer). Both valuators shall be recommended experts in valuation of biotech companies. The Independent Valuation need not precede the contributions of capital, but shall in any case be initiated promptly following any contribution. Upon receipt of any additional capital from time to time contributed to it by a Limited Partner pursuant to this Section 4.2, the General Partner is authorized and directed, if requested by such Limited Partner, to deliver a certificate, executed on behalf of the Partnership by the General Partner, to such Limited Partner evidencing the Partnership Shares acquired by such Limited Partner hereunder.

 

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4.

LIABILITY

 

4.1	The liability of the General Partner shall be personal and unlimited.

 

C.

The liability of each Limited Partner shall be limited to such Limited Partner's contribution to the Partnership. Thus, the liability of MHA in respect of the MHA Partnership Shares shall be limited to the contribution described in clause 3.4 and the liability of Nordic in respect of the Nordic Partnership Shares shall be limited to the contribution described in clause 3.5.

 

5.	ADMINISTRATION OF THE PARTNERSHIP

 

D.	The General Partner shall in its capacity as general partner be responsible for the management and administration of the Partnership. In particular the General Partner shall monitor and oversee the development and commercialization activities with respect to the Assets.

 

E.

The Partnership shall delegate the execution of certain of the General Partner's obligations pursuant to this Agreement to MHA to the extent set out in the Services Agreement. For the avoidance of doubt, the General Partner shall retain final power and authority in respect of all decisions regarding the Assets, including in respect of final development, partnering and marketing decisions, and such authority shall not be limited by the previous sentence.

 

F.

The General Partner shall at all times act in good faith and in the best interest of the Partnership, shall use its best endeavours to ensure the safekeeping of the Partnership's assets and shall provide such services and support to the Partnership as will ensure that the Partnership is in compliance with all applicable laws from time to time.

 

III.	THE GENERAL PARTNER

 

A.	The General Partner is a Danish limited liability company, which has been established prior to Closing with the articles of association attached hereto as Appendix 7.1.

 

B.	At Closing the share capital of the General Partner is distributed between the Limited Partners as follows (all amounts in DKK):

 

	Number of shares in the General Partner
Nordic	62,500
MHA	62,500
Total	125,000

 

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C.	At Closing the rights and obligations of the Limited Partners regarding their holdings of shares in the General Partner are set out in the shareholders' agreement attached hereto as Appendix 7.3.

 

D.

The share capital of the General Partner shall at all times be owned by the Limited Partners pro rata to their holdings of Partnership Shares. At any time that the relative ownership of Partnership Shares by MHA and Nordic changes, including, without limitation in accordance with the Put Option or the Call Option, the share capital of the General Partner shall be redistributed in accordance with the previous sentence. Each of Nordic and MHA agrees to deliver any certificates evidencing its share capital in the General Partner to the General Partner in furtherance of any such redistribution.

 

IV.	MANAGEMENT FEE

 

A.

In consideration of the services to be provided under this Agreement and the liability as a general partner of the Partnership, the General Partner shall receive a management fee of DKK 50,000 per year, payable in arrears in quarterly instalments beginning on March 31, 2008 (prorated for the period from the Closing through March 31, 2008).

 

B.

If the General Partner undertakes any of the services described in the Services Agreement (as a result of termination of the Services Agreement), the management fee shall be renegotiated and fixed at an amount which covers the reasonable expenses of the General Partner related to the provision of its services to the Partnership after the termination of the Services Agreement plus a reasonable profit.

 

V.	MEETINGS OF THE PARTNERSHIP

 

A.	Every year the General Partner shall convene an ordinary general meeting in the Partnership.

 

B.	Extraordinary general meeting shall be held when deemed appropriate by the General Partner. Furthermore an extraordinary general meeting shall be held when it is requested in writing by a Limited Partner for consideration of a specified proposal.

 

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C.	The notice convening general meetings shall be forwarded not earlier than 20 Business Days and not later than 5 Business Days before the general meeting and shall include the agenda for the general meeting.

 

D.	At the general meeting resolutions may exclusively be passed as to matters which according to the Agreement or the articles of association of the Partnership are not under the purview of the General Partner.

 

E.	The ordinary general meeting shall be held in time for the audited and approved annual report to be filed with the Danish Commerce and Companies Agency no later than 5 months after the expiry of each accounting year.

 

F.	The agenda for the ordinary general meeting shall include:

 

(i)

The General Partner's presentation of the Partnership's activities during the past year.

 

(ii)

Presentation of the audited annual report for approval.

 

(iii)

Proposals, if any, from the General Partner and/or the Limited Partners.

 

G.	Each Partnership Share of DKK 1,000 confers one vote at the general meeting.

 

H.

All matters being dealt with at the general meeting shall be decided by simple majority. However, any amendment of the articles of association of the Partnership can only be made with the consent of the General Partner. Resolutions may be passed or matters dealt with by written consent in lieu of votes taken at a meeting.

 

I.	The General Partner shall elect the chairman of the general meeting. The chairman leads the discussions and decides on all questions relating to the procedure of the matters tried at the general meeting, the voting and its results.

 

J.	The discussions at the general meeting shall be kept in a minute book signed by the chairman and the General Partner.

 

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6.	POWER TO BIND THE PARTNERSHIP

 

K.

The Partnership shall be bound by the signature of the General Partner, such signature to include the signatures of one member of the board of directors of the General Partner appointed by Nordic, if any, and one member of the board of directors of the General Partner appointed by MHA, if any. No board member of the General Partner may refuse to sign anything authorized and directed by the board of directors of the General Partner, in accordance with the Shareholders Agreement, to be signed by the General Partner.

 

VI.	LIQUIDATION AND TRADE SALE PREFERENCES

 

A.	In the event of a dissolution of the Partnership whether in the form of a liquidation, bankruptcy or any other form of dissolution of the Partnership the following shall apply as regards the respective rights of the Limited Partners to receive distribution of proceeds:

 

(i)

Before any distribution is made to Limited Partners other than the holder(s) of the Nordic Partnership Shares, an amount corresponding to (a) the total amount contributed to the Partnership by Nordic pursuant to clauses 3.5 and 3.6 with the addition of a compounded return calculated at the rate of 10 percent per annum as from the time each such capital contribution to the Partnership has been made through the date of payment of distribution, minus (b) distributions or payments received by the holder(s) of the Nordic Partnership Shares pursuant to clauses 13.1 and 13.2 hereof, shall be made to the holders of the Nordic Partnership Shares.

 

(ii)

From any amount available for distribution in excess of the amount referred to under sub-clause 11.1 (i) the holder(s) of the MHA Partnership Shares shall before any distribution is made to other Limited Partners be entitled to receive an amount corresponding to the proceeds distributed to the holders of the Nordic Partnership Shares under sub-clause 11.1 (i).

 

(iii)

Any amount available for distribution in excess of the amounts referred to under sub-clauses 11.1 (i) and (ii) shall be distributed among Limited Partners on a pro rata basis according to their respective nominal holdings of Partnership Shares.

 

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B.

In the event of a Trade Sale based on a sale of 100 percent of the Partnership Shares the proceeds from such Trade Sale shall be distributed among the Limited Partners in accordance with clause 11.1. In the event of a Trade Sale based on the sale or license of all or substantially all assets of the Partnership, each Limited Partner shall be entitled to require that the Partnership be liquidated and the proceeds from such liquidation be distributed among the Limited Partners in accordance with clause 11.1.

 

C.

Except as set forth in clause 11.2, the Partnership shall not be liquidated, dissolved or wound up without the unanimous consent of the Limited Partners and the General Partner. The proceeds from any liquidation, dissolution, winding up or sale of all Partnership Shares shall be distributed pursuant to clause 11.1.

 

VII.	PLEDGE AND ASSIGNMENT OF PARTNERSHIP SHARES

 

A.	A Party may not pledge or otherwise create or suffer the creation of any encumbrance or lien over all or any part of its Partnership Shares, without the prior written consent of the General Partner.

 

B.

Except for a conversion of Partnership Shares taking place by exercise of the Call Option and/or the Put Option as described in the Joint Venture Agreement, a Party may not sell, assign, issue put- or call-options, transfer or otherwise dispose of all or any part of its Partnership Shares without observing the rules set out in clauses 12.3-12.5

 

C.	Permitted Transfers

 

1.	The transfer or other transmission of the Partnership Shares is subject to the rules set out in clauses 12.4-12.5, provided that the Limited Partners shall be allowed to transfer their Partnership Shares without observing these rules in the following situations:

 

(i)

Each Limited Partner shall be entitled to transfer its Partnership Shares wholly or partly to an entity which is 100 percent owned and controlled by such Limited Partner, provided that the original Limited Partner shall remain liable for the assignee's performance of all of the original Limited Partner's obligations under this Agreement and that the original Limited Partner shall maintain a 100 percent direct ownership and control of such company as long as it owns Partnership Shares.

 

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(ii)

Nordic shall be entitled to transfer its Partnership Shares to another investment entity advised by its management company, Nordic Biotech Advisors ApS (company registration No 26123925), as well as to one or more of the limited partners in Nordic.

 

D.	Rights of First Refusal

 

1.

Upon any transfer of a Limited Partner's (referred to as the "Proposing Transferor") Partnership Shares or any part thereof (referred to as the "Sale Shares"), whether by sale, gift, enforcement by creditors or division of an estate, the other Limited Partner(s) shall have a pre-emptive right to the Sale Shares offered for sale by the Proposing Transferor – failing amicable agreement as to the price and conditions for the transfer of such shares – at the price and on the conditions at which the Proposing Transferor proposes to sell the Sale Shares to a independent third party (referred to as the "Proposing Transferee"). The Proposing Transferee may not whether directly or indirectly have any community of interests with the Proposing Transferor.

 

2.

The Proposing Transferor that wishes to dispose of Sale Shares in accordance with clause 12.4.1 must offer such shares to the other Limited Partner(s) by giving written notice (referred to as the "Transfer Notice") to the General Partner, who shall without undue delay and in any event within 5 Business Days pass on the Transfer Notice to the other Limited Partner(s). The Transfer Notice shall include information as to the identity of the Proposing Transferee and must be accompanied by the offer from the Proposing Transferee, including documentation to the effect that the Proposing Transferee is able to pay the purchase price and fulfil any other conditions of such offer.

 

3.

In the event that the other Limited Partner(s) is(are) desirous of accepting the offer, such Limited Partner(s) shall submit its(their) acceptance in writing addressed to the General Partner and such acceptance must reach the General Partner within 10 Business Days after the General Partner having submitted the Transfer Notice to the other Limited Partner(s).

 

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4.

In the event that an offer made in pursuance hereof is accepted by several other Limited Partners in respect of a total share amount exceeding the share amount comprised in the Transfer Notice, the General Partner shall allot shares to each such Limited Partners in proportion as nearly as may be to the number of shares already held by the respective participating Limited Partner. Not later than 5 Business Days after the expiry of the above-mentioned 10 Business Days time limit, the General Partner shall give notice to the Proposing Transferor stating whether the shares comprised in the Transfer Notice have been taken up by the other Limited Partner(s) having a pre-emptive right.

 

5.

Failing the other Limited Partner's(s') acceptance to take up all of the Sale Shares proposed to be disposed of in the Transfer Notice, all the Sale Shares may be transferred to the Proposing Transferee at a price, which is not lower and on conditions not less strict than those offered to the other Limited Partner(s), provided that the transfer is executed within 40 Business Days following expiry of the period, in which the offer from the Proposing Transferor may be accepted by the other Limited Partner(s). After expiry of such 40 Business Days period, the Proposing Transferor may not sell such shares to the Proposing Transferee or any other third party without having offered such shares to the other Limited Partner(s) according to the provisions of this clause 12.4.

 

E.	Tag-along Right

 

If in observance of the provisions of this clause 12, including the pre-emption right, Partnership Shares are transferred from one or more Limited Partners to a third party, whereby such third party obtains 50 percent or more of the Partnership Shares, the transfer may only be executed on condition that the said third party simultaneously offers to purchase the Partnership Shares held by the remaining Limited Partner(s) on the same terms and conditions.

F.	General conditions

 

1.

A transfer of Partnership Shares pursuant to clauses 12.3 or 12.4, including by way of enforcement by creditors or in any other way, as well as a transfer of Partnership Shares by exercise of part of the Call Option or Put Option, is conditional upon that simultaneously with such transfer the transferring party shall transfer such number of shares in the General Partner to the transferee(s) that subsequent to the transfer of Partnership Shares the share capital of the General Partner is owned by the holders of Partnership Shares pro rata to their holdings of Partnership Shares.

 

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2.

A transfer of Partnership Shares pursuant to clause 12.3 or 12.4, including by way of enforcement by creditors or in any other way, as well as a transfer of Partnership Shares by exercise of part of the Call Option or Put Option, is conditional upon the transferee(s) signing and adhering to this Agreement and the Shareholders' Agreement.

 

VIII.

DIVIDENDS AND DISTRIBUTIONS

 

A.

Minimum Distribution. Within 45 days of the end of each fiscal year of the Partnership, the General Partner shall determine the amount of available cash from operations to be distributed (the “Distributable Amount”). The General Partner shall authorize and distribute (1) a “Minimum Distribution” to Nordic equal to the greater of (i) 6% of Net Sales (as such term is defined in that certain Exclusive License Agreement for “Hedrin” among Thornton & Ross, Ltd., Kerris, S.A. and Manhattan Pharmaceuticals, Inc., dated June 26, 2007, as such Exclusive License Agreement may be amended and/or restated from time to time (the “License Agreement”)) for such fiscal year, as such amount may be reduced in accordance with clause 13.3 (the “Nordic Royalty”), and (ii) Nordic’s pro rata share of the Distributable Amount, and (2) an amount to MHA equal to the Distributable Amount minus the Minimum Distribution. To the extent Nordic has received one or more License Payments for such fiscal year, the Minimum Distribution shall be reduced by the amount of such License Payments.

 

B.

In all events, the General Partner shall, to the extent not prohibited by law, authorize and distribute a distribution, allocated among the Limited Partners pro rata in accordance with their Partnership Shares, that will at least cover the tax liability of each Limited Partner arising from the net income of the Partnership.

 

C.

To the extent Nordic’s percentage ownership of Partnership Shares changes, the percentage set forth in clause 13.1(1)(i) shall be changed in the same proportion as the amount of the change of Nordic’s percentage ownership. For the avoidance of doubt, if Nordic’s percentage ownership of Partnership Shares decreases from 50% to 20%, the Nordic Royalty shall be reduced from 6% to 2.4% of Net Sales.

 

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7.

AUDITOR

 

D.	The auditor of the Partnership shall be a Danish member of an internationally recognised accounting group.

 

E.	The auditor is elected by the General Partner for 1 year at a time. Re-election may take place.

 

8.	NON-COMPETITION

 

F.

During the term of this Agreement none of the Limited Partners are entitled to start up, acquire, engage in, or in any other way directly or indirectly participate in any activity or business which competes fully or partly with the activities of the Partnership relating to the development or commercialization of the Assets within North America, in the field of treating lice infestations in human beings, unless written consent thereto is granted by the other Limited Partner(s).

 

9.	CONFIDENTIALITY

 

9.1

The Parties shall keep as confidential any information they may obtain on the business and activities of the Partnership as a consequence of the Limited Partners' joint ownership of the Partnership and neither the conditions for any of the Limited Partners' investment in the Partnership nor the conditions included in this Agreement shall be disclosed publicly or privately, except (i) otherwise agreed between the Parties, (ii) where such disclosure is required to be given by law, a court of competent jurisdiction, a stock ex-change or any administrative, regulatory or governmental authority or body, (iii) where the information was available in the public at the time of disclosure, (iv) becomes available to the general public other than as a result of any non-compliance with this clause 16.1, (v) is provided to the disclosing Party by a third party who is lawfully in possession of such information and has a lawful right to disclose it, or (vi) was independently developed by the disclosing Party.

 

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9.2	Notwithstanding clause 16.1, Nordic shall always be entitled to provide such information to its limited partners about the Partnership as required from time to time by Nordic under its limited partnership agreement.

 

IX.	VALUE ADDED TAX - TAXES

 

A.	All amounts payable pursuant to this Agreement shall, unless otherwise stated, be exclusive of any VAT.

 

B.	The Partnership shall be responsible for any VAT and other taxes which may be payable on services acquired by the Partnership.

 

C.	The Parties shall fully account for their own taxes and VAT (if any) arising out of distributions from the Partnership.

 

10.	EXCULPATION AND INDEMNITIES

 

D.

No director, officer, employee, agent, advisor or shareholder of the General Partner shall have any liability for any loss to the Partnership or to the Limited Partners arising in connection with services or duties performed or to be performed by the General Partner pursuant to or resulting from this Agreement, except in respect of any matter resulting from such person's gross negligence or willful misconduct towards any obligation or duty such person has or may have in relation to the services performed or to be performed by the General Partner pursuant to or resulting from this Agreement.

 

E.

The Partnership shall indemnify any director, officer, employee, agent, advisor or shareholder of the General Partner against any claim raised by a third party in connection with services or duties performed or to be performed by the General Partner pursuant to or resulting from this Agreement, except in respect of any matter resulting from such person’s gross negligence or willful misconduct towards any obligation or duty such person has or may have in relation to the services performed or to be performed by the General Partner pursuant to or resulting from this Agreement.

 

X.	AMENDMENT OF THE AGREEMENT

 

A.	The Agreement can only be amended with the written consent of all Parties.

 

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B.	The Agreement is non-terminable, except as agreed to by all Parties.

 

XI.

NOTICES

 

A.

All notices between the Parties under this Agreement shall be sent by (i) registered mail, or (ii) email or fax to be confirmed by ordinary letter within 48 hours after transmission to the following addresses, email and fax numbers, unless these subsequently are changed to another address, email of fax with a notice of at least 3 Business Days:

 

Nordic:	Nordic Biotech Venture Fund II K/S
	c/o Nordic Biotech Advisors ApS
	Østergade 5, 3rd floor
	DK-1100 Copenhagen K
	Denmark
	Fax +45 70 20 12 64
	E-mail: fs@nordic-biotech.com
	Attn.: Florian Schönharting
	With a copy to: John M. Barberich
	Email: jmb@nordicbiotech.com
MHA:	Manhattan Pharmaceuticals, Inc.
	810 Seventh Avenue, 4th Floor
	New York, NY 10019
	Fax: (212) 582-3957
	Attn: Chief Financial Officer
	Email: mgmcguinness@manhattanpharma.com
General Partner:	Hedrin Pharmaceuticals General Partner ApS
	Østergade 5, 3rd floor
	DK-1100 Copenhagen K
	Denmark
	Fax +45 70 20 12 64
	E-mail: fs@nordic-biotech.com
	Attn.: Florian Schönharting
	and
	810 Seventh Avenue, 4th Floor
	New York, NY 10019
	Fax: (212) 582-3957
	Attn: Chief Financial Officer
	Email: mgmcguinness@manhattanpharma.com

 

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11.	GOVERNING LAW AND JURISDICTION

 

B.	This Agreement shall be governed by and construed in accordance with Danish law.

 

C.

Each Party hereby irrevocably submits to the exclusive jurisdiction of the federal and state courts sitting in the state of New York in any action or proceeding arising out of or relating to this Agreement. Each Party hereby irrevocably agrees, on behalf of itself and on behalf of such Party’s successors and permitted assigns, that all claims in respect of such action or proceeding shall be heard and determined in any such court and irrevocably waives any objection such person may now or hereafter have as to the venue of any such suit, action or proceeding brought in such a court or that such court is an inconvenient forum.

 

XII.

LICENSE

 

A.

The General Partner and the Parties agree that any agreement entered into by the Partnership with respect to the Assets or the License Agreement, including, without limitation, a sublicense agreement or other agreement by which a third party (a “Licensee”) contracts to sell or otherwise commercialize the Assets, shall include, at Nordic’s option, a provision by which the Licensee agrees to pay a portion of the consideration payable by such Licensee equal to the Nordic Royalty directly to Nordic (the “License Payment”). Nordic shall agree in any such agreement to provide notice of changes to the Nordic Royalty to any Licensee promptly as they occur.

 

Remainder of page intentionally blank; signature page follows

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21 /2 2008

For Nordic Biotech General Partner II ApS on behalf of Nordic Biotech Venture Fund II K/S:

/s/ Christian Hansen

Name: Christian Hansen

Title: Partner

/s/ Florian Schonharting

Name: Florian Schonharting

Title: Partner

 

21 /2 2008

For Manhattan Pharmaceuticals, Inc.:

/s/ Michael McGuinness

Name: Michael McGuinness

Title: CFO

 

21 / 2 2008

For Hedrin Pharmaceuticals General Partner ApS (under formation):

/s/ Christian Hansen
		/s/ Florian Schonharting
Name: Christian Hansen		Name: Florian Schonharting
Title: Partner		Title: Partner

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Appendix 2.4

Articles of Association of the Partnership

	VEDTÆGTER   for   [Hedrin Pharmaceuticals K/S]		ARTICLES OF ASSOCIATION   of   [Hedrin Pharmaceuticals K/S]   (Translation of official Danish language version in left-hand column)
1.	SELSKABETS NAVN		NAME
1.1	Selskabets navn er [Hedrin Pharmaceuticals K/S].		The name of the company is [Hedrin Pharmaceuticals K/S].
2.	HJEMSTED		REGISTERED OFFICE
2.1	Selskabets hjemsted er Københavns Kommune.		The registered office of the company is in the municipality of Copenhagen.
3.	FORMÅL		OBJECTS
3.1	Det er selskabets formål at eje, udvikle og kommercialisere medicinske produkter.		The object of the company is to acquire, develop and commercialize medical products.
4	SELSKABETS KAPITAL		SHARE CAPITAL
4.1	Selskabets kapital udgør DKK 2.000.000 fordelt på 2.000 kommandit-anparter a DKK 1.000.		The capital of the company is DKK 2,000,000 divided into 2,000 limited partnership shares of DKK 1,000.
4.2	Ved tegning eller anden erhvervelse af kommanditanparter skal enhver kommanditist underskrive eller på anden måde tiltræde den gældende kommanditselskabsaftale.		At subscription or any other acquisition of limited partnership shares any limited partner shall sign or in other ways accede to the applicable limited partnership agreement.
4.3	Selskabets kapital er ikke indbetalt ved stiftelsen, men skal under visse betingelser som nærmere beskrevet i kommanditselskabsaftalen indbetales af kommanditisterne. Indbetalingen kan foretages som kontantindskud og som apportindskud.		The share capital of the company has not been paid in at the foundation, but shall under certain conditions specified in the limited partnership agreement be paid in by the limited partners. The payment may take place in cash and by contribution in kind.
4.4	Komplementaren har ingen ejerandel i selskabet.		The general partner has no ownership share in the company.

 

 

 

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5.	HÆFTELSE		LIABILITY
5.1	Komplementaren hæfter personligt og ubegrænset for selskabets forpligtelser.		The general partner is subject to personal and unlimited liability for all obligations of the company.
5.2	Selskabets øvrige deltagere er kommanditister, som hæfter indirekte og solidarisk for selskabets forpligtelser, dog således at den enkelte kommanditists hæftelse er begrænset til dennes til enhver tid værende indskud i selskabet.		The other participants of the company are limited partners, who shall have indirect, joint and several liability for the obligations of the company, however the liability of the individual limited partner shall be limited to such limited partner's contribution to the company at the time in question.
6.	GENERALFORSAMLINGER		GENERAL MEETINGS
6.1	Komplementaren skal hvert år indkalde til en ordinær generalforsamling i selskabet.		Every year the general partner shall convene an ordinary general meeting in the company.
6.2	Ekstraordinær generalforsamling skal afholdes, når komplementaren finder anledning hertil. Endvidere skal komplementaren indkalde til ekstraordinær generalforsamling, såfremt en af kommanditister fremsætter skriftlig anmodning herom med angivelse af de forslag, som de pågældende kommanditister ønsker behandlet.		Extraordinary general meeting shall be held when deemed appropriate by the general partner. Furthermore extraordinary general meeting shall be held when it is requested in writing by a limited partner for consideration of a specified proposal.
6.3	Skriftlig indkaldelse til såvel ekstraordinær som ordinær generalforsamling skal ske med mindst 5 hverdages og højst 20 hverdages varsel. Indkaldelsen skal indeholde dagsordenen for generalforsamlingen og en beskrivelse af dagsordenens væsentlige punkter.		The notice convening general meetings shall be forwarded not earlier than 20 business days and not later than 5 business days before the general meeting and shall include the agenda for the general meeting and particulars of important items on the agenda.
6.4	På generalforsamlingen kan alene træffes beslutning om forhold, som ikke ifølge den for selskabet gældende kommanditselskabsaftale eller selskabets vedtægter henhører under komplementaren.		At the general meeting resolutions may exclusively be passed as to matters which according to the applicable limited partnership agreement or the company’s articles of association are not under the purview of the general partner.
6.5	Den ordinære generalforsamling skal afholdes i så god tid, at selskabets reviderede og godkendte årsrapport kan indsendes til Erhvervs- og Selskabsstyrelsen, så den er modtaget i styrelsen inden 5 måneder efter udløbet af hvert regnskabsår.		The ordinary general meeting shall be held in time for the audited and approved annual accounts to be filed with the Danish Commerce and Companies Agency no later than 5 months after the expiry of each accounting year.

 

 

 

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6.6	Dagsordenen for den ordinære generalforsamling skal omfatte:   1.  Komplementarens beretning om selskabets          virksomhed i det forløbne år.   2.  Fremlæggelse af revideret årsrapport til          godkendelse.   3.  Eventuelle forslag fremsat af komplementaren           og/eller kommanditisterne.		The agenda for the ordinary general meeting shall include:   1.  The general partner's presentation of the           company's activities during the past year.   2.  Presentation of the audited annual accounts          for approval.   3.  Proposals, if any, from the general partner           and/or the limited partners.
6.7	Ved afstemninger på generalforsamlingen giver hvert kommanditandel, én stemme.		Each Share confers one vote at the general meeting.
6.8	Alle beslutninger på generalforsamlingen vedtages med simpelt stemmeflertal, idet beslutning om ændring af selskabets vedtægter dog kun er gyldig, såfremt den tiltrædes af komplementaren.		All matters being dealt with at the general meeting shall be decided by simple majority. However, any amendment of the company's articles of association can only be made with the consent of the general partner.
6.9	Generalforsamlingen ledes af en dirigent valgt af komplementaren.		The general partner shall elect the chairman of the general meeting.
6.10	Dirigenten leder forhandlingerne og afgør alle spørgsmål vedrørende sagernes behandlingsmåde, stemmeafgivningen og dennes resultater.		The chairman leads the discussions and decides on all questions relating to the procedure of the matters tried at the general meeting, the voting and its results.
6.11	Over forhandlingerne på generalforsamlingen føres en protokol, der underskrives af dirigenten og komplementaren.		The discussions at the general meeting shall be kept in a minute book signed by the chairman and the general partner.
7.	ANPARTSOVERGANG		TRANSFER OF SHARES
7.1	Overdragelse og anden retsovergang af kommanditanparter er kun gyldig, når dette sker i overensstemmelse med kommanditselskabsaftalen, og når selskabet efter anmeldelse af ejerskiftet har bekræftet dets gyldighed.		Any transfer of limited partnership shares shall only be valid when such transfer takes place in accordance with the limited partnership agreement, and when the company after receipt of notification of the change of ownership has confirmed its validity.

 

 

 

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8.	SELSKABETS LEDELSE		MANAGEMENT OF THE COMPANY
8.1	Selskabet ledes af komplementaren, der dog er berettiget til at lade tredjemand udføre drifts- og ledelsesmæssige opgaver på komplementarens vegne og på komplementarens ansvar, i det omfang dette er tilladt efter kommanditselskabsaftalen.		The company is managed by the general partner who shall, however, be entitled to appoint a third party to perform its operational and management tasks on behalf of the general partner and on the general partner's responsibility to the extent permitted by the limited partnership agreement.
	Som vederlag for de ydelser, som skal leveres i henhold til kommanditselskabsaftalen og hæftelsen som komplementar, skal komplementaren modtage et årligt management fee på 50.000 eller et sådant andet beløb, som måtte blive besluttet i henhold til kommanditselskabsaftalen.		In consideration of the services to be provided under the limited partnership agreement and the liability as a general partner of the company, the general partner shall receive a management fee of DKK 50,000 per year or such other amount as may be decided pursuant to the limited partnership agreement.
9.	FORDELING OG UDLODNING AF SELSKABETS RESULTAT		DISTRIBUTION AND ALLOCATION OF THE COMPANY’S RESULT
9.1	Fordeling og udlodning af selskabets resultat sker som bestemt i kommanditselskabsaftalen.		Distribution and allocation of the company’s result shall take place as set out in the limited partnership agreement.
10.	TEGNINGSREGEL		POWER TO BIND THE COMPANY
10.1	Selskabet tegnes af komplementaren. Komplementarens tegningsregel skal kræve underskrift af mindst to medlemmer af komplementarens bestyrelse.		The company shall be bound by the signature of the general partner. The rules of signature of the general partner shall require signature by at least two members of the board of directors of the general partner.
11.	REVISOR		AUDITOR
11.1	Selskabets regnskaber revideres af en statsautoriseret revisor. Revisor vælges af komplementaren på den ordinære generalforsamling for ét år ad gangen med mulighed for genvalg.		The company’s accounts shall be audited by a state-authorised public accountant. The auditor shall be elected by the general partner at the ordinary general meeting for 1 year at a time. Re-election may take place.

 

 

 

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12.	REGNSKABSÅR		FINANCIAL YEAR
12.1	Selskabets regnskabsår løber fra 1. januar til 31. december.		The financial year of the company is 1 January to 31 December.
12.2	Selskabets første regnskabsår løber fra stiftelsen til den 31. december 2008.		The first accounting year of the company is from the foundation until 31 December 2008.
	* * *		* * *
	Således vedtaget ved selskabets stiftelse den 2008		As adopted at the foundation of the company on 2008

 

 

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Appendix 7.1

Articles of Association of General Partner

	VEDTÆGTER   for   [Hedrin Pharmaceuticals General Partner ApS]		ARTICLES OF ASSOCIATION   of   [Hedrin Pharmaceuticals General Partner ApS]   (Translation of official Danish language version in left-hand column)
1.	NAVN		NAME
1.1	Selskabets navn er [Hedrin Pharmaceuticals General Partner ApS].		The name of the company is [Hedrin Pharmaceuticals General Partner ApS].
2.	HJEMSTED		REGISTERED OFFICE
2.1	Selskabets hjemsted er i Københavns Kommune.		The registered office of the company is in the municipality of Copenhagen.
3.	FORMÅL		OBJECTS
3.1	Selskabets formål er at være komplementar i [Hedrin Pharmaceuticals K/S].		The object of the company is to be general partner of [Hedrin Pharmaceuticals K/S].
4.	ANPARTSKAPITAL		SHARE CAPITAL
4.1	Selskabets anpartskapital udgør DKK 125.000 fordelt på anparter à DKK 1.		The share capital of the company is DKK 125,000 divided into shares of DKK 1.
4.2	Anparterne er undergivet visse begrænsninger i den indgåede anpartshaveroverenskomst.		The shares are subject to and comprised by certain restrictions in the entered into shareholders' agreement.
5.	ANPARTSOVERGANG		TRANSFER OF SHARES
	Overdragelse og anden retsovergang af selskabets anparter kan alene ske i overensstemmelse med den indgåede anpartshaveroverenskomst.		Any transfer and other assignment of the company's shares may only take place be in accordance with the shareholders' agreement entered into.

 

 

 

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6.	GENERALFORSAMLINGER		GENERAL MEETINGS
6.1	Generalforsamlingen har den højeste myndighed i alle selskabets anliggender inden for de i lovgivningen og nærværende vedtægter fastsatte grænser.		The general meeting of shareholders has the supreme authority in all matters pertaining to the company subject to the limitations established by law and these articles of association.
6.2	Selskabets generalforsamling skal afholdes på selskabets hjemsted eller andetsteds i Region Hovedstaden. Den ordinære generalforsamling skal afholdes hvert år i så god tid, at den reviderede og godkendte årsrapport kan indsendes til Erhvervs- og Selskabsstyrelsen, så den er modtaget i styrelsen inden 5 måneder efter udløbet af hvert regnskabsår.		General meetings shall be held at the registered office of the company or elsewhere in the Capital Region of Denmark. The annual general meeting shall be held in time for the audited and adopted annual report to be received by the Danish Commerce and Companies Agency (Erhvervs- og Selskabsstyrelsen) within five months after expiry of the financial year.
6.3	Dagsordenen for den ordinære generalforsamling skal omfatte:   1.  Valg af dirigent. 2.  Forelæggelse af årsrapport med revisionspåtegning          til godkendelse. 3.  Beslutning om anvendelse af overskud eller          dækning af tab i henhold til den godkendte          årsrapport 4.  Eventuelle forslag fra bestyrelse eller anpartshavere.		The agenda for the ordinary general meeting shall include:   1.  Election of chairman of the meeting. 2.  Presentation of the annual report with the          auditor's report for approval. 3.  Decision on allocation of profit or the cover          of losses according to the approved annual          report. 4.  Proposals, if any, from the board of          directors or the shareholders.
6.4	På generalforsamlingen giver hver anpart én stemme.		Each share carries one vote at the general meeting.
7.	SELSKABETS LEDELSE		MANAGEMENT OF THE COMPANY
7.1	Selskabet ledes af en bestyrelse på én til fem medlemmer valgt af generalforsamlingen.		The board of directors shall consist of one to five directors appointed by the general meeting in accordance with the shareholders agreement.

 

 

 

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7.2	Selskabet har ingen direktion.		The company has no board of management.
8.	TEGNINGSREGEL		POWER TO BIND THE COMPANY
	Selskabet tegnes af 2 bestyrelsesmedlemmer i forening.		The company is bound by the joint signatures of 2 directors.
9.	REVISOR		AUDITOR
9.1	Selskabets regnskaber revideres af en af generalforsamlingen valgt statsautoriseret revisor.		The company’s accounts shall be audited by a state-authorised public accountant elected by the general meeting.
10.	REGNSKABSÅR		FINANCIAL YEAR
10.1	Selskabets regnskabsår løber fra 1. januar til 31. december.		The financial year of the company is 1 January to 31 December.
10.2	Selskabets første regnskabsår løber fra stiftelsen til den 31. december 2008.		The first accounting year of the company is from the foundation until 31 December 2008.
11.	BEMYNDIGELSE TIL EKSTRAORDINÆR UDBYTTEUDDELING		AUTHORIZATION FOR PAYMENT OF EXTRAORDINARY DIVIDENS
11.1	Bestyrelsen er bemyndiget til efter aflæggelsen af selskabets første årsrapport at træffe beslutning om uddeling af ekstraordinært udbytte, jf. anpartsselskabslovens § 44a. Bemyndigelsen er ikke tidsbegrænset.		The board of directors is authorized to pay extraordinary dividends after the submission of the company's first annual report, cf. Section 44a of the Danish Private Companies Act. The authorization is not limited in time.
	Således vedtaget i forbindelse med stiftelsen.		As adopted at the foundation.
	Dato: [*.] 2008		Date: [*] 2008

 

 

 

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Appendix 7.3

Shareholder Agreement Regarding General Partner

Note: The execution version of the Shareholder Agreement regarding the General Partner is attached as Exhibit D to the Joint Venture Agreement filed as Exhibit 10.19 to Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-150580) filed with the SEC on October 3, 2008 and incorporated herein by reference.

 

 

 

 

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Exhibit C

Registration Rights Agreement

Note: The execution version of the Registration Rights Agreement, dated February 25, 2008, is filed as Exhibit 10.22 to MHA's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2008 and incorporated herein by reference.

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Exhibit D

Shareholder Agreement

Note: The execution version of the Shareholder Agreement, dated February 25, 2008, is attached hereto.

 

 

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Exhibit E

Services Agreement

Note: The execution version of the Shareholder Agreement, dated February 25, 2008, is attached hereto.

 

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Exhibit F

Warrant

Note: The execution version of the Warrant, dated April 30, 2008, is filed as Exhibit 4.6 to MHA's Registration Statement on Form S-1 (File No. 333-150580) filed with the Securities and Exchange Commission on May 1, 2008 and incorporated herein by reference.

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Exhibit G

Opinion

 

February 25, 2008

 

Registration Statement on Form S-1

Filed on May 1, 2008

File No. 333-150580

Dear Mr. Riedler: