|
Filed
Pursuant to Rule 424(b)(3) and 424(c)
Commission
File No. 333-150580
|
Manhattan
Pharmaceuticals, Inc.
33,928,571
Shares
Common
Stock
This
prospectus supplement supplements the prospectus dated October 15, 2008,
which
relates to the shares of our common stock that may be sold by the selling
securityholders named therein.
This
prospectus supplement should be read in connection with, and may not be
delivered or utilized without, the prospectus dated October 15, 2008 and
the
prospectus supplement dated November 21, 2008. This prospectus supplement
is
qualified by reference to the prospectus and the prospectus supplements,
except
to the extent that the information in this prospectus supplement updates
or
supersedes the information contained in the prospectus dated October 15,
2008 or
the prospectus supplement dated November 21, 2008.
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 supplement. Any representation to the contrary
is a
criminal offense.
The
date of this prospectus supplement is November 26, 2008
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date
of
Report (Date of earliest event reported): November 19, 2008
Manhattan
Pharmaceuticals, Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
|
|
001-32639
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36-3898269
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|
(State
or other jurisdiction
of
incorporation)
|
|
(Commission
File Number)
|
|
(IRS
Employer
Identification
No.)
|
48
Wall Street, Suite 1110
New
York, New York 10005
(Address
of principal executive offices) (Zip Code)
(212)
582-3950
(Registrant's
telephone number, including area code)
Not
applicable
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
|
o
|
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
|
o
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
|
|
o
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
|
Item
1.01 Entry
into a Material Definitive Agreement
Manhattan
Pharmaceuticals, Inc. (the “Company”)
entered into a Securities Purchase Agreement (the “Securities
Purchase Agreement”),
dated
as of November 19, 2008, among the Company and the investors set forth on
Exhibit A-1 and Exhibit A-2 thereto (the “Investors”).
The
Securities Purchase Agreement provides for the sale by the Company of up to
500
units (each a “Unit”
and
collectively, the “Units”)
with
each Unit consisting of (i) a 12% Senior Secured Note Promissory Note in the
principal amount of $5,000 (each a “Note”,
and
collectively, the “Notes”)
and
(ii) a warrant to purchase up to 166,667 shares of the Company’s common stock
(“Common
Stock”)
at an
exercise price of $.09 per share which expire on December 31, 2013 (each a
“Warrant”
and
collectively, the “Warrants”);
provided, that if 500 Units are sold, the Company
may sell
up to an additional 200 Units (the “Overallotment”).
On
November 19, 2008, the Company completed the sale of 207 Units (the
“First
Closing”).
The
Company may sell up to an additional 293 Units (493 Units if the Overallotment
is exercised) in subsequent closings.
All
of
the Investors represented that they were “accredited investors,” as that term is
defined in Rule 501(a) of Regulation D under the Securities Act, and the sale
of
the Units was made in reliance on exemptions provided by Regulation D and
Section 4(2) of the Securities Act of 1933, as amended.
In
connection with the Securities Purchase Agreement, the Company, the placement
agent acting in connection with the private placement (the “Placement
Agent”) and the Investors entered into a Registration Rights Agreement,
dated as of November 19, 2008, and the Company agreed to file a registration
statement to register the resale of the shares of Common Stock issuable upon
exercise of the Warrants (the “Warrant
Shares”),
within 20 days of the final closing date and to cause the registration statement
to be declared effective within 90 days (or 120 days upon full review by the
SEC).
To
secure
its obligations under the Notes, at the First Closing the Company also entered
into a Security Agreement with the Investors (the “Security
Agreement”)
and a
Default Agreement with the Investors (the “Default
Agreement”).
The
Security Agreement provides that the Notes will be secured by a pledge of the
Company’s assets other than (i) its interest in the Hedrin joint venture,
including, without limitation, its interest in Hedrin Pharmaceuticals K/S and
Hedrin Pharmaceuticals General Partner ApS, (ii) the Company’s rent deposit for
its former office space, (iii) the Company’s refund of a prepayment and (iv) the
Company’s tax refund for the 2007 fiscal year from the State of New York and
City of New York. In addition, to provide additional security for its
obligations under the Notes, the Company entered into a Default Agreement which
provides that upon an event of default under the Notes, the Company shall at
the
request of the holders of the Notes use its reasonable commercial efforts to
either (i) sell a part or all of its interests in the Hedrin joint venture
or
(ii) transfer all or part of its interest in the Hedrin JV to the holders of
the
Notes, as necessary, in order to fulfill its obligations under the Notes, to
the
extent required and to the extent permitted by the applicable Hedrin joint
venture agreements.
At
the
First Closing the Company also entered into (i) Amendment No. 2 to the
Employment Agreement with Douglas Abel, its Chief Executive Officer (the
“Abel
Amendment”)
and
(ii) Amendment No. 1 to the Employment Agreement with Michael McGuinness, its
Chief Financial Officer (the “McGuinness
Amendment”).
The
Abel Amendment and the McGuinness Amendment provide for a reduction of up to
1/3
of the salary payable to Messrs. Abel and McGuinness, respectively, until the
Company shall have received at least $2,500,000 of gross proceeds from the
sale
of the Units or other sales of securities or from other revenue received by
the
Company in the operation of its business or any combination of the
foregoing.
In
connection with the First Closing, the Company incurred expenses which included,
without limitation, commissions to the Placement Agent, legal and accounting
fees, and other miscellaneous expenses, of approximately $245,000. In addition,
the Company issued a warrant to purchase 5,175,010 shares of Common Stock at
an
exercise price of $.09 per share to the Placement Agent (the “Placement
Agent Warrant”)
as
additional compensation for its services. Further, the Company granted the
Placement Agent the right to nominate a member of the Board of Directors of
the
Company and such director shall receive all compensation and benefits provided
to the other directors of the Company. Additionally, upon such director’s
appointment to the Board of Directors he shall be issued a warrant to purchase
1,000,000 shares of Common Stock at a per share exercise price equal to the
greater of (i) the fair market value on the date of issuance or (ii)
$.09.
The
Company did not use any form of advertising or general solicitation in
connection with the sale of the Units. The Notes, the Warrants and the Warrant
Shares are non-transferable in the absence of an effective registration
statement under the Act, or an available exemption therefrom, and all
certificates are imprinted with a restrictive legend to that
effect.
The
description of the private placement described in this Current Report on Form
8-K does not purport to be complete and is qualified in its entirety by
reference to the Securities Purchase Agreement filed as Exhibit
10.1
hereto,
the Registration Rights Agreement filed as Exhibit
10.2
hereto,
the Security Agreement filed as Exhibit
10.3 hereto,
the Default Agreement filed as Exhibit
10.4
hereto,
the form of Note filed as Exhibit
10.5
hereto,
the form of Warrant filed as Exhibit
10.6
hereto,
the Abel Amendment filed as Exhibit
10.7
hereto,
the McGuinness Amendment filed as Exhibit
10.8
hereto
and the form of Placement Agent Warrant files as Exhibit
10.9
(collectively, the “Transaction
Documents”),
all
of which are incorporated herein by reference. The forms of the Transaction
Documents have been included to provide investors and security holders with
information regarding their terms. They are not intended to provide any other
factual information about the Company. The Transaction Documents contain certain
representations and warranties, as well as indemnification with respect to
a
breach of such representations or warranties. Investors and security holders
should not rely on the representations and warranties as characterizations
of
the actual state of facts because they were made only as of the respective
dates
of the Transaction Documents. In addition, information concerning the subject
matter of the representations and warranties may change after the respective
dates of the Transaction Documents, and such subsequent information may not
be
fully reflected in the Company’s public disclosures. A copy of issued by the
Company in connection with the private placement is filed as Exhibit
99.1
hereto.
Forward
Looking Statements
This
Current Report on Form 8-K contains forward-looking statements made pursuant
to
the safe harbor provisions of the Private Securities Litigation Reform Act
of
1995. Forward-looking statements typically are identified by use of terms such
as "may," "will," "should," "plan," "expect," "anticipate," "estimate" and
similar words, although some forward-looking statements are expressed
differently. Forward-looking statements represent our management's judgment
regarding future events. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, the Company can
give no assurance that such expectations will prove to be correct. All
statements other than statements of historical fact included in this Current
Report on Form 8-K are forward-looking statements. The Company cannot guarantee
the accuracy of the forward-looking statements, and you should be aware that
the
Company's actual results could differ materially from those contained in the
forward-looking statements due to a number of factors, including the statements
under "Risk Factors" contained in the Company's Annual Report on Form 10-K
for
the fiscal year ended December 31, 2007 filed with the Securities and Exchange
Commission.
Item
3.02 Unregistered Sales of Equity Securities
The
information set forth under Item 1.01 of this Current Report on Form 8-K is
incorporated by reference in response to this Item 3.02.
| Item 5.02 |
Departure
of Directors or Certain Officers; Election of Directors; Appointment
of
Certain Officers; Compensatory Arrangements of Certain
Officers
|
The
information set forth under Item 1.01 of this Current Report on Form 8-K is
incorporated by reference in response to this Item 5.02.
Item
9.01. Financial Statements and Exhibits.
(d) Exhibits
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10.1
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Securities
Purchase Agreement, dated November 19, 2008, by and among the Company
and
the investors listed on Exhibit A-1 and A-2
thereto.
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10.2
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Registration
Rights Agreement, dated November 19, 2008, by and among the Company,
the
Placement Agent and the investors listed on Exhibit A
thereto.
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10.3
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Security
Agreement, dated November 19, 2008, by and among the Company and
each
person named on Exhibit A-1 and A-2 of the Securities Purchase
Agreement.
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10.4
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Default
Agreement, dated November 19, 2008, by and among the Company and
the
persons and entities listed on Schedule A
thereto.
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10.5
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Form
of 12% Senior Secured Promissory Note
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| 10.6 |
Form
of Warrant
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10.7
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Amendment
No. 2 to the Employment Agreement between the Company and Douglas
Abel,
dated November 19, 2008.
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10.8
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Amendment
No. 1 to the Employment Agreement between the Company and Michael
McGuinness, dated November 19,
2008.
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10.9
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Form
of Placement Agent Warrant
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99.1
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Press
release issued by the Company on November 25,
2008
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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MANHATTAN
PHARMACEUTICALS, INC.
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Date: November
25, 2008
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By:
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/s/
Michael G. McGuinness
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Michael
G. McGuinness
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Chief
Financial Officer
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Exhibit
10.1
SECURITIES
PURCHASE AGREEMENT
This
SECURITIES PURCHASE AGREEMENT (this “Agreement”)
is
made and entered into as of November 19, 2008, by and between Manhattan
Pharmaceuticals, Inc., a Delaware corporation (the “Company”)
and
the investors (each, an “Investor”
and,
collectively, the “Investors”),
set
forth on Exhibit
A-1
and
Exhibit
A-2.
|
A.
|
WHEREAS,
the Investors wish to purchase from the Company, and the Company
wishes to
sell and issue to the Investors, upon the terms and conditions stated
in
this Agreement, a minimum of 200 units (the “Minimum
Amount”)
and a maximum of 500 units (the “Maximum
Amount”);
provided, however, there shall be an overallotment option to purchase
an
additional 200 units (the “Overallotment
Amount”),
at a purchase price of $5,000 per unit (each, a “Unit”),
each Unit consisting of:
|
|
(a)
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a
twelve (12%) percent senior secured promissory note (each a “Note,”
and, collectively, the “Notes”)
of the Company in the aggregate principal amount of $5,000 in the
form
annexed hereto as Exhibit
B;
and
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(b)
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a
warrant (each a “Warrant,”
and, collectively, the “Warrants”)
to purchase up to 166,667 shares (the “Warrant
Shares”)
of the Company’s common stock, par value $0.001 per share (together with
any securities into which such shares may be reclassified, the
“Common
Stock”),
at an exercise price of $0.09 per share (subject to adjustment as
set
forth in the Warrants), which Warrants shall be substantially in
the form
attached hereto as Exhibit
C,
upon the terms and conditions set forth in this
Agreement;
|
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B.
|
WHEREAS,
the Units, Notes, Warrants and Warrant Shares issued pursuant to
this
Agreement are
collectively referred to herein as the “Securities,”
and
|
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C.
|
WHEREAS,
contemporaneous with the sale of the Units, the parties hereto will
execute and deliver a Registration Rights Agreement, substantially
in the
form attached hereto as Exhibit
D
(the “Registration
Rights Agreement”),
pursuant to which the Company will agree to provide certain registration
rights with respect to the Warrant Shares under the Securities Act
and the
rules and regulations promulgated thereunder, and applicable state
securities laws.
|
NOW,
THEREFORE,
in
consideration of the mutual terms, conditions and other agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto hereby agree to the sale and purchase of the Units
as
set forth herein.
|
1.
|
DEFINITIONS
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For
purposes of this Agreement, the terms set forth below shall have the
corresponding meanings provided below.
|
(a)
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“Affiliate”
means, with respect to any specified
Person:
|
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(i)
|
if
such Person is an individual, the spouse of that Person and, if deceased
or disabled, his heirs, executors, or legal representatives, if
applicable, or any trusts for the benefit of such individual or such
individual’s spouse and/or lineal descendants,
or
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(ii)
|
otherwise,
another Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control
with, the Person specified. As used in this definition, “control” shall
mean the possession, directly or indirectly, of the power to cause
the
direction of the management and policies of a Person, whether through
the
ownership of voting securities or by contract or other written
instrument.
|
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(b)
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“Business
Day”
means any day on which banks located in New York City are not required
or
authorized by law to remain closed.
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(c)
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“Closing”
and “Closing
Date”
as defined in Section
2.2(c).
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(d)
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“Common
Stock”
as defined in the recitals above.
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(e)
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“Company
Financial Statements”
as
defined in Section
6.5 hereto.
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(f)
|
“Company’s
knowledge”
means the information and/or other items that the Executives of the
Company have actual knowledge of after due
inquiry.
|
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(g)
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“Default
Agreement”
means the Default Agreement, dated the date of the First Closing,
by and
among each Investor and the Company, the form of which is annexed
hereto
has Exhibit
E.
|
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(h)
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“Deposit
Account Agreement”
means the Deposit Agreement, dated October 21, 2008, by and among
the
Company, the Placement Agent and the Escrow
Agent.
|
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(i)
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“ERISA”
as
defined in Section
6.18
hereto.
|
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(j)
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“Environmental
Laws”
as defined in Section
6.12
hereto.
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(k)
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“Escrow
Agent”
means Signature Bank, a New York commercial
bank.
|
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(l)
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“Escrow
Agreement”
means the Amended and Restated Escrow Deposit Agreement, dated October
16,
2008, by and among the Company, the Placement Agent and the Escrow
Agent.
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(m)
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“Exchange Act” means
the Securities Exchange Act of 1934, as
amended.
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(n)
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“Executives”
means Douglas Abel and Michael
McGuinness.
|
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(o)
|
“Executive
Agreements”
as defined in Section
8.5.
|
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(p)
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“First
Closing”
and “First
Closing Date”
as defined in Section
2.2(a).
|
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(q)
|
“Intellectual
Property”
means the Company’s patents, patent applications, provisional patents,
trademarks, service marks, trade names, trademark registrations,
service
mark registrations, copyrights, licenses, formulae, mask works, customer
lists, internet domain names, know-how and other intellectual property,
including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems, procedures or
registrations or applications relating to the
same.
|
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(r)
|
“Indebtedness”
of any Person means all obligations of such Person (i) for borrowed
money,
(ii) evidenced by notes, bonds, debentures or similar instruments,
(iii)
for the deferred purchase price of goods or services (other than
trade
payables or accruals incurred in the ordinary course of business),
(iv)
under capital leases, and (v) in the nature of guarantees of the
obligations described in clauses (i) through (iv) above of any other
Person.
|
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(s)
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“Investor”
means any person who purchases Units in the Offering pursuant to
this
Agreement.
|
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(t)
|
“Lien(s)”
means any interest in Property securing an obligation owed to a Person
whether such interest is based on the common law, statute or contract,
and
including but not limited to a security interest arising from a mortgage,
lien, title claim, assignment, encumbrance, adverse claim, contract
of
sale, pledge, conditional sale or trust receipt or a lease, consignment
or
bailment for security purposes. The term “Lien” includes but is not
limited to mechanics’, materialmens’, warehousemens’ and carriers’ liens
and other similar encumbrances. For the purposes hereof, a Person
shall be
deemed to be the owner of Property which it has acquired or holds
subject
to a conditional sale agreement or other arrangement pursuant to
which
title to the Property has been retained by or vested in some other
Person
for security purposes.
|
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(u)
|
“Material
Adverse Effect”
means a material adverse effect on, and a “Material
Adverse Change”
means a material adverse change in:
|
|
(i)
|
the
assets, liabilities, results of operations, condition (financial
or
otherwise), business, or prospects of the Company taken as a whole;
or
|
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(ii)
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the
ability of the Company to perform its obligations under the Transaction
Documents,
|
but,
to
the extent applicable, shall exclude any circumstance, change or effect to
the
extent resulting or arising from: (i) any change in general economic conditions
in the industries or markets in which the Company and its Subsidiaries operates
so long as the Company and its Subsidiaries are not disproportionately (in
a
material manner) affected by such changes; (ii) national or international
political conditions, including any engagement in hostilities, whether or not
pursuant to the declaration of a national emergency or war, or the occurrence
of
any military or terrorist attack so long as the Company and its Subsidiaries
are
not disproportionately (in a material manner) affected by such changes; (iii)
changes in United States generally accepted accounting principles, or the
interpretation thereof; or (iv) the entry into or announcement of this
Agreement, actions contemplated by this Agreement, or the consummation of the
transactions contemplated hereby.
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(v)
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“Maximum
Amount”
as defined in the recitals above.
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(w)
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“Minimum
Amount”
as defined in the recitals above.
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(x)
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“Note(s)”
as
defined in the recitals above.
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(y)
|
“OTCBB”
shall mean the Over-the-Counter Bulletin Board
system.
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(z)
|
“Overallotment
Amount”
as defined in the recitals above.
|
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(aa)
|
“Offering”
shall mean the offering and sale of the Units pursuant to this Agreement
and the Private Placement
Memorandum.
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(bb)
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“Person”
shall mean an individual, entity, corporation, partnership, association,
limited liability company, limited liability partnership, joint-stock
company, trust or unincorporated
organization.
|
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(cc)
|
“Placement
Agent”
shall mean [l].
|
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(dd)
|
“Private
Placement Memorandum”
means the Company’s Confidential Private Placement Memorandum, dated
October 22, 2008, together with any and all amendments and/or supplements
thereto.
|
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(ee)
|
“Property”
means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or
intangible.
|
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(ff)
|
“Public
Information Failure”
as defined in Section
6.25
hereto.
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(gg)
|
“Public
Information Failure Payments”
as defined in Section
6.25
hereto.
|
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(hh)
|
“Purchase
Price”
shall mean up to $3,500,000 (which amount includes the $1,000,000
Overallotment Amount).
|
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(ii)
|
“Registration
Rights Agreement”
shall have the meaning set forth in the
recitals.
|
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(jj)
|
“Regulation
D”
as defined in Section
4.11
hereto.
|
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(kk)
|
“Rule
144”
as defined in Section
4.10(c)
hereto.
|
|
(ll)
|
“SEC”
means the United States Securities and Exchange
Commission.
|
|
(mm)
|
“SEC
Documents”
as defined in Section
6.5
hereto.
|
|
(nn)
|
“Securities”
as defined in the recitals above.
|
|
(oo)
|
“Securities
Act” means the
Securities Act of 1933, as amended.
|
|
(pp)
|
“Security
Agreement” means
the Security Agreement by and among each Investor and the
Company,
the form of which is annexed hereto has Exhibit
F.
|
|
(qq)
|
“Subsequent
Closing”
and “Subsequent
Closing Date”
as defined in Section
2.2(b).
|
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(rr)
|
“Subsidiaries”
shall
mean any corporation or other entity or organization, whether incorporated
or unincorporated, in which the Company owns, directly or indirectly,
any
controlling equity or other controlling ownership interest or otherwise
controls through contract or
otherwise.
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(ss)
|
“Transaction
Documents”
shall mean this Agreement, the Private Placement Memorandum, the
Notes,
the Security Agreement, the Default Agreement, the Executive Agreements,
the Registration Rights Agreement, the Warrants, the Escrow Agreement
and
the Deposit Account Agreement.
|
|
(tt)
|
“Transfer”
shall mean any sale, transfer, assignment, conveyance, charge, pledge,
mortgage, encumbrance, hypothecation, security interest or other
disposition, or to make or effect any of the
above.
|
|
(uu)
|
“Warrant
Shares”
as
defined in the recitals above.
|
|
(vv)
|
“Warrants”
as
defined in the recitals above.
|
|
2.
|
SALE
AND PURCHASE OF UNITS.
|
|
2.1
|
Subscription
for Units by Investors.
Subject to the terms and conditions of this Agreement, on the Closing
Date, each of the Investors shall severally, and not jointly, purchase,
and the Company shall sell and issue to each Investor, the number
of Units
specified by it on its respective signature page attached hereto
in
exchange for the Purchase Price.
|
|
2.2
|
Closings.
|
|
(a)
|
First
Closing.
Subject to the terms and conditions set forth in this Agreement,
the
Company shall issue and sell to each Investor listed on Exhibit
A-1,
and each such Investor shall, severally and not jointly, purchase
from the
Company on the First Closing Date, such number of Units set forth
on the
respective signature pages attached hereto, which will be reflected
opposite such Investor’s name on Exhibit A-1
(the “First
Closing”).
The date of the First Closing is hereinafter referred to as the
“First
Closing Date”.
Units equal to at least the Minimum Amount are required to be sold
at the
First Closing within the time period set forth in the Private Placement
Memorandum.
|
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(b)
|
Subsequent
Closing(s).
The Company agrees to issue and sell to each Investor listed on
Exhibit
A-2
(the Subsequent Closing Schedule of Investors), and each such Investor
agrees, severally and not jointly, to purchase from the Company on
the
date set forth on Exhibit
A-2
(each a “Subsequent
Closing Date”)
such number of Units set forth on the signature pages attached hereto,
which will be reflected opposite such Investor’s name on Exhibit A-2
(a
“Subsequent
Closing”).
There may be more than one Subsequent Closing; provided,
however,
that the final Subsequent Closing shall take place within the time
periods
set forth in the Private Placement Memorandum. The date of any Subsequent
Closing is hereinafter referred to as a “Subsequent
Closing Date”).
|
|
(c)
|
Closing.
The First Closing and any applicable Subsequent Closings are each
referred
to in this Agreement as a “Closing”.
The First Closing Date and any Subsequent Closing Dates are sometimes
referred to herein as a “Closing
Date”.
All Closings shall occur within the time periods set forth in the
Private
Placement Memorandum at the offices of Gusrae, Kaplan, Bruno & Nusbaum
PLLC, counsel to the Placement Agent, at 120 Wall Street, 11th Floor,
New
York, NY 10005 or remotely via the exchange of documents and
signatures.
|
|
2.3
|
Closing
Deliveries.
At each Closing, the Company shall deliver to the Investors purchasing
Units at such Closing, against delivery by the Investor of the Purchase
Price (as provided below), the Notes and the Warrants. At each Closing,
each Investor purchasing Units at such Closing shall deliver or cause
to
be delivered to the Company the Purchase Price set forth in its
counterpart signature page annexed hereto by paying United States
dollars
via bank, certified or personal check which has cleared prior to
the
applicable Closing or in immediately available funds, by wire transfer
to
the following Escrow Account, pursuant to the Escrow
Agreement:
|
|
Acct.
Name:
|
Signature
Bank as Escrow Agent for Manhattan Pharmaceuticals,
Inc.
|
|
ABA
Number:
|
026013576
|
|
Acct
Number:
|
1501128178
|
|
2.4
|
Terms
of the Notes. Each
of the Notes shall have the terms and conditions and be in the form
attached hereto as Exhibit
B.
The Company’s obligations to the Investors under the Notes shall be
secured by the assets of the Company as provided in the Security
Agreement
and in the Default Agreement. Upon an Event of Default (as defined
in the
Note),
the Investors shall have, in addition to any rights provided hereunder,
the rights provided them under the Transaction Documents.
|
|
2.5
|
Restrictions
on Release of Proceeds.
In
addition to the other conditions to Closing listed in Section
8
hereof, the release of proceeds from the Escrow Account to the Company
shall be subject to the following
restrictions:
|
|
(i)
|
The
proceeds from the sale of the Units to be released to the Company
shall be
released from the Escrow Account and transferred to the deposit account
(the “Deposit
Account”)
established by the Deposit Account Agreement. Funds shall be released
from
the Deposit Account retroactive as of October 1, 2008, in a series
of
monthly payments (a “Monthly
Payment”)
and Closing lump sum payments (“Lump
Sum Payment”)
in the amounts set forth above:
|
|
Gross
Proceeds
|
Monthly
Payment
|
Aggregate
Lump
Sum
Payment
at
Closing
|
|||||
|
$1,000,000
to $1,499,999
|
$
|
106,000
|
0
|
||||
|
$1,500,000
to $1,999,999
|
$
|
113,300
|
$
|
200,000
|
|||
|
$2,000,000
to 2,500,000
|
$
|
119,375
|
$
|
225,000
|
|||
|
$2,500,000
or more
|
$
|
125,000
|
Any
amount in excess of $1,500,000
|
||||
|
(ii)
|
At
the First Closing the Company shall receive an amount equal to the
Monthly
Payment for the month in which such Closing occurs, plus any applicable
Lump Sum Payment; provided,
however,
that if the First Closing shall occur after October 31, 2008 and
prior to
or on November 30, 2008, the Company shall receive an amount equal
to two
Monthly Payments, plus any applicable Lump Sum Payment; provided,
further,
that if the First Closing shall occur after November 30, 2008 and
on or
prior to December 31, 2008, the Company shall receive an amount equal
to
three Monthly Payments, plus any applicable Lump Sum Payment and
provided,
further,
that if First Closing after December 31, 2008, the Company shall
receive
an amount equal to four Monthly Payments, plus any applicable Lump
Sum
Payment. Following the First Closing, Monthly Payments shall be paid
by
the Escrow Agent to the Company on the first Business Day of each
month
and shall be increased, as applicable in accordance with Section
2.5(i).
The Escrow Agent shall pay to the Company the applicable Lump Sum
Payment
at each Closing which results in gross proceeds from the sale of
the Units
being at least equal to $1,500,000, $2,000,000 or $2,500,000, as
the case
may be.
|
|
2.6
|
Use
of Proceeds. The
Company hereby covenants and agrees that the proceeds from the sale
of
Units shall be used as provided for in the Private Placement
Memorandum.
|
|
3.
|
ACKNOWLEDGEMENTS
OF THE INVESTORS.
|
Each
Investor, severally and not jointly, acknowledges that:
|
3.1
|
Resale
Restrictions.
None of the Securities have been registered under the Securities
Act, or
under any state securities or “blue sky” laws of any state of the United
States, and, unless so registered, none of the Securities may be
offered
or sold by the Investor except pursuant to an effective registration
statement under the Securities Act, or pursuant to an exemption from,
or
in a transaction not subject to, the registration requirements of
the
Securities Act and in each case only in accordance with applicable
state
securities laws.
|
|
3.2
|
Legends
on Notes, Warrants and Warrant Shares.
Such Investor understands that the Notes, the Warrants and certificates
evidencing the Warrant Shares shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be
placed
against transfer of the certificates evidencing such Warrant
Shares):
|
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM ACCEPTABLE
TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT.
If
required by the authorities of any state in connection with the issuance or
sale
of the Notes, the Warrants or any Warrant Shares, the Securities will also
bear
any legend required by such state authority.
|
3.3
|
Agreements.
It
has received and carefully read the Transaction Documents and Private
Placement Memorandum, including the Risk Factors set forth in the
Private
Placement Memorandum;
|
|
3.4
|
Books
and Records.
The books and records of the Company were available upon reasonable
notice
for inspection, subject to certain confidentiality restrictions,
by the
Investor during reasonable business hours at its principal place
of
business, that all documents, records and books in connection with
the
sale of the Securities hereunder have been made available for inspection
by it and its attorney and/or advisor(s) and that the Investor and/or
its
advisor has reviewed all such documents, records and books to its
full
satisfaction and all questions it and/or its advisor may have had
been
answered to their respective full
satisfaction;
|
|
3.5
|
Independent
Advice.
The Investor has been advised to consult the Investor’s own legal, tax and
other advisors with respect to the merits and risks of an investment
in
the Securities and with respect to applicable resale restrictions,
and it
is solely responsible (and neither the Company nor the Placement
Agent is
in any way, directly and/or indirectly, responsible) for compliance
with:
|
|
(a)
|
any
applicable laws of the jurisdiction in which the Investor is resident
in
connection with the distribution of the Securities hereunder,
and
|
|
(b)
|
applicable
resale restrictions;
|
|
3.6
|
No
Insurance.
There is no government or other insurance covering any of the
Securities.
|
|
4.
|
REPRESENTATIONS,
WARRANTIES AND ACKNOWLEDGMENTS OF THE
INVESTORS.
|
Each
Investor, severally and not jointly, represents and warrants to the Company
solely as to such Investor that:
|
4.1
|
Capacity.
The Investor: (i) if a natural person, represents that the Investor
has
reached the age of 21 and has full authority, legal capacity and
competence to enter into, execute and deliver this Agreement and
the
Transaction Documents to which the Investor is a party and all other
related agreements or certificates and to take all actions required
pursuant hereto and thereto and to carry out the provisions hereof
and
thereof and, (ii) if a corporation, partnership, or limited liability
company or partnership, or association, joint stock company, trust,
unincorporated organization or other entity, represents that such
entity
was not formed for the specific purpose of acquiring the Units, such
entity is duly organized, validly existing and in good standing under
the
laws of the state of its organization, such entity has full power
and
authority to execute and deliver this Agreement, the Transaction
Documents
to which it is a party and all other related agreements or certificates
and to take all actions required pursuant hereto and thereto and
to carry
out the provisions hereof and thereof and to purchase and hold the
Units,
the execution and delivery of this Agreement and the Transaction
Documents
to which it is a Party have been duly authorized by all necessary
action;
or (iii) if executing this Agreement in a representative or fiduciary
capacity, represents that it has full power and authority to execute
and
deliver this Agreement and the Transaction Documents to which it
is a
Party in such capacity and on behalf of the subscribing individual,
ward,
partnership, trust, estate, corporation, or limited liability company
or
partnership, or other entity for whom the Investor is executing this
Agreement and the Transaction Documents, and such individual, partnership,
ward, trust, estate, corporation, or limited liability company or
partnership, or other entity has full right and power to perform
pursuant
to this Agreement and the Transaction Documents to which it is a
Party and
make an investment in the
Company;
|
|
4.2
|
No
Violation of Corporate Governance Documents.
If
the Investor is a corporation or other entity, the entering into
of this
Agreement and the other Transaction Documents to which it is a party
and
the transactions contemplated hereby and thereby do not and will
not
result in the violation of any of the terms and provisions of any
law
applicable to, or the charter or other organizational documents,
bylaws or
other constating documents of, the Investor or of any agreement,
written
or oral, to which the Investor may be a party or by which the Investor
is
or may be bound;
|
|
4.3
|
Binding
Agreement. The
Investor has duly executed and delivered this Agreement and the other
Transaction Documents to which it is a party, and this Agreement
and the
other Transaction Documents to which it is a party constitute a valid
and
binding agreement of the Investor enforceable against the Investor
in
accordance with their respective terms, except as such enforceability
may
be limited by general principals of equity, or to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar
laws
relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.
|
|
4.4
|
No
SEC Review or Approval.
Neither the SEC nor any other securities commission, securities regulator
or similar regulatory authority has reviewed or passed on the merits
of
the Securities or on any of the documents reviewed or executed by
the
Investor in connection with the sale of the Securities.
|
|
4.5
|
Purchase
Entirely for Own Account.
The Securities are being acquired for such Investor’s own account, not as
nominee or agent, for investment purposes only and not with a view
to the
resale or distribution of any part thereof in violation of the Securities
Act, and such Investor has no present intention of selling, granting
any
participation in, or otherwise distributing the same in violation
of the
Securities Act,
without prejudice, however, to such Investor’s right at all times to sell
or otherwise dispose of all or any part of such Securities in compliance
with applicable federal and state securities laws.
|
|
4.6
|
Not
a Broker-Dealer. Such
Investor is neither a registered representative under the Financial
Industry Regulatory Authority (“FINRA”),
a member of FINRA or associated or Affiliated with any member of
FINRA,
nor a broker-dealer registered with the SEC under the Exchange Act
or
engaged in a business that would require it to be so registered,
nor is it
an Affiliate of a such a broker-dealer or any Person engaged in a
business
that would require it to be registered as a broker-dealer. In the
event
such Investor is a member of FINRA, or associated or Affiliated with
a
member of FINRA, such Investor agrees, if requested by FINRA, to
sign a
lock-up, the form of which shall be satisfactory to FINRA with respect
to
the Warrants and the Warrant
Shares.
|
|
4.7
|
Not
an Underwriter.
Such Investor is not an underwriter of the Common Stock, nor is it
an
Affiliate of an underwriter of the Common
Stock.
|
|
4.8
|
Investment
Experience.
Such Investor acknowledges that the purchase of the Securities is
a highly
speculative investment and that it can bear the economic risk and
complete
loss of its investment in the Securities and has such knowledge and
experience in financial and/or business matters that it is capable
of
evaluating the merits and risks of the investment contemplated
hereby.
|
|
4.9
|
Disclosure
of Information.
Such Investor has had an opportunity to receive, and fully and carefully
review, all information related to the Company and the Securities
requested by it and to ask questions of and receive answers from
the
Company regarding the Company, its business and the terms and conditions
of the offering of the Securities. Neither such inquiries nor any
other
due diligence investigation conducted by such Investor shall modify,
amend
or affect such Investor’s right to rely on the Company’s representations
and warranties contained in this Agreement. Such Investor acknowledges
that it has received, and fully and carefully reviewed and understands
all
of the Transaction Documents, including, but not limited to, the
Private
Placement Memorandum describing, among other items, the Company,
its
business, its risks, the Securities and the offering of the Securities.
Investor acknowledges that it has received, and fully and carefully
reviewed and understands, copies of the SEC Documents, either in
hard copy
or electronically through the SEC’s EDGAR system. Such Investor
understands that its investment in the Securities involves a high
degree
of risk. Such Investor’s decision to enter into this Agreement and the
Registration Rights Agreement has been made based solely on the
independent evaluation of the Investor and its representatives. Such
Investor has received such accounting, tax and legal advice from
Persons
other than the Company as it has considered necessary to make an
informed
investment decision with respect to the acquisition of the
Securities.
|
|
4.10
|
Restricted
Securities.
Such Investor understands that except as provided in the Registration
Rights Agreement, the sale or re-sale of the Securities has not been
and
is not being registered under the Securities Act or any applicable
state
securities laws, and the Securities, as applicable, may not be transferred
unless:
|
|
(a)
|
they
are sold pursuant to an effective registration statement under the
Securities Act; or
|
|
(b)
|
they
are being sold pursuant to a valid exemption from the registration
requirements of the Securities Act and, if required by the Company,
such
Investor shall have delivered to the Company, at the Investor’s sole cost
and expense, an opinion of counsel that shall be in form, substance
and
scope customary for opinions of counsel in comparable transactions
to the
effect that the Securities to be sold or transferred may be sold
or
transferred pursuant to an exemption from the registration requirements
of
the Securities Act, which opinion shall be acceptable to the Company;
or
|
|
(c)
|
they
are sold or transferred to an “affiliate” (as defined in Rule 144,
promulgated under the Securities Act (or a successor rule (“Rule
144”))
of such Investor who agrees to sell or otherwise transfer the Securities
only in accordance with this Section
4.10
and who is an accredited investor,
or
|
|
(d)
|
they
are sold pursuant to Rule 144.
|
Such
Investor understands that any sale of the Securities made in reliance on Rule
144 may be made only in accordance with the terms of Rule 144 and other than
as
provided in the Transaction Documents, neither the Company nor any other Person
is under any obligation to register the Securities under the Securities Act
or
any state securities laws. Notwithstanding the foregoing or anything else
contained herein to the contrary, the Securities may be pledged as collateral
in
connection with a bona
fide
margin
account or other lending arrangement.
|
4.11
|
Accredited
Investor.
Such Investor is an accredited investor as defined in Rule 501(a)
of
Regulation D, as amended, under the Securities Act (“Regulation
D”).
|
|
4.12
|
No
General Solicitation.
Such Investor did not learn of the investment in the Securities as
a
result of any public advertising or general solicitation, and is
not aware
of any public advertisement or general solicitation in respect of
the
Company or its securities.
|
|
4.13
|
Brokers
and Finders.
No Investor will have, as a result of the transactions contemplated
by the
Transaction Documents, any valid right, interest or claim against
or upon
the Company, any Subsidiary or any other Investor for any commission,
fee
or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of such
Investor.
|
|
4.14
|
Prohibited
Transactions.
Other
than with respect to the transactions contemplated herein, since
the
earlier to occur of (i) the time that such Investor was first contacted
by
the Company, or any other Person regarding an investment in the Company
and (ii) the thirtieth (30th)
day prior to the date hereof, neither the Investor nor any Affiliate
of
the Investor which (x) had knowledge of the transactions contemplated
hereby, (y) has or shares discretion relating to the Investor’s
investments or trading or information concerning such Investor’s
investments, including in respect of the Securities, or (z) is subject
to
the Investor’s review or input concerning such Affiliate’s investments or
trading decisions (collectively, “Trading
Affiliates”)
has, directly or indirectly, nor has any Person acting on behalf
of, or
pursuant to, any understanding with such Investor or Trading Affiliate
effected or agreed to effect any transactions in the securities of
the
Company or involving the Company’s securities (a
“Prohibited
Transaction”).
|
|
4.15
|
Residency.
Such Investor is a resident of the jurisdiction set forth in the
Investor
Questionnaire provided separately.
|
|
4.16
|
Reliance
on Exemptions.
The Investor understands that the Securities are being offered and
sold to
it in reliance upon specific exemptions from the registration requirements
of United States federal and state securities laws and that the Company
is
relying upon the truth and accuracy of, and the Investor’s compliance
with, the representations, warranties, agreements, acknowledgments
and
understandings of the Investor set forth herein in order to determine
the
availability of such exemptions and the eligibility of the Investor
to
acquire the Securities. All of the information which the Investor
has
provided to the Company is true, correct and complete as of the date
this
Agreement is signed, and if there should be any change in such information
prior to the Closing, the Investor will immediately provide the Company
with such information.
|
|
4.17
|
Conflicts.
The Investor understands that Affiliates and/or employees of the
Placement
Agent (i) beneficially own in the aggregate approximately 1,087,920
shares
of Common Stock, (ii) will receive the compensation set forth elsewhere
herein in connection with the Offering, and (iii) may, but are not
obligated to, purchase Securities in the Offering and any and all
such
Securities purchased shall be counted toward the Minimum Amount and
the
Maximum Amount.
|
|
5.
|
COVENANTS
OF THE COMPANY
|
|
5.1
|
Affirmative
Covenants.
|
|
(a)
|
Furnishing
of Information.
Until the date that any Investor owning Warrant Shares may sell all
of
them under Rule 144 of the Securities Act (or any successor provision)
without restriction, the Company covenants to use its commercially
reasonable efforts to (a) timely file (or obtain extensions in respect
thereof and file within the applicable grace period) all reports
required
to be filed by the Company after the date hereof pursuant to the
Exchange
Act and (b) make and keep adequate “current public information” (as such
term is described in Rule 144)
available.
|
|
(b)
|
Rule
144 Sales.
In connection with any proposed sale of Warrant Shares pursuant to
Rule
144 (or any successor provision) by the Investor, the Company covenants
that it shall take such reasonable action as the Investor may request
(including, without limitation, promptly obtaining any required legal
opinions from Company counsel necessary to effect the sale of Warrant
Shares under Rule 144 and paying all related fees and expenses of
such counsel in connection with such opinions), all to the extent
required
from time to time to enable such Investor to sell Warrant Shares
without
registration under the Securities Act pursuant to the provisions
of
Rule 144 under the Securities Act (or any successor provision). The
Company further covenants to take such action and to provide such
legal
opinions within three (3) business days after receipt from such Investor
(or its representative) of documentation reasonably required by Company
counsel to provide such opinion.
|
|
(c)
|
Filing
of Tax Reports.
The Company shall, and shall cause each of its Subsidiaries to prepare
and
timely file (or obtain extensions in respect thereof and file within
the
applicable grace period) all tax returns and tax reports required
to be
filed by each of them in all required jurisdictions after the date
hereof
pursuant to applicable tax laws.
|
|
6.
|
REPRESENTATIONS
AND WARRANTIES OF THE
COMPANY.
|
The
Company represents, warrants and covenants to the Investors that:
|
6.1
|
Organization;
Execution, Delivery and Performance.
|
|
(a)
|
The
Company and each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
in which
it is incorporated or organized, with full power and authority (corporate
and other) to own, lease, use and operate its properties and to carry
on
its business as and where now owned, leased, used, operated and conducted.
The Company is duly qualified as a foreign corporation to do business
and
is in good standing in every jurisdiction in which its ownership
or use of
property or the nature of the business conducted by it makes such
qualification necessary except where the failure to be so qualified
or in
good standing would not have a Material Adverse Effect.
|
|
(b)
|
Subsidiaries.
The Company has no Subsidiaries other than those listed in Schedule
6.1(b)
hereto. Except as disclosed in Schedule
6.1(b)
hereto or in the SEC Documents, the Company owns, directly or indirectly,
all of the capital stock or comparable equity interests of each Subsidiary
free and clear of any and all Liens and all of the issued and outstanding
shares of capital stock or comparable equity interest of each Subsidiary
are validly issued and are fully paid, non-assessable and free of
preemptive rights of first refusal and other similar rights. The
Company
has the unrestricted right to vote, and (subject to limitations imposed
by
applicable law) to receive dividends and distributions on, all capital
stock or other equity securities of its Subsidiaries that are owned
by the
Company.
|
| (c) |
(i) The
Company has all requisite corporate power and authority to enter
into and
perform the Transaction Documents and to consummate the transactions
contemplated hereby and thereby and to issue the Securities in accordance
with the terms hereof and thereof;
|
|
(ii)
|
the
execution and delivery of the Transaction Documents by the Company
and the
consummation by the Company of the transactions contemplated hereby
and
thereby have been duly authorized by the Company’s Board of Directors and
no further consent or authorization of the Company, its Board of
Directors, or its stockholders, is required except as expressly
contemplated by this Agreement;
|
|
(iii)
|
each
of the Transaction Documents has been duly executed and delivered
by the
Company by its authorized representative, and such authorized
representative is a true and official representative with authority
to
sign each such document and the other documents or certificates executed
in connection herewith and bind the Company accordingly;
and
|
|
(iv)
|
each
of the Transaction Documents constitutes, and upon execution and
delivery
thereof by the Company will constitute, a legal, valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by general
principals of equity, or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating
to, or affecting generally, the enforcement of applicable creditors’
rights and remedies.
|
|
6.2
|
Warrants
Shares Duly Authorized. The
Warrant Shares will be duly authorized and reserved for future issuance
and, upon exercise of the Warrants in accordance with their terms,
will be
duly and validly issued, fully paid and non-assessable, and free
from all
taxes or Liens with respect to the issue thereof and shall not be
subject
to preemptive rights, rights of first refusal and/or other similar
rights
of stockholders of the Company and/or any other
Person.
|
|
6.3
|
No
Conflicts.
Except as disclosed in Schedule
6.3,
the execution, delivery and performance of the Transaction Documents
by
the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the
issuance and reservation for issuance of the Warrant Shares) will
not:
|
|
(a)
|
conflict
with or result in a violation of any provision of the Certificate
of
Incorporation or By-laws or similar documents of the Company;
or
|
|
(b)
|
violate
or conflict with, or result in a breach of any provision of, or
constitutes a default and/or an event of default (or an event which
with
notice or lapse of time or both could become a default and/or an event
of
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture, patent,
patent
license or instrument to which the Company is a party, except for
possible
violations, conflicts or defaults as would not, individually or in
the
aggregate, have a Material Adverse Effect;
or
|
|
(c)
|
result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and
regulations of any self-regulatory organizations to which the Company
or
its securities are subject) applicable to the Company or by which
any
property or asset of the Company is bound or
affected.
|
The
Company is not in violation of its Certificate of Incorporation, By-laws or
other organizational documents. The Company is not in default (and no event
has
occurred which with notice or lapse of time or both could put the Company in
default), under, and the Company has not taken any action or failed to take
any
action that would give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to
which
the Company is a party or by which any property or assets of the Company is
bound or affected, except for possible defaults, terminations, amendments,
accelerations or cancellations which would not, individually or in the
aggregate, have a Material Adverse Effect. The businesses of the Company are
not
being conducted in violation of any law, rule ordinance or regulation of any
governmental entity, except for possible violations which would not,
individually or in the aggregate, have a Material Adverse Effect. Based in
part
on the truth and accuracy of the Investor’s representations set forth herein and
in the Investor Questionnaires, except as required under the Securities Act,
the
Exchange Act,
or
any
applicable state securities laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with,
any
court, governmental agency, regulatory agency, self regulatory organization
or
stock market or any third party in order for it to execute, deliver or perform
any of its obligations under this Agreement or the Warrants in accordance with
the terms hereof or thereof or to issue and sell the Units, Notes and Warrants
in accordance with the terms hereof and to issue the Warrant Shares upon
exercise of the Warrants. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof or will
be obtained or effected in a timely manner following the Closing
Date.
|
6.4
|
Capitalization.
|
|
(a)
|
As
of September 15, 2008, the authorized capital stock of the Company
consists solely of 1,500,000 share of preferred stock, of which no
shares
of preferred stock are issued and outstanding and 300,000,000 shares
of
Common Stock, of which 70,624,232 shares of
Common Stock are issued and outstanding, 10,766,336 shares of Common
Stock
are reserved for issuance pursuant to options granted under the Company’s
stock option plan, and 15,966,710 shares are reserved for issuance
pursuant to securities (other than the Warrants and the warrants
issued to
the Placement Agent in the Offering) exercisable for, or convertible
into
or exchangeable for shares of Common Stock.
|
|
(b)
|
Except
as described above, in the SEC Documents or Schedule
6.4(b)
annexed hereto, as of September 15,
2008:
|
|
(i)
|
there
are no outstanding options, warrants, scrip, rights to subscribe
for,
puts, calls, rights of first refusal, agreements, understandings,
claims
or other commitments or rights of any character whatsoever relating
to, or
securities or rights convertible into or exchangeable for any shares
of
capital stock of the Company, or arrangements by which the Company
is or
may become bound to issue additional shares of capital stock of the
Company;
|
|
(ii)
|
other
than the Registration Rights Agreement there are no agreements or
arrangements under which the Company is obligated to register the
sale of
any of its securities under the Securities Act (except for the
registration rights provisions contained herein);
and
|
|
(iii)
|
there
are no anti-dilution or price adjustment provisions contained in
any
security issued by the Company (or in any agreement providing rights
to
security holders) that will be triggered by the issuance of any of
the
Notes, the Warrants and/or the Warrant Shares. All of such outstanding
shares of capital stock are, or upon issuance will be, duly authorized,
validly issued, fully paid and nonassessable. No shares of capital
stock
and/or other securities of the Company are subject to preemptive
rights,
rights of first refusal and/or any other similar rights of the
stockholders of the Company and/or any other Person or any Lien imposed
through the actions or failure to act of the
Company.
|
|
6.5
|
SEC
Information.
|
|
(a)
|
Except
as set forth in Schedule
6.5
or
in the SEC Documents, since January 1, 2007, the Company has timely
filed
(subject to 12b-25 filings with respect to certain periodic filings)
all
reports, schedules, forms, statements and other documents required
to be
filed by it with the SEC pursuant to the reporting requirements of
the
Exchange Act, including, but not limited to, all Current Reports
on Form
8-K (all of the foregoing filed with the SEC prior to the date hereof
and
all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein, being hereinafter
referred to herein as the “SEC
Documents”).
The SEC Documents have been made available to the Investors via the
SEC’s
EDGAR system. Except as set forth on Schedule
6.5
to
this Agreement, as of their respective dates the SEC Documents complied
in
all material respects with the requirements of the Exchange Act and
the
rules and regulations of the SEC promulgated thereunder applicable
to the
SEC Documents, and none of the SEC Documents, at the time they were
filed
with the SEC, 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 light of the circumstances
under
which they were made, not misleading. In addition, as of each Closing,
the
SEC Documents, together with any additional documents filed with
the SEC
after the date hereof and through the date of Closing, when taken
in their
entirety, shall not contain any untrue statements of a material fact
or
omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the date upon
which
they were made and the circumstances under which they were made,
not
misleading. As of their respective dates, the financial statements
of the
Company included in the SEC Documents (“Company
Financial Statements”)
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto as in effect at the time of the filing. The Company
Financial Statements have been prepared in accordance with United
States
generally accepted accounting principles (“GAAP”),
consistently applied, during the periods involved
(except:
|
|
(i)
|
as
may be otherwise indicated in such financial statements or the notes
thereto; or
|
|
(ii)
|
in
the case of unaudited interim statements, to the extent they may
not
include footnotes or may be condensed or summary statements) and
fairly
present in all material respects the consolidated financial position
of
the Company and its consolidated Subsidiaries, if any, as of the
dates
thereof and the consolidated results of their operations and cash
flows
for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit
adjustments).
|
Except
as
expressly set forth in the Company Financial Statements, in the SEC Documents
or
on Schedule
6.5,
the
Company has no liabilities, contingent or otherwise, other
than:
|
(i)
|
liabilities
incurred in the ordinary course of business subsequent to December
31,
2007; and
|
|
(ii)
|
obligations
under contracts and commitments incurred in the ordinary course of
business and not required under GAAP to be reflected in such financial
statements, which, individually or in the aggregate, are not material
to
the financial condition or operating results of the
Company.
|
|
(b)
|
The
shares of Common Stock are quoted on the OTCBB under the symbol “MHAN.”
The Company has not received notice (written or oral) from the OTCBB
to
the effect that the Company is not in compliance with the continuing
requirements of the OTCBB. The Company is, and it has no reason to
believe
that it will not in the foreseeable future continue to be, in compliance
with all such maintenance
requirements.
|
|
(c)
|
All
information relating to or concerning the Company and its officers,
directors, employees, customers or clients (including, without limitation,
all information regarding the Company’s internal financial accounting
controls and procedures) set forth in the Transaction Documents and
the
SEC Documents incorporated by reference therein, when taken together
as a
whole, does not contain an untrue statement of material fact or omit
to
state any material fact necessary in order to make the statements
made
herein or therein, in light of the circumstances under which they
were
made, not misleading.
|
|
6.6
|
Intellectual
Property.
Except as set forth in Schedule
6.6
or
in the SEC Documents, the Company or its Subsidiaries owns valid
title,
free and clear of any Liens, or possesses the requisite valid and
current
licenses or rights, free and clear of any Liens, to use all Intellectual
Property in connection with the conduct its business as now operated.
There is no pending claim or action by any person pertaining to,
or
proceeding pending, or to the Company’s knowledge threatened, which
challenges the right of the Company or of a Subsidiary with respect
to any
Intellectual Property necessary to enable it to conduct its business
as
now operated. To the best of the Company’s knowledge, the Company’s
current products, services and processes do not infringe on any
Intellectual Property or other rights held by any person, and the
Company
is unaware of any facts or circumstances which might give rise to
any of
the foregoing. The Company has not received any written notice of
infringement of, or conflict with, the asserted rights of others
with
respect to the Intellectual Property. The Company has taken reasonable
security measures to protect the secrecy, confidentiality and value
of its
Intellectual Property.
|
|
6.7
|
Permits;
Compliance.
The Company is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents,
certificates, approvals and orders necessary to own, lease and operate
its
properties and to carry on its business as it is now being conducted
(collectively, the “Company Permits”),
except where such failure to posses would not have a Material Adverse
Effect, and there is no action pending or, to the knowledge of the
Company, threatened regarding suspension or cancellation of any of
the
Company Permits. The Company is not in conflict with, or in default
or
violation of, any of the Company Permits, except for any such conflicts,
defaults or violations which, individually or in the aggregate, would
not
reasonably be expected to have a Material Adverse Effect. Since December
31, 2007, the Company has received no notification with respect to
possible conflicts, defaults or violations of applicable laws, except
for
notices relating to possible conflicts, defaults or violations, which
conflicts, defaults or violations would not have a Material Adverse
Effect.
|
|
6.8
|
Absence
of Litigation.
Except as set forth in Schedule
6.8 or
in the SEC Documents, there is no action, suit, claim, proceeding,
inquiry
or investigation before or by any court, public board, government
agency,
self-regulatory organization or body pending or, to the knowledge
of the
Company, threatened against or affecting the Company, or its businesses,
properties or assets or their officers or directors in their capacity
as
such, that would have a Material Adverse
Effect.
|
|
6.9
|
No
Materially Adverse Contracts, etc.
Except as set forth in Schedule
6.9,
the Company is not subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which
in
the judgment of the Company’s officers has or is expected in the future to
have a Material Adverse Effect. The Company is not a party to any
contract
or agreement which has or is reasonably expected to have a Material
Adverse Effect.
|
|
6.10
|
No
Material Changes.
Except as set forth in the SEC Documents, since December 31, 2007,
there
has not been:
|
|
(a)
|
Any
material adverse change in the financial condition, operations or
business
of the Company from that shown on the Company Financial Statements,
or any
material transaction or commitment effected or entered into by the
Company
outside of the ordinary course of
business;
|
|
(b)
|
To
the Company’s Knowledge, any effect, change or circumstance which has had,
or could reasonably be expected to have, a Material Adverse Effect;
or
|
|
(c)
|
Any
incurrence of any material liability outside of the ordinary course
of
business.
|
|
6.11
|
Labor
Matters.
|
|
(a)
|
The
Company is not a party to or bound by any collective bargaining agreements
or other agreements with labor organizations. The Company has not
violated
in any material respect any laws, regulations, orders or contract
terms,
affecting the collective bargaining rights of employees, labor
organizations or any laws, regulations or orders affecting employment
discrimination, equal opportunity employment, or employees’ health,
safety, welfare, wages and hours.
|
|
(b)
|
The
Company is, and at all times has been, in compliance in all material
respects with all applicable laws respecting employment (including
laws
relating to classification of employees and independent contractors)
and
employment practices, terms and conditions of employment, wages and
hours,
and immigration and naturalization.
|
|
6.12
|
Environmental
Matters.
To the Company’s knowledge, neither the Company nor any Subsidiary is in
violation of any statute, rule, regulation, decision or order of
any
governmental agency or body or any court, domestic or foreign, relating
to
the use, disposal or release of hazardous or toxic substances or
relating
to the protection or restoration of the environment or human exposure
to
hazardous or toxic substances (collectively, “Environmental
Laws”),
owns or operates any real property contaminated with any substance
that is
subject to any Environmental Laws, is liable for any off-site disposal
or
contamination pursuant to any Environmental Laws, and is subject
to any
claim relating to any Environmental Laws, which violation, contamination,
liability or claim has had or could reasonably be expected to have
a
Material Adverse Effect, individually or in the aggregate; and there
is no
pending or, to the Company’s knowledge, threatened investigation that
might lead to such a claim.
|
|
6.13
|
Tax
Matters. None
of the Company and its Subsidiaries has made or filed any federal,
state
and foreign income or any other tax returns, reports and declarations
required by any jurisdiction to which it is subject and none of them
has
ever paid any taxes or other governmental assessments or charges
that are
material in amount, nor is it aware of any that have been assessed
or are
due. There are no unpaid taxes in any material amount claimed to
be due by
the taxing authority of any jurisdiction, and the officers of the
Company
know of no basis for any such claim. Neither the Company nor any
of its
Subsidiaries have executed a waiver with respect to the statute of
limitations relating to the assessment or collection of any foreign,
federal, state or local tax.
|
|
6.14
|
Certain
Transactions.
Except as set forth on Schedule
6.14
or
in the SEC Documents, there are no loans, leases, royalty agreements
or
other transactions between:
|
|
(a)
|
the
Company or any of its customers or suppliers;
and
|
|
(b)
|
any
officer, employee, consultant or director of the Company or any person
owning five (5%) percent or more of the capital stock of the Company
or
five (5%) percent or more of the ownership interests of the Company
or any
member of the immediate family of such officer, employee, consultant,
director, stockholder or owner or any corporation or other entity
controlled by such officer, employee, consultant, director, stockholder
or
owner, or a member of the immediate family of such officer, employee,
consultant, director, stockholder or
owner.
|
|
6.15
|
No
General Solicitation.
The Company has not, and to the Company’s knowledge no other Person has
conducted any “general solicitation,” as such term is defined in
Regulation D promulgated under the Securities Act, with respect to
any of
the Securities being offered
hereby.
|
|
6.16
|
No
Integrated Offering; Compliance With Prior Sales of
Securities.
Neither the Company, nor any of its Affiliates, nor any person acting
on
its or their behalf, has directly or indirectly made any offers or
sales
of any security or solicited any offers to buy any security under
circumstances that would require registration under the Securities
Act of
the issuance of the Securities to the Investors. The issuance of
the
Securities to the Investors will not be integrated with any other
issuance
of the Company’s securities (past, current or future) for purposes of any
stockholder approval provisions applicable to the Company or its
securities. All prior sales of the Company’s Securities were made in
compliance with all Federal and State laws, rules and
regulations.
|
|
6.17
|
No
Brokers.
Except as set forth in Section
10.1,
the Company has taken no action which would give rise to any claim
by any
person for brokerage commissions, transaction fees or similar payments
relating to this Agreement or the transactions contemplated
hereby.
|
|
6.18
|
ERISA.
The Company has not made or currently makes no contributions to any
employee pension benefit plan for its employees which plan is subject
to
the Employee Retirement Income Security Act of l974, as amended from
time
to time (“ERISA”).
|
|
6.19
|
Title
to Property.
The Company holds no title in fee simple to any real property. The
Company
holds good and marketable title to all personal property owned by
it which
is material to the business of the Company, in each case free and
clear of
all Liens, except such as are described in Schedule
6.1(b).
Any real property and facilities held under lease by the Company
is held
under valid, subsisting and enforceable leases against the
Company.
|
|
6.20
|
Insurance.
Except as set forth on Schedule
6.20
and for Directors’ and Officers’ liability insurance, the Company does not
carry any insurance policies.
|
|
6.21
|
Internal
Controls.
Except as set forth in Schedule
6.21
or
the SEC Documents, the Company is
in material compliance with the provisions of the Sarbanes-Oxley
Act
of
2002 currently applicable to the Company that are effective as of
the date
hereof and the Company maintains
a system of internal accounting controls sufficient to provide reasonable
assurance that:
|
|
(a)
|
transactions
are executed in accordance with management's general or specific
authorizations;
|
|
(b)
|
transactions
are recorded as necessary to permit preparation of financial statements
in
conformity with GAAP and to maintain asset
accountability;
|
|
(c)
|
access
to assets is permitted only in accordance with management's general
or
specific authorization; and
|
|
(d)
|
the
recorded accountability for assets is compared with the existing
assets at
reasonable intervals and appropriate action is taken with respect
to any
differences.
|
The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and designed such
disclosure controls and procedures to ensure that material information relating
to the Company is made known to the certifying officers by others within those
entities, particularly during the period in which the Company’s most recently
filed period report under the Exchange Act, as the case may be, is being
prepared. The Company's certifying officers have evaluated the effectiveness
of
the Company's controls and procedures as of the end of the period covered by
the
most recently filed periodic report under the Exchange Act (such date, the
"Evaluation
Date").
The
Company presented in its most recently filed periodic report under the Exchange
Act the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date and except as set forth in the SEC
Documents, there have been no changes in the Company’s internal controls as such
term is defined in Item 308 of Regulation S-K) over financial reporting that
have materially affected, or are reasonably likely to materially affect, the
Company’s internal controls over financial reporting.
|
6.22
|
Books
and Records.
The books of account, ledgers, order books, records and documents
of the
Company accurately and completely reflect all material information
relating to the businesses of the Company, the location and collection
of
its assets, and the nature of all transactions giving rise to the
obligations or accounts receivable of the
Company.
|
|
6.23
|
FCPA
Matters.
Neither the Company, nor to the Knowledge of the Company any director,
officer, agent, employee or other person acting on behalf of the
Company
has, in the course of his or her actions for, or on behalf of, the
Company:
|
|
(a)
|
used
any corporate funds for any unlawful contribution, gift, entertainment
or
other unlawful expenses relating to political
activity;
|
|
(b)
|
made
any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate
funds;
|
|
(c)
|
violated
or is in violation of any provision of the U.S. Foreign
Corrupt Practices Act
of
1977, as amended; or
|
|
(d)
|
made
any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic governmental or private official
or
person.
|
|
6.24
|
Form
D; Blue Sky Laws.
The Company shall file a Form D with respect to the Securities as
required
under Regulation D and to provide a copy thereof to the Placement
Agent,
promptly after such filing. The Company shall assist the Placement
Agent’s
legal counsel, on or before the Closing Date, in qualifying the Securities
for sale to the Investors in the applicable closing pursuant to this
Agreement under applicable securities or “blue sky” laws of the states of
the United States (or to obtain an exemption from such qualification),
and
shall pay all fees and expenses of such counsel in connection therewith,
including, but not limited to, all State filing fees and such counsel’s
legal fees and expenses.
|
|
6.25
|
Public
Information.
Public
Information.
At any time during the period commencing from the six (6) month
anniversary of the First Closing Date and ending at such time that
all of
the Warrant Shares can be sold either pursuant to a registration
statement, or if a registration statement is not available for the
resale
of all of such securities, may be sold without the requirement for
the
Company to be in compliance with Rule 144(c)(1) and otherwise without
restriction or limitation pursuant to Rule 144, if the Company shall
fail
for any reason or no reason to satisfy the current public information
requirement under Rule 144(c) (a “Public
Information Failure”)
then, as a remedy for the damages to any holder of Securities by
reason of
any such delay in or reduction of its ability to sell the Warrant
Shares
(which remedy shall not be exclusive of any other remedies available),
including, without limitation, specific performance), the Company
shall
pay to each holder of Warrant Shares who is not eligible to sell
all of
his, her or its Warrant Shares pursuant to Rule 144 as a result of
such
Public Information Failure an amount in cash, as liquidated damages
and
not as a penalty equal to two (2%) percent of the aggregate Purchase
Price
of such holder’s Securities on the day of a Public Information Failure and
on every thirtieth (30th) day (pro rated for periods totalling less
than
thirty (30) days) thereafter until the earlier of (i) the date such
Public
Information Failure is cured and (ii) such time that such public
information is no longer required pursuant to Rule 144. The payments
to
which a holder shall be entitled pursuant to this Section
6.25
are referred to herein as “Public Information Failure Payments.” Public
Information Failure Payments shall be paid on the earlier of (I)
the last
day of the calendar month during which such Public Information Failure
Payments are incurred and (II) the fifth (5th) Business Day after
the
event or failure giving rise to the Public Information Failure Payments
is
cured. The parties agree that the maximum aggregate amount of Public
Information Failure Payments payable to any Holder by the Company
shall be
ten (10%) percent of the aggregate Purchase Price of such holder’s
Securities. In the event the Company fails to make Public Information
Failure Payments in a timely manner, such Public Information Failure
Payments shall bear interest at the rate of two (2%) percent per
month
(prorated for partial months) until paid in
full.
|
|
6.26
|
Registration
Rights.
Except as contemplated pursuant to this Agreement or as set forth
on
Schedule
6.26
to
this Agreement or in the SEC Documents, the Company has not granted
or
agreed to grant to any Person any rights (including “piggy-back”
registration rights) to have any securities of the Company registered
pursuant to the Registration Rights Agreement that have not been
satisfied
or expressly waived, in writing, by the Person who has such registration
rights.
|
|
6.27
|
Ranking
of Notes.
Except as set forth on Schedule
6.27,
no Indebtedness of the Company (and/or Subsidiary) ranks senior to
or pari
passu with the Notes in right of
payment.
|
|
6.28
|
Indebtedness
of the Company.
Schedule
6.28
sets forth a complete and correct list of all outstanding Indebtedness
of
the Company (including a description of the obligors and obligees,
principal amount outstanding and collateral therefor, if any, and
guaranty
thereof, if any). The Company is not in default and no waiver of
default
is currently in effect in the payment of any principal or interest
on any
Indebtedness of the Company, and no event or condition exists with
respect
to any Indebtedness of the Company that would permit (or that with
notice
or the lapse of time, or both, would permit) one or more Persons
to cause
such Indebtedness to become due and payable before its stated maturity
or
before its regularly scheduled dates of
payment.
|
|
7.
|
TRANSFER
RESTRICTIONS.
|
|
7.1
|
Transfer
or Resale.
Except
as provided in the Registration Rights Agreement, the resale of the
Securities by the Investor has not been and will not be registered
under
the Securities Act or any applicable state securities laws, and none
of
the Securities may be transferred or sold by the Investor unless:
|
|
(a)
|
they
are sold pursuant to an effective registration statement under the
Securities Act;
|
|
(b)
|
they
are being sold pursuant to a valid exemption from the registration
requirements of the Securities Act and, if required by the Company,
the
Investor shall have delivered to the Company, at the Investor’s sole cost
and expense, an opinion of counsel that shall be in form, substance
and
scope customary for opinions of counsel in comparable transactions
to the
effect that the Securities to be sold or transferred may be sold
or
transferred pursuant to an exemption from the registration requirements
of
the Securities Act, which opinion shall be acceptable to the
Company;
|
|
(c)
|
the
Securities are sold or transferred to an “affiliate” (as defined in Rule
144) of the Investor who agrees to sell or otherwise transfer the
Securities only in accordance with this Section
7.1
and who is an Accredited Investor;
or
|
|
(d)
|
the
Securities are sold pursuant to Rule
144.
|
|
7.2
|
Transfer
Agent Instructions.
The Company shall issue irrevocable instructions to its transfer
agent,
substantially in the form attached hereto as Exhibit
G,
to issue certificates, registered in the name of each Investor or
its
nominee, for any Warrant Shares in such amounts as specified from
time to
time by each Investor to the Company upon exercise of the Warrants
in
accordance with the terms thereof (the “Irrevocable
Transfer Agent Instructions”).
Prior to registration of the Warrant Shares under the Securities
Act or
the date on which the Warrant Shares may be sold pursuant to Rule
144
without any restriction as to the number of securities as of a particular
date that can then be immediately sold, all such certificates shall
bear
the restrictive legend specified in Section
3.2
of
this Agreement. Nothing in this Section shall affect in any way the
Investor’s obligations and agreement set forth in Section
7.1
hereof to comply with all applicable prospectus delivery requirements,
if
any, upon re-sale of the Securities. If an Investor provides the
Company
with a customary opinion of counsel, that shall be in form, substance
and
scope reasonably acceptable to the Company, to the effect that a
public
sale or transfer of such Securities may be made without registration
under
the Securities Act and such sale or transfer is effected, the Company
shall permit the transfer, and, in the case of the Warrant Shares,
promptly instruct its transfer agent to issue one or more certificates,
free from restrictive legend, in such name and in such denominations
as
specified by such Investor. The Company acknowledges that a breach
by it
of its obligations hereunder will cause irreparable harm to the Investors,
by vitiating the intent and purpose of the transactions contemplated
hereby. Accordingly, the Company acknowledges that the remedy at
law for a
breach of its obligations under this Section
7.2
may be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Section
7.2,
that the Investors shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach and requiring immediate
transfer, without the necessity of showing economic loss and without
any
bond or other security being
required.
|
|
8.
|
CONDITIONS
TO EACH CLOSING OF THE
INVESTORS.
|
The
obligation of an Investor to purchase the Units at any Closing at which such
Investor is purchasing Units is subject to the fulfillment to such Investor’s
satisfaction, on or prior to such applicable Closing Date, of the following
conditions, any of which may be waived by such Investor (as to itself
only):
|
8.1
|
Representations
and Warranties.
The representations and warranties made by the Company in Section
8
hereof qualified as to materiality shall be true and correct at all
times
prior to and on the applicable Closing Date, except to the extent
any such
representation or warranty expressly speaks as of an earlier date,
in
which case such representation or warranty shall be true and correct
as of
such earlier date, and, the representations and warranties made by
the
Company in Section
8
hereof not qualified as to materiality shall be true and correct
in all
material respects at all times prior to and on the applicable Closing
Date, except to the extent any such representation or warranty expressly
speaks as of an earlier date, in which case such representation or
warranty shall be true and correct in all material respects as of
such
earlier date. The Company shall have performed in all material respects
all obligations and covenants herein required to be performed by
it on or
prior to the applicable Closing
Date.
|
|
8.2
|
Approvals.
The Company shall have obtained any and all consents, permits, approvals,
registrations and waivers necessary or appropriate for consummation
of the
purchase and sale of the Securities and the consummation of the other
transactions contemplated by the Transaction Documents, all of which
shall
be in full force and effect.
|
|
8.3
|
Judgments,
Etc.
No
judgment, writ, order, injunction, award or decree of or by any court,
or
judge, justice or magistrate, including any bankruptcy court or judge,
or
any order of or by any governmental authority, shall have been issued,
and
no action or proceeding shall have been instituted by any governmental
authority, enjoining or preventing the consummation of the transactions
contemplated hereby or in the other Transaction
Documents.
|
|
8.4
|
Stop
Orders.
No stop order or suspension of trading shall have been imposed by
the SEC
or any other governmental or regulatory body having jurisdiction
over the
Company or the market(s) where the Common Stock is listed or quoted,
with
respect to public trading in the Common
Stock.
|
|
8.5
|
Executive
Agreements.
The Company shall have entered into an agreement with each of the
Executives (the “Executive
Agreements”),
substantially the form attached hereto as Exhibits
H-1
and H-2.
|
|
8.6
|
Company
CEO/CFO Certificate.
The Company shall have delivered a Certificate, executed on behalf
of the
Company by its Chief Executive Officer or its Chief Financial Officer,
dated as of the applicable Closing Date, certifying to the fulfillment
of
the conditions specified in Subsections
8.1, 8.3 and 8.4
hereof.
|
|
8.7
|
Company
Secretary Certificate.
The Company shall have delivered a Certificate, executed on behalf
of the
Company by its Secretary, dated as of the First Closing Date, certifying
the resolutions adopted by the Board of Directors of the Company
approving
the transactions contemplated by this Agreement and the other Transaction
Documents and the issuance of the Securities, certifying the current
versions of the Certificate of Incorporation and Bylaws of the Company
and
certifying as to the signatures and authority of persons signing
the
Transaction Documents and related documents on behalf of the Company.
The
foregoing certificate shall only be required to be delivered on the
First
Closing Date, unless any material information contained in the certificate
has changed.
|
|
8.8
|
Opinion
of Counsel.
The Investors and the Placement Agent shall have received an opinion
from
Lowenstein Sandler PC, the Company’s legal counsel, dated as of each
Closing Date, in such form and substance as agreed to by the Company
and
the Placement Agent.
|
|
8.9
|
Registration
Rights Agreement.
The Company shall have executed and delivered the Registration Rights
Agreement.
|
|
8.10
|
Security
Agreement.
The Company shall have executed and delivered the Security
Agreement.
|
|
8.11
|
Default
Agreement.
The Company shall have executed and delivered the Default
Agreement.
|
|
8.12
|
Escrow
Agreements.
The Company shall have executed and delivered the Escrow Agreement
and the
Deposit Account Agreement.
|
|
8.13
|
10b-5
Letters.
The Company shall have delivered to the Placement Agent, a representation
letter, in form and substance as mutually agreed by the Company and
the
Placement Agent, from each of the Company’s officers and directors,
addressed to the Company.
|
|
8.14
|
Note
and Warrants.
The Company shall have delivered the Notes and Warrants being sold
at the
applicable Closing.
|
|
9.
|
CONDITIONS
TO EACH CLOSING OF THE
COMPANY.
|
The
obligations of the Company to effect the transactions contemplated by this
Agreement are subject to the fulfillment at or prior to the applicable Closing
Date of the conditions listed below.
|
9.1
|
Representations
and Warranties.
The representations and warranties made by the Investors in Section
4
shall be true and correct in all material respects at the time of
Closing
as if made on and as of such
date.
|
|
9.2
|
Corporate
Proceedings.
All corporate and other proceedings required to be undertaken by
the
Investor in connection with the transactions contemplated hereby
shall
have occurred and all documents and instruments incident to such
proceedings shall be reasonably satisfactory in substance and form
to the
Company.
|
|
9.3
|
Agreements.
Such Investor shall have completed and executed this Agreement, the
Registration Rights Agreement and the investor questionnaire, and
delivered the same to the Company
|
|
9.4
|
Purchase
Price.
The Investors shall have delivered or caused to be delivered the
Purchase
Price to the Company.
|
|
9.5
|
Minimum
Amount.
The Minimum Amount shall have been
raised.
|
|
9.6
|
Payment
of Expenses.
The Company shall have delivered checks or initiated wire transfers
to
Lowenstein Sandler PC for its fees and
expenses.
|
|
10.
|
MISCELLANEOUS.
|
|
10.1
|
Compensation
of Placement Agent, Brokers, etc.
The Investor acknowledges that it is fully aware that the Placement
Agent
will receive from the Company, in consideration of its services as
placement agent in respect of the offer and sale of the Units contemplated
hereby:
|
|
(a)
|
a
success fee of ten (10%) percent of the aggregate Purchase Price
of the
Units sold at each Closing, payable in cash (five (5%) percent of
the
Purchase Price of the Units sold to investors introduced by the Company,
up to the sale of $500,000 of Units);
and
|
|
(b)
|
a
warrant to purchase a number of shares of Common Stock equal fifteen
(15%)
of the number of Warrant Shares underlying the Units sold in the
Offering,
at exercise price per share of $0.09, subject to adjustment, which
expire
on December 31, 2013.
|
In
addition, the Investor acknowledges that it is aware that the Placement Agent
will receive from the Company (i) a non-accountable expense allowance equal
to
one and one-half (1.5%) percent of the gross proceeds from the sale of the
Units
at each Closing and (ii) payment of all of its accountable fees and expenses
including, but not limited to, all legal fees and expenses incurred in
connection with the Offering.
|
10.2
|
Notices.
All notices, requests, demands and other communications provided
in
connection with this Agreement shall be in writing and shall be deemed
to
have been duly given at the time when hand delivered, delivered by
express
courier, or sent by facsimile (with receipt confirmed by the sender’s
transmitting device) in accordance with the contact information provided
below or such other contact information as the parties may have duly
provided by notice.
|
|
(a)
|
The
Company:
|
|
Manhattan
Pharmaceuticals, Inc.
|
|
|
48
Wall Street, Suite 1100
|
|
|
New
York, NY 10005
|
|
|
Facsimile:
(212) 582-3957
|
|
|
Attention:
Doug Abel
|
|
|
Chief
Executive Officer
|
|
|
With
a copy to:
|
|
|
Lowenstein
Sandler PC
|
|
|
65
Livingston Avenue
|
|
|
Roseland,
NJ 07068-1791
|
|
|
Facsimile:
(973) 597-2445
|
|
|
Attention:
Anthony Pergola, Esq.
|
|
|
(b)
|
The
Investors:
|
|
As
per the contact information provided on the signature page
hereof.
|
|
|
(c)
|
The
Placement Agent:
|
|
[l]
|
|
|
With
a copy to:
|
|
|
Gusrae,
Kaplan, Bruno & Nusbaum PLLC
|
|
|
120
Wall Street
|
|
|
New
York, NY 10005
|
|
|
Facsimile:
(212) 809-5449
|
|
|
Attention:
Lawrence G. Nusbaum, Esq.
|
|
10.3
|
Survival
of Representations and Warranties.
|
Each
party hereto covenants and agrees that the representations and warranties
of
such
party contained in this Agreement shall survive the Closing.
|
10.4
|
Indemnification.
|
|
(a)
|
The
Company expressly and irrevocably agrees to indemnify and hold harmless
each Investor and its Affiliates and their respective directors,
officers,
employees and agents (the “Investor
Indemnitees”)
from and against any and all losses, claims, damages, liabilities
and
expenses (including without limitation reasonable attorney fees and
disbursements and other expenses as and when incurred in connection
with
investigating, preparing or defending any action, claim or proceeding,
pending or threatened and the costs of enforcement thereof) (collectively,
“Losses”)
to which such Investor Indemnitees may become subject as a result
of any
breach of representation, warranty, covenant or agreement made by
the
Company under the Transaction Documents and will reimburse any such
Investor Indemnitees for all such amounts as they are incurred by
such
Investor Indemnitees.
|
|
(b)
|
Each
Investor agrees to indemnify and hold harmless the Company and its
Affiliates and their respective directors, officers, employees and
agents
(collectively, the “Company
Indemnitees”)
from and against any and all Losses to which such Company Indemnitees
may
become subject as a result of any breach of representation, warranty,
covenant or agreement made by or to be performed on the part of such
Investors under the Transaction Documents, and will reimburse any
such
Company Indemnitees for all such amounts as they are incurred by
such
Company Indemnitees.
|
|
(c)
|
Promptly
after receipt by any Investor Indemnitees or Company Indemnitees,
as
applicable, of notice of any demand, claim or circumstances which
would or
might give rise to a claim or the commencement of any action, proceeding
or investigation in respect of which indemnity may be sought pursuant
to
Section
10.4,
such Investor Indemnitees or Company Indemnitees, as applicable,
shall
promptly notify the other Party in writing and such other Party shall
assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Investor Indemnitees or Company Indemnitees,
as
applicable, and shall assume the payment of all fees and expenses;
provided,
however, that
the failure of any Investor Indemnitees or Company Indemnitees, as
applicable, so to notify the other Party shall not relieve the other
Party
of its obligations hereunder except to the extent that the other
Party is
materially prejudiced by such failure to notify. In any such proceeding,
any Investor Indemnitees or Company Indemnitees, as applicable, shall
have
the right to retain its own counsel, but the fees and expenses of
such
counsel shall be at the expense of such Investor Indemnitees or Company
Indemnitees, as applicable, unless:
|
|
(i)
|
the
Parties shall have mutually agreed to the retention of such counsel;
or
|
|
(ii)
|
in
the reasonable judgment of counsel to such Investor Indemnitees or
Company
Indemnitees, as applicable, representation of both parties by the
same
counsel would be inappropriate due to actual or potential differing
interests between them.
|
The
other
Party shall not be liable for any settlement of any proceeding effected without
its written consent, which consent shall not be unreasonably withheld, but
if
settled with such consent, or if there be a final judgment for the plaintiff,
the other Party shall indemnify and hold harmless such Investor Indemnitees
or
Company Indemnitees, as applicable, from and against any loss or liability
(to
the extent stated above) by reason of such settlement or judgment. Without
the
prior written consent of the Investor Indemnitees or Company Indemnitees, as
applicable, which consent shall not be unreasonably withheld, the other Party
shall not effect any settlement of any pending or threatened proceeding in
respect of which any Investor Indemnitees or Company Indemnitees, as applicable,
is or could have been a party and indemnity could have been sought hereunder
by
such Investor Indemnitees or Company Indemnitees, as applicable, unless such
settlement includes an unconditional release of such Investor Indemnitees or
Company Indemnitees, as applicable, from all liability arising out of such
proceeding.
|
10.5
|
Entire
Agreement.
This Agreement and the other Transaction Documents contain the entire
agreement between the Company and each Investor in respect of the
subject
matter contained herein and supersedes all prior agreements and
understandings of the parties, oral and written, with respect to
the
subject matter contained herein.
|
|
10.6
|
Third
Party Beneficiaries.
This Agreement is intended for the benefit of the parties hereto
and their
respective permitted successors and assigns, and
is
not for the benefit of, nor may any provision hereof be enforced
by, any
other person.
|
|
10.7
|
Successors
and Assigns.
This Agreement shall be binding upon and inure to the benefit of
the
parties and their successors and assigns. Neither the Company nor
any
Investor shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the
other.
|
|
10.8
|
Independent
Nature of Investors’ Obligations and Rights.
The obligations of each Investor under any Transaction Document are
several and not joint with the obligations of any other Investor,
and
neither the Company nor any other Investor shall be responsible in
any way
for the performance of the obligations of any other Investor under
any
Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Investor pursuant hereto or
thereto,
shall be deemed to constitute the Investors as a partnership, an
association, a joint venture or any other kind of entity, or create
a
presumption that the Investors are in any way acting in concert or
as a
group with respect to such obligations or the transactions contemplated
by
the Transaction Documents and the Company acknowledges that the Investors
are not acting in concert or as a group with respect to such obligations
or the transactions contemplated by the Transaction Documents. Each
Investor confirms that it has independently participated in the
negotiation of the transaction contemplated hereby with the advice
of its
own counsel and advisors. Each Investor shall be entitled to independently
protect and enforce its rights, including, without limitation, the
rights
arising out of this Agreement or out of any other Transaction Document,
and it shall not be necessary for any other Investor to be joined
as an
additional party in any proceeding for such
purpose.
|
|
10.9
|
Publicity.
The Company and [l]
shall have the right to review a reasonable period
of time
before issuance of any press releases or any other public statements
with
respect to the transactions contemplated hereby; provided,
however,
that the Company shall be entitled, without the prior approval of
[l]
or the Investors, to make any press release or SEC or other
regulatory filings with respect to such transactions as is expressly
required by applicable law and regulations (although [l]
shall be consulted by the Company in connection with any press
release prior to its release and shall be provided with a copy thereof
and
be given an opportunity to comment thereon). No Investor shall issuance
any press release or public statement with respect to the transactions
contemplated hereby without the prior written approval of the
Company.
|
|
10.10
|
Binding
Effect; Benefits.
This Agreement and all the provisions hereof shall be binding upon
and
inure to the benefit of the parties hereto and their respective successors
and permitted assigns; nothing in this Agreement, expressed or implied,
is
intended to confer on any persons other than the parties hereto or
their
respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this
Agreement.
|
|
10.11
|
Amendment;
Waivers.
All modifications, amendments or waivers to this Agreement shall
require
the written consent of both the Company and a majority in interest
of the
Investors (based on the number of Units purchased
hereunder).
|
|
10.12
|
Governing
Law; Consent to Jurisdiction; Waiver of Jury Trial.
This Agreement shall be governed by, and construed solely and exclusively
in accordance with, the internal laws of the State of New York without
regard to the choice of law principles thereof. Each of the parties
hereto
irrevocably submits to the sole and exclusive jurisdiction of the
courts
of the State of New York located in New York County and the United
States
District Court for the Southern District of New York for the purpose
of
any suit, action, proceeding or judgment relating to or arising out
of
this Agreement and the transactions contemplated hereby (a “Proceeding”).
Each of the parties hereto irrevocably consents to the sole and exclusive
jurisdiction of any such court in any such Proceeding and to the
laying of
venue in such court. Each party hereto expressly and irrevocably
waives
any objection to the laying of venue of any such Proceeding brought
in
such courts and irrevocably waives any claim that any such Proceeding
brought in any such court has been brought in an inconvenient forum.
The
successful party in any Proceeding shall be entitled to its legal
fees and
expenses from the losing party. EACH
OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY
IN ANY
LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL
HAS
BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
|
|
10.13
|
Further
Assurances.
Each party hereto shall do and perform or cause to be done and performed
all such further acts and shall execute and deliver all such other
agreements, certificates, instruments and documents as any other
party
hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of
the
transactions contemplated hereby.
|
|
10.14
|
Counterparts.
This agreement may be executed in any number of counterparts, each
of
which shall be deemed to be an original, and all of which shall constitute
one and the same document. in the event that any signature (including
a
financing signature page) is delivered by facsimile transmission
or by
e-mail delivery of a “.pdf” format data file, 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 or “.pdf” signature page were an original
thereof.
|
|
10.15
|
Severability.
Any provision of this Agreement that is prohibited or unenforceable
in any
jurisdiction shall, as to such jurisdiction, be ineffective to the
extent
of such prohibition or unenforceability without invalidating the
remaining
provisions hereof but shall be interpreted as if it were written
so as to
be enforceable to the maximum extent permitted by applicable law,
and any
such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties
hereby waive any provision of law which renders any provision hereof
prohibited or unenforceable in any
respect.
|
|
10.16
|
Use
of Proceeds.
The Company agrees, represents, warranties and covenants that it
shall use
the net proceeds received in the Offering expressly as set forth
in the
Private Placement Memorandum.
|
[SIGNATURE
PAGES IMMEDIATELY FOLLOW]
IN
WITNESS WHEREOF,
the
undersigned Investors and the Company have caused this Securities Purchase
Agreement to be duly executed as of the date first above written.
|
MANHATTAN
PHARMACEUTICALS, INC.
|
||
|
|
||
|
|
By:
|
/s/
Michael McGuinness
|
|
|
Name:
Michael McGuinness
Title:
Chief Financial Officer
|
|
|
|
INVESTORS:
The
Investors executing the Signature Page in the form attached hereto
as
Annex
A
and delivering the same to the Company or its agents shall be deemed
to
have executed this Agreement and agreed to the terms
hereof.
|
Annex
A
Securities
Purchase Agreement
Investor
Counterpart Signature Page
The
undersigned, desiring to:
|
(a)
|
enter
into this Securities Purchase Agreement dated as of November 19, 2008
(the “Agreement”),
between the undersigned, Manhattan Pharmaceuticals, Inc., a Delaware
corporation (the “Company”),
and the other parties thereto, in or substantially in the form furnished
to the undersigned; and
|
|
(b)
|
purchase
the securities of the Company as set forth
below,
|
hereby
agrees to purchase such securities from the Company as of the Closing and
further agrees to join the Agreement as a party thereto, with all the rights
and
privileges appertaining thereto, and to be bound in all respects by the terms
and conditions thereof. The undersigned specifically acknowledges having read
the representations in the Purchase Agreement section entitled “Representations,
Warranties and Acknowledgments of the Investors,” and hereby represent that the
statements contained therein are complete and accurate with respect to the
undersigned as an Investor. The undersigned further hereby agrees that execution
by the undersigned of this Investor Counterpart Signature Page shall constitute
an agreement to be bound by the terms and conditions of each of the Agreement
and the Registration Rights Agreement, with the same effect as if such separate,
but related agreement, was separately signed.
Purchaser
herby elects to purchase a total of 40 Units at a price of $5,000 per Unit.
(Each Unit consisting of Notes and Warrants to purchase Warrant
Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Neel B. Ackerman
|
|
|
|
|
Signature:
|
Signature: /s/
Neel B. Ackerman
|
|
|
|
|
Date:
|
Date:
October 27, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name: Martha N. Ackerman
|
|
|
|
|
Title:
|
Co-Investor
Signature: /s/ Martha N. Ackerman
|
|
Date:
October 27, 2008
|
Purchaser
herby elects to purchase a total of 5 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print Name of Entity:
|
Stephen
M. Burnich Revocable Trust u/a 10/08/04
|
Print
Name:
|
|
|
||
|
Signature: /s/
Stephen M. Burnich
|
Signature:
|
|
|
|
||
|
Date: October
29, 2008
|
Date:
|
|
|
|
||
|
Print
Name: Stephen M. Burnich
|
Co-Investor
Print Name:
|
|
|
|
||
|
Title: Trustee
|
Co-Investor
Signature:
|
|
|
Date:
|
||
Purchaser
herby elects to purchase a total of 10 Units at a price of $5,000 per Unit.
(Each Unit consisting of Notes and Warrants to purchase Warrant
Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Ennio De Pianto
|
|
|
|
|
Signature:
|
Signature: /s/
Ennio De Pianto
|
|
|
|
|
Date:
|
Date: October
29, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 5 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Matthew Ernst
|
|
|
|
|
Signature:
|
Signature: /s/
Matthew Ernst
|
|
|
|
|
Date:
|
Date: October
29, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
Title:
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 5 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity: John
M. Goodman Living Trust
|
Print
Name:
|
|
|
|
|
Signature: /s/
John M. Goodman
|
Signature:
|
|
|
|
|
Date: November
4, 2008
|
Date:
|
|
Print
Name: John M. Goodman
|
Co-Investor
Print Name:
|
|
|
|
|
Title: Trustee
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
Purchaser
herby elects to purchase a total of 5 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Leon Kanner
|
|
|
|
|
Signature:
|
Signature: /s/
Leon Kanner
|
|
|
|
|
Date:
|
Date:
October 29, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name: Rosemary
Kanner
|
|
|
|
|
Title:
|
Co-Investor
Signature: /s/
Rosemary Kanner
|
|
Date:
October 29, 2008
|
Purchaser
herby elects to purchase a total of 2 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Richard Kindt
|
|
|
|
|
Signature:
|
Signature: /s/
Ricahrd Kindt
|
|
|
|
|
Date:
|
Date:
October 29, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 10 Units at a price of $5,000 per Unit.
(Each Unit consisting of Notes and Warrants to purchase Warrant
Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Douglas E. Pritchett
|
|
|
|
|
Signature:
|
Signature: /s/
Douglas E. Pritchett
|
|
|
|
|
Date:
|
Date:
October 31, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 2 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Jerome A. Shinkay
|
|
|
|
|
Signature:
|
Signature: /s/
Jerome A. Shinkay
|
|
|
|
|
Date:
|
Date:
October 31, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 5 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Michael J. Spezia
|
|
|
|
|
Signature:
|
Signature: /s/
Michael J. Spezia
|
|
|
|
|
Date:
|
Date:
November 3, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 2 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: George D. Wilson
|
|
|
|
|
Signature:
|
Signature: /s/
George D. Wilson
|
|
|
|
|
Date:
|
Date:
October 27, 2008
|
|
Print
Name:
|
Co-Investor
Print Name: Diane
J. Wilson
|
|
|
|
|
Title:
|
Co-Investor
Signature: /s/
Diane J. Wilson
|
|
Date:
October 27, 2008
|
Purchaser
herby elects to purchase a total of 2 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Joseph L. Jerger
|
|
|
|
|
Signature:
|
Signature: /s/
Joseph L. Jerger
|
|
|
|
|
Date:
|
Date:
November 6, 2008
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 5 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: David Pudelsky
|
|
|
|
|
Signature:
|
Signature: /s/
David Pudelsky
|
|
|
|
|
Date:
|
Date: November
6, 2008
|
|
Print
Name:
|
Co-Investor
Print Name: Nancy
Pudelsky
|
|
|
|
|
Title:
|
Co-Investor
Signature: /s/
Nancy Pudelsky
|
|
Date:
November 6, 2008
|
Purchaser
herby elects to purchase a total of 2 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: James R. Buck
|
|
|
|
|
Signature:
|
Signature: /s/
James R. Buck
|
|
|
|
|
Date:
|
Date:
November 6, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 3 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: John O. Dunkin
|
|
|
|
|
Signature:
|
Signature: /s/
John O. Dunkin
|
|
Date:
|
Date:
November 4, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 3 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print Name of Entity:
|
NFS/FMTC
SEP IRA FBO Jay Jennings
|
Print
Name:
|
|
|
||
|
Signature: /s/
Jay Jennings
|
Signature:
|
|
|
|
||
|
Date: October
29, 2008
|
Date:
|
|
|
|
||
|
Print
Name: Jay Jennings
|
Co-Investor
Print Name:
|
|
|
|
||
|
Title: IRA
Owner
|
Co-Investor
Signature:
|
|
|
Date:
|
||
Purchaser
herby elects to purchase a total of 13 Units at a price of $5,000 per Unit.
(Each Unit consisting of Notes and Warrants to purchase Warrant
Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print Name of Entity:
|
Landmark
Community Bank Collateral Account FBO Estate of Catherine
Nasser
|
Print
Name:
|
|
|
||
|
Signature:
/s/ William K. Nasser, Jr.
|
Signature:
|
|
|
|
||
|
Date: November
4, 2008
|
Date:
|
|
|
Print
Name: William K. Nasser, Jr.
|
Co-Investor
Print Name:
|
|
|
|
||
|
Title:
Attorney-in-fact
|
Co-Investor
Signature:
|
|
|
|
||
|
Date:
|
||
Purchaser
herby elects to purchase a total of 5 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity: Nasser
Family Trust
|
Print
Name:
|
|
|
|
|
Signature: /s/
William K. Nasser
|
Signature:
|
|
|
|
|
Date: November
4, 2008
|
Date:
|
|
|
|
|
Print
Name: William K. Nasser
|
Co-Investor
Print Name:
|
|
|
|
|
Title: Trustee
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 1 Unit at a price of $5,000 per Unit. (Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: James R. Kahn
|
|
|
|
|
Signature:
|
Signature:
/s/ James R. Kahn
|
|
|
|
|
Date:
|
Date:
November 12, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name: Debra
A. Kahn
|
|
|
|
|
Title:
|
Co-Investor
Signature: /s/
Debra A. Kahn
|
|
Date:
November 12, 2008
|
Purchaser
herby elects to purchase a total of 10 Units at a price of $5,000 per Unit.
(Each Unit consisting of Notes and Warrants to purchase Warrant
Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: A. Starke Taylor, Jr.
|
|
|
|
|
Signature:
|
Signature:
/s/ A. Starke Taylor, Jr.
|
|
|
|
|
Date:
|
Date:
October 7, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name: Carolyn Taylor
|
|
|
|
|
Title:
|
Co-Investor
Signature: /s/
Carolyn Taylor
|
|
Date:
October 7, 2008
|
Purchaser
herby elects to purchase a total of 1 Unit at a price of $5,000 per Unit. (Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Mark Vollmer
|
|
|
|
|
Signature:
|
Signature: /s/
Mark Vollmer
|
|
|
|
|
Date:
|
Date:
November 11, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 5 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Robert J. Guercio
|
|
|
|
|
Signature:
|
Signature:
/s/ Robert J. Guercio
|
|
|
|
|
Date:
|
Date:
November 6, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 1 Unit at a price of $5,000 per Unit. (Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Ralph Hanby
|
|
|
|
|
Signature:
|
Signature:
/s/ Ralph Hanby
|
|
|
|
|
Date:
|
Date:
November 13, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 2 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant
Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Robert E. Jacobson
|
|
Signature:
|
Signature:
/s/ Robert E. Jacobson
|
|
Date:
|
Date:
November 10, 2008
|
|
Print
Name:
|
Co-Investor
Print Name: Saralee
Jacobson
|
|
Title:
|
Co-Investor
Signature: /s/
Saralee Jacobson
|
|
Date:
November 10, 2008
|
Purchaser
herby elects to purchase a total of 6 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Michael Cushing
|
|
|
|
|
Signature:
|
Signature:
/s/ Michael Cushing
|
|
|
|
|
Date:
|
Date:
November 13, 2008
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 1 Unit at a price of $5,000 per Unit. (Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Raymond Yarusi, Jr.
|
|
|
|
|
Signature:
|
Signature:
/s/ Raymond Yarusi, Jr.
|
|
|
|
|
Date:
|
Date:
November 12, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 5 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: James C. Orr
|
|
|
|
|
Signature:
|
Signature:
/s/ James C. Orr
|
|
Date:
|
Date:
November 9, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
Purchaser
herby elects to purchase a total of 5 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Vernon L. Simpson
|
|
|
|
|
Signature:
|
Signature:
/s/ Vernon L. Simpson
|
|
|
|
|
Date:
|
Date:
November 17, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 5 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print Name of Entity:
|
Michael
Yokoyama & Jaye Ventui Family Trust
|
Print
Name:
|
|
|
||
|
Signature:
/s/ Michael Yokoyama & /s/ Jaye Venuti
|
Signature:
|
|
|
Date: November
12, 2008
|
Date:
|
|
|
|
||
|
Print
Name: Michael Yokoyama & Jaye Ventui
|
Co-Investor
Print Name:
|
|
|
|
||
|
Title: Co-Trustees
|
Co-Investor
Signature:
|
|
|
Date:
|
||
Purchaser
herby elects to purchase a total of 4 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Frederick Peet
|
|
|
|
|
Signature:
|
Signature:
/s/ Frederick Peet
|
|
|
|
|
Date:
|
Date:
November 7, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
|
|
|
Date:
|
Purchaser
herby elects to purchase a total of 2 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Ronald Rasmussen
|
|
|
|
|
Signature:
|
Signature:
/s/ Ronald Rasmussen
|
|
|
|
|
Date:
|
Date:
November 12, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 1 Unit at a price of $5,000 per Unit. (Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Lewis R. Jacobson
|
|
|
|
|
Signature:
|
Signature:
/s/ Lewis R. Jacobson
|
|
|
|
|
Date:
|
Date:
November 17, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 5 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Mark B. Ginsburg
|
|
|
|
|
Signature:
|
Signature: /s/
Mark B. Ginsburg
|
|
|
|
|
Date:
|
Date:
November 18, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
Purchaser
herby elects to purchase a total of 4 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Gregory Dovolis
|
|
|
|
|
Signature:
|
Signature: /s/
Greogory Dovolis
|
|
|
|
|
Date:
|
Date:
November 3, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 5 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: William S. Silver
|
|
|
|
|
Signature:
|
Signature:
/s/ William S. Silver
|
|
|
|
|
Date:
|
Date:
November 5, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 5 Units at a price of $5,000 per Unit.
(Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Praful Desai
|
|
|
|
|
Signature:
|
Signature:
/s/ Praful Desai
|
|
|
|
|
Date:
|
Date:
November 5, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
Date:
|
Purchaser
herby elects to purchase a total of 1 Unit at a price of $5,000 per Unit. (Each
Unit consisting of Notes and Warrants to purchase Warrant Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity:
|
Print
Name: Thomas Gemellaro
|
|
|
|
|
Signature:
|
Signature:
/s/ Thomas Gemellaro
|
|
|
|
|
Date:
|
Date:
November 13, 2008
|
|
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
Purchaser
herby elects to purchase a total of 14 Units at a price of $5,000 per Unit.
(Each Unit consisting of Notes and Warrants to purchase Warrant
Shares)
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
Print
Name of Entity: Howard
M. Tanning Rollover IRA
|
Print
Name:
|
|
|
|
|
Signature:
/s/ Howard M. Tanning
|
Signature:
|
|
|
|
|
Date:
November 3, 2008
|
Date:
|
|
|
|
|
Print
Name: Howard M. Tanning
|
Co-Investor
Print Name:
|
|
|
|
|
Title:
IRA Owner
|
Co-Investor
Signature:
|
|
Date:
|
Investor’s
principal address is as set forth in the Investor Questionnaire provided
separately.
Exhibit A-1
First
Closing
Schedule
of Investors
|
Investor
|
Notes
|
Warrants
|
Purchase Price
|
|||||||
|
Neel
B. Ackerman and Martha N. Ackerman
|
$
|
200,000
|
6,666,680
|
$
|
200,000
|
|||||
|
Stephen
M. Burnich Revocable Trust u/a 10/08/04
|
$
|
25,000
|
833,335
|
$
|
25,000
|
|||||
|
Ennio
De Pianto
|
$
|
50,000
|
1,666,670
|
$
|
50,000
|
|||||
|
Matthew
Ernst
|
$
|
25,000
|
833,335
|
$
|
25,000
|
|||||
|
John
M. Goodman Living Trust
|
$
|
25,000
|
833,335
|
$
|
25,000
|
|||||
|
Leon
Kanner & Rosemary E. Kanner
|
$
|
25,000
|
833,335
|
$
|
25,000
|
|||||
|
Richard
Kindt
|
$
|
10,000
|
333,334
|
$
|
10,000
|
|||||
|
Douglas
E. Pritchett
|
$
|
50,000
|
1,666,670
|
$
|
50,000
|
|||||
|
Jerome
A. Shinkay
|
$
|
10,000
|
333,334
|
$
|
10,000
|
|||||
|
Michael
J. Spezia
|
$
|
25,000
|
833,335
|
$
|
25,000
|
|||||
|
George
D. Wilson & Diane J. Wilson
|
$
|
10,000
|
333,334
|
$
|
10,000
|
|||||
|
Joseph
L. Jerger
|
$
|
10,000
|
333,334
|
$
|
10,000
|
|||||
|
David
& Nancy Pudelsky
|
$
|
25,000
|
833,335
|
$
|
25,000
|
|||||
|
James
R. Buck
|
$
|
10,000
|
333,334
|
$
|
10,000
|
|||||
|
John
O. Dunkin
|
$
|
15,000
|
500,001
|
$
|
15,000
|
|||||
|
NFS/FMTC
SEP IRA FBO Jay Jennings
|
$
|
15,000
|
500,001
|
$
|
15,000
|
|||||
|
Landmark
Community Bank Collateral Account FBO Estate of Catherine
Nasser
|
$
|
65,000
|
2,166,671
|
$
|
65,000
|
|||||
|
Nasser
Family Trust
|
$
|
25,000
|
833,335
|
$
|
25,000
|
|||||
|
James
R. Kahn & Debra A. Kahn, JTWROS
|
$
|
5,000
|
166,667
|
$
|
5,000
|
|||||
|
Carolyn
N. Taylor & A. Starke Taylor, Jr.
|
$
|
50,000
|
1,666,670
|
$
|
50,000
|
|||||
|
Mark
Vollmer
|
$
|
5,000
|
166,667
|
$
|
5,000
|
|||||
|
Robert
J. Guercio
|
$
|
25,000
|
833,335
|
$
|
25,000
|
|||||
|
Ralph
Hanby
|
$
|
5,000
|
166,667
|
$
|
5,000
|
|||||
|
Robert
E. Jacobson & Saralee Jacobson, JTWROS
|
$
|
10,000
|
333,334
|
$
|
10,000
|
|||||
|
Michael
Cushing
|
$
|
30,000
|
1,000,002
|
$
|
30,000
|
|||||
|
Raymond
Yarusi, Jr.
|
$
|
5,000
|
166,667
|
$
|
5,000
|
|||||
|
James
Orr
|
$
|
25,000
|
833,335
|
$
|
25,000
|
|||||
|
Vernon
L. Simpson
|
$
|
25,000
|
833,335
|
$
|
25,000
|
|||||
|
Michael
H. Yokoyama & Jaye S. Venuti Family Trust
|
$
|
25,000
|
833,335
|
$
|
25,000
|
|||||
|
Frederick
Peet
|
$
|
20,000
|
666,668
|
$
|
20,000
|
|||||
|
Ronald
Rasmussen
|
$
|
10,000
|
333,334
|
$
|
10,000
|
|||||
|
Lewis
R. Jacobson
|
$
|
5,000
|
166,667
|
$
|
5,000
|
|||||
|
Mark
B. Ginsburg
|
$
|
25,000
|
833,335
|
$
|
25,000
|
|||||
|
Gregory
J. Dovolis
|
$
|
20,000
|
666,668
|
$
|
20,000
|
|||||
|
William
S. Silver
|
$
|
25,000
|
833,335
|
$
|
25,000
|
|||||
|
Praful
Desai
|
$
|
25,000
|
833,335
|
$
|
25,000
|
|||||
|
Thomas
Gemellaro
|
$
|
5,000
|
166,667
|
$
|
5,000
|
|||||
|
Howard
M. Tanning Rollover IRA
|
$
|
70,000
|
2,333,338
|
$
|
70,000
|
|||||
|
FIRST
CLOSING TOTAL:
|
$
|
1,035,000
|
34,500,069
|
$
|
1,035,000
|
|||||
Exhibit A-2
Schedule
of Investors
Subsequent
Closing held ______
|
Investor
|
Notes
|
Warrants
|
Purchase Price
|
|||||||
|
SUBSEQUENT
CLOSING TOTAL
|
||||||||||
Exhibit
10.2
REGISTRATION
RIGHTS AGREEMENT
This
REGISTRATION RIGHTS AGREEMENT (this “Agreement”)
is
made as of November 19, 2008, by and among (i) Manhattan Pharmaceuticals, Inc.,
a Delaware corporation (the “Company”),
(ii)
each person listed on Exhibit A
attached
hereto, as may be amended from time to time (each an “Investor”
and,
collectively, the “Investors”),
(iii)
[l]
(the “Placement
Agent”)
and
(iv) each person or entity that subsequently becomes a party to this Agreement
pursuant to, and in accordance with, the provisions of Section
13
hereof
(each an “Investor
Permitted Transferee”
and,
collectively, the “Investor
Permitted Transferees”).
WHEREAS,
the Company has agreed to issue and sell to the Investors (the “Offering”),
and
the Investors have agreed to purchase from the Company, an aggregate of up
to
five hundred (500) units (each a “Unit”
and,
collectively, the “Units”)
for an
aggregate purchase price of $2,500,000 (the “Offering
Amount”),
subject to an overallotment option to purchase up to an additional two hundred
(200) Units ($1,000,000) (the “Overallotment
Amount”),
priced at $5,000 per Unit, with each Unit consisting of (i) a $5,000 aggregate
principal amount twelve (12%) percent senior secured promissory note (each
a
“Note”
and,
collectively, the “Notes”)
of the
Company, and (ii) a warrant (each a “Warrant”
and,
collectively, the “Warrants”),
to
purchase shares (the “Warrant
Shares”)
of the
Company’s common stock, $0.001 par value per share (the “Common
Stock”)
as
provided in that certain Securities Purchase Agreement, dated of even date
herewith, between the Company and the Investors (the “Securities
Purchase Agreement”);
and
WHEREAS,
the Company has agreed to provide certain registration rights with respect
to
the resale of the Warrant Shares, all on the terms and conditions provided
herein; and
WHEREAS,
the terms of the Securities Purchase Agreement provide that it shall be a
condition precedent to the closing of the transactions thereunder, for the
Company and the Investors to execute and deliver this Agreement.
NOW,
THEREFORE, in consideration of the promises and mutual covenants contained
herein, the parties hereto hereby agree as follows:
1.
DEFINITIONS.
The
following terms shall have the meanings provided therefor below or elsewhere
in
this Agreement as described below:
“Business
Day”
means
a
day, other than a Saturday or Sunday, on which banks in New York City are open
for the general transaction of business.
“Closing”
shall
have the meaning ascribed to such term in the Securities Purchase
Agreement.
“Effectiveness
Date”
means,
(i) with respect to the Initial Registration Statement, as soon as practicable,
but if the Initial Registration Statement is not subject to a SEC review no
later than ninety
(90) calendar days after the Filing Date, and if the Initial Registration
Statement is subject to a SEC review no later than one hundred twenty (120)
calendar days after the Filing Date, and (ii) with respect to any additional
Registration Statements which may be required to be filed hereunder pursuant
to
Section 3(d)
or
otherwise, not later than ninety (90) calendar days following the date on which
the additional Registration Statement is required to be filed hereunder if
it is
not subject to a SEC review or if the additional Registration Statement is
subject to a SEC review one hundred twenty (120) calendar days after the date
such Registration Statement is required to be filed hereunder.
“Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended, and all of the rules
and
regulations promulgated thereunder.
“Filing
Date”
shall
mean, with respect to the Initial Registration Statement, within twenty (20)
calendar days after the Final Closing, provided,
however,
that if
the Filing Date falls on a Saturday, Sunday or other day, that the SEC is closed
for business the Filing Date shall be extended to the next Business
Day.
“First
Closing”
shall
have the meaning ascribed to such term in the Securities Purchase
Agreement.
“Holder”
or
“Holders”
shall
mean the holder or holders, as the case may be, from time to time of Registrable
Securities.
“Initial
Nordic Registration Statement”
shall
mean the registration statement filed by the Company with the SEC (File No.
333-150580), as amended or supplemented from time to time.
“Initial
Registration Statement”
shall
mean the initial Registration Statement filed pursuant to this
Agreement.
“Investor
Permitted Transferees”
as
defined in the Preamble.
“Investors”
shall
mean, collectively, the Investors and the Investor Permitted Transferees;
provided,
however,
that
the term “Investors” shall not include any of the Investors or any of the
Investor Permitted Transferees that do not own or hold any Registrable
Securities.
“Nordic
Registration Statement”
shall
mean any registration statement filed pursuant to the Registration Rights
Agreement, dated February 25, 2008, by and among the Company and Nordic Biotech
Venture Fund II K/S, as amended from time to time, including the Initial Nordic
Registration Statement.
2
“Person”
means
an individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or agency or subdivision thereof) or other entity of any
kind.
“Placement
Agent”
as
defined in the Preamble.
“Registrable
Securities”
shall
mean the Warrant Shares.
“Registration
Statement”
means
any one or more registration statements filed (and/or required to be filed
pursuant hereto) with the SEC by the Company on Form S-3, or in the event the
Company is not eligible to use Form S-3, on Form S-1, for the purpose of
registering the Registrable Securities, including (in each case) the prospectus,
amendments and supplements to such registration statement or prospectus,
including pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference or deemed to be incorporated by reference
in
such registration statement. The term “Registration Statement” shall include,
but not be limited to, the Initial Registration Statement and shall not include
any Nordic Registration Statement.
“Rule
144”
shall
mean Rule 144 promulgated by the SEC pursuant to the Securities Act and any
successor or substitute rule, law or provision.
“Rule 172”
means
Rule 172 promulgated by the SEC pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC having substantially the same purpose and effect
as
such Rule.
“Rule 424”
means
Rule 424 promulgated by the SEC pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC having substantially the same purpose and effect
as
such Rule.
“SEC”
shall
mean the United States Securities and Exchange Commission.
“SEC
Guidance”
means
(i) any publicly-available written guidance, or rule of general
applicability of the SEC staff, or (ii) oral or written comments,
requirements or requests of the SEC staff to the Company in connection with
the
review of a Registration Statement.
“Securities
Act”
shall
mean the Securities Act of 1933, as amended, and all of the rules and
regulations promulgated thereunder.
“Trading
Day”
means
(a) if the Common Stock is listed or quoted on the NASDAQ Market, then any
day
during which securities are generally eligible for trading on the NASDAQ Market,
or (b) if the Common Stock is not then listed or quoted and traded on the NASDAQ
Market, then any Business Day.
“Warrant
Shares”
as
defined in the preamble.
3
2.
EFFECTIVENESS;
This
Agreement shall become effective and legally binding only if the First Closing
occurs.
3.
MANDATORY
REGISTRATION.
(a)
The Company shall be required to file an Initial Registration Statement
on or prior to the Filing Date registering the Registrable Securities for resale
by the Holders as selling stockholders thereunder. On or prior to the Filing
Date, the Company shall prepare and file with the SEC an Initial Registration
Statement for the purpose of registering under the Securities Act the resale
of
all, or such portion as permitted by SEC Guidance (and the Company shall make
a
commercially reasonable effort to advocate with the SEC for the registration
of
all or the maximum number of the Registrable Securities as permitted by SEC
Guidance) of the Registrable Securities by, and for the account of, the Holders
as selling stockholders thereunder, that are not then registered on an effective
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415. No other securities shall be included in the Initial
Registration Statement that is filed except for the Registrable Securities.
Each
Registration Statement (including the Initial Registration Statement) shall
contain the “Plan of Distribution” included in the Investor Questionnaire, in
substantially the form of which was provided to Investors with the Securities
Purchase Agreement (except if otherwise required pursuant to written comments
received from the SEC upon a review of such Registration Statement). The Company
shall cause a Registration Statement to be declared effective by the SEC under
the Securities Act as promptly as practicable after the filing thereof, but
in
any event on or prior to the applicable Effectiveness Date.
(b)
The Company shall be required to keep a Registration Statement effective
until such date that is the earlier of (the “Effectiveness
Period”)
(i)
the date as of which all of the Holders as selling stockholders thereunder
may
sell all of the Registrable Securities registered for resale thereon without
restriction pursuant to Rule 144 or (ii) the date when all of the Registrable
Securities registered thereunder shall have been sold (such date is referred
to
herein as the “Mandatory
Registration Termination Date”).
Thereafter, the Company shall be entitled to withdraw such Registration
Statement and the Holders shall have no further right to offer or sell any
of
the Registrable Securities registered for resale thereon pursuant to the
respective Registration Statement (or any prospectus relating
thereto).
(c)
Notwithstanding any other provision of this Agreement, if any SEC
Guidance sets forth a limitation on the number of Registrable Securities to
be
registered in the Initial Registration Statement (and the Company has made
a
commercially reasonable effort to advocate with the SEC for the registration
of
all or a greater number of Registrable Securities), the number of Registrable
Securities to be registered on such Registration Statement will be reduced
on a
pro rata basis among the Investors based on the total number of unregistered
Warrant Shares held by such Investors on a fully diluted basis. The Company
shall file a new registration statement as soon as reasonably practicable
covering the resale by the Holders of not less than the number of such
Registrable Securities that are not registered in the Initial Registration
Statement. The Company shall not be liable for liquidated damages under
Section
5(a)
as to
any Registrable Securities which are not permitted by the SEC to be included
in
a Registration Statement due solely to SEC Guidance from time to time. In such
case, any liquidated damages payable under Section
5(a)
shall be
calculated to apply only the percentage of Registrable Securities which are
permitted in accordance with SEC Guidance to be included in such Registration
Statement.
4
(d)
If during the Effectiveness Period, subject to Section
3(a)
and
Section
3(c),
the
Company becomes aware that the number of Registrable Securities at any time
exceeds the number of Registrable Securities then registered for resale in
a
Registration Statement, then the Company shall file as soon as reasonably
practicable an additional Registration Statement covering the resale by the
Holders of not less than the number of such Registrable Securities that are
not
then registered.
(e) Notwithstanding
any other provision of this Agreement, if during the Effectiveness Period any
of
the Registrable Securities become eligible for resale without restriction
pursuant to Rule 144 (the “Rule
144 Eligible Securities”)
then
the number of Registrable Securities outstanding at any one time shall be
reduced by the number of Rule 144 Eligible Securities and the Company may at
its
option file an amendment to any Registration Statement to reduce the number
of
Registrable Securities accordingly. The Company acknowledges that the Company’s
obligation to file its periodic disclosure documents for the twelve (12) month
period preceding the date of sale is a “restriction” as that term is used in the
first sentence of this Section
3(e).
4.
PIGGYBACK
REGISTRATION.
(a)
If, at any time, commencing on the date of the First Closing, the Company
proposes to prepare and file with the SEC a registration statement under the
Securities Act other than a Nordic Registration Statement, the Company will
give
written notice to each Holder and the Placement Agent of its intention to do
so
by certified mail and shall include all of the Registrable Securities in such
registration statement; provided,
however,
that in
connection with any offering involving an underwriting of shares of Common
Stock, the Company shall not be required to include the Registrable Securities
of any Holder in such registration statement unless they accept the terms of
the
underwriting as agreed upon between the Company and its underwriters, and then
only in such quantity as the underwriters determine in their sole discretion
will not jeopardize the success of the offering by the Company. In the event
that the underwriters determine that less than all of the Registrable Securities
required to be registered can be included in such offering, then the Registrable
Securities that are included shall be apportioned, among the Investors on a
pro
rata basis based on the total number of unregistered Warrant Shares held by
such
Investors and requested to be included in the Registration Statement on a fully
diluted basis. The Company shall use its best efforts to effect the registration
under the Securities Act of the Registrable Securities at the Company’s sole
cost and expense and at no cost or expense to the Holders (other than any
commission, discounts or counsel fees payable by the Holders, as further
provided in Section
7
hereof).
(b)
Notwithstanding the preceding provisions of this Section
4,
the
Company shall have the right any time after it shall have given written notice
pursuant to this Section
4
(irrespective of whether any written request for inclusion of such securities
shall have already been made) to elect not to file any proposed registration
statement, or to withdraw the same after the filing but prior to the effective
date thereof.
5
(c)
The Company shall use its commercially reasonable efforts to cause the
registration statement filed pursuant to this Section
4
to
become effective as promptly as possible under the circumstances at the time
prevailing and, if any stop order shall be issued by the SEC in connection
therewith, to use its reasonable efforts to obtain the removal of such
order.
(d) To
the
extent any Registrable Securities of the Holders are included in such
registration statement, the Company shall notify each Holder by facsimile or
e-mail as promptly as practicable, and in any event, within two (2) Trading
Days, after such registration statement is declared effective and shall
simultaneously provide the Holders with a copy of any related prospectus to
be
used in connection with the sale or other disposition of the Registrable
Securities covered thereby.
5.
PENALTIES/SUSPENSION
OF A REGISTRATION STATEMENT.
(a)
If: (i) the Initial Registration Statement and any other
Registration Statement other than a Nordic Registration Statement is not filed
on or prior to the Filing Date, or (ii) the Company fails to file with the
SEC a request for acceleration in accordance with Rule 461 promulgated
under the Securities Act, within five (5) Trading Days of the date that the
Company is notified (orally or in writing, whichever is earlier) by the SEC
that
the Initial Registration Statement or any other Registration Statement will
not
be “reviewed” or not be subject to further review and the Company has obtained
any required clearance from the Financial Industry Regulatory Authority, Inc.
(“FINRA”),
or
(iii) prior to the Effectiveness Date of the Initial Registration Statement
or any other Registration Statement, the Company fails to file a pre-effective
amendment and otherwise respond in writing to comments made by the SEC in
respect of such Initial Registration Statement or any other Registration
Statement within ten (10) Business Days after the receipt of comments by or
notice from the SEC that such amendment is required in order for such Initial
Registration Statement or any other Registration Statement to be declared
effective, or (iv) subject to the tolling provisions contained herein, as
to, in the aggregate among all Investors on a pro rata basis based on the amount
of Registrable Securities held by each of them, respectively, the lesser of
(A)
all of the Registrable Securities and (B) the maximum number of Registrable
Securities permitted by SEC Guidance (collectively, the “Initial
Shares”),
a
Registration Statement registering for resale all of the Initial Shares is
not
declared effective by the SEC by the Effectiveness Date, or (v) after the
Effectiveness Date of the Initial Registration Statement or any other
Registration Statement, subject to the tolling provisions contained herein,
such
Initial Registration Statement or other Registration Statement ceases for any
reason to remain continuously effective as to all Registrable Securities
included in such Initial Registration Statement or other Registration Statement,
as applicable, or the Investors are otherwise not permitted to utilize the
Prospectus therein to resell such Registrable Securities, for more than ten
(10)
consecutive Business Days or more than an aggregate of twenty (20) Business
Days
during any twelve (12) month period (which need not be consecutive Business
Days), provided,
however,
that no
such payments shall be required in connection with a Suspension Period (as
hereinafter defined) (any such failure or breach being referred to as an
“Event,”
and
for purposes of clause (i), (iv) or (v) the date on which such Event
occurs, or for purposes of clause (ii) the date on which such five (5)
Trading Day period is exceeded, or for purposes of clause (iii) the date
which such ten (10) Business Day period is exceeded, or for purposes of clause
(v) the date on which such ten (10) or twenty (20) Business Day period, as
applicable, is exceeded being referred to as “Event
Date”),
then,
in addition to any other rights the Investors may have hereunder or under
applicable law, on each such Event Date and on each monthly anniversary of
each
such Event Date (if the applicable Event shall not have been cured by such
date)
until the applicable Event is cured, the Company shall, subject to Section
3(c),
pay to
each Investor on a monthly basis within three (3) Business Days of the end
of
the month an amount in cash, as partial liquidated damages and not as a penalty,
equal to one and one-half (1.5%) percent of the aggregate purchase price paid
by
such Investor pursuant to the Securities Purchase Agreement for any Registrable
Securities then held by such Investor (as applicable under clause (iv)) that
are
not then eligible for resale pursuant to the Initial Registration Statement
or
other Registration Statement. The parties agree that the maximum aggregate
liquidated damages payable to an Investor under this Agreement shall be ten
(10%) percent of the aggregate amount paid by such Investor for its respective
Registrable Securities pursuant to the Securities Purchase Agreement. If the
Company fails to pay any partial liquidated damages pursuant to this
Section
5(a)
in full
within ten (10) calendar days after the date payable, the Company will be
required to pay such liquidation damages in cash only and shall pay interest
thereon at a rate of eighteen (18%) percent per annum (or such lesser maximum
amount that is required to be paid by applicable law) to the Investor, accruing
daily from the date such partial liquidated damages are due until such amounts,
plus all such interest thereon, are paid in full; provided,
however,
that if
the tenth calendar day after the date payable is not a Business Day then the
payment shall be due on the next Business Day. The partial liquidated damages
pursuant to the terms hereof shall apply on a daily pro-rata basis for any
portion of a month prior to the cure of an Event.
6
(b)
The Company shall notify each Holder and the Placement Agent by facsimile
or e-mail as promptly as practicable, and in any event, within two (2) Trading
Days, after a Registration Statement is declared effective and shall
simultaneously provide the Investors with a copy of any related prospectus
to be
used in connection with the sale or other disposition of the Registrable
Securities covered thereby. Failure to notify the Holders in accordance with
this Section
5(b) shall
be
deemed an Event under Section
5(a).
(c) No
Investor shall be entitled to a payment pursuant to this Section 5
if
effectiveness of a Registration Statement has been delayed or a prospectus
has
been unavailable as a result of (i) a failure by such Investor to promptly
provide on request by the Company the information required under the Securities
Purchase Agreement or this Agreement or requested by the SEC as a condition
to
effectiveness of a Registration Statement; (ii) the provision of inaccurate
or
incomplete information by such Investor; or (iii) a statement or determination
of the SEC that any provision of the rights of the Investor under this Agreement
are contrary to the provisions of the Securities Act.
6.
OBLIGATIONS
OF THE COMPANY.
In the
event the Company files a Registration Statement with the SEC in connection
with
Section
3
or
Section
4
hereof
that covers the Registrable Securities and uses its commercially reasonable
efforts to cause a Registration Statement to become effective, the Company
shall, as expeditiously as reasonably possible:
7
(a)
Prepare and file with the SEC such amendments and supplements to a
Registration Statement and the prospectus used in connection therewith as may
be
necessary to comply with the provisions of the Securities Act with respect
to
the disposition of all Registrable Securities covered by a Registration
Statement;
(b)
Furnish to the selling Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of
the
Securities Act, and such other documents (including, without limitation,
prospectus amendments and supplements as are prepared by the Company in
accordance with Section
6(a)
above)
as the selling Holders may reasonably request in order to facilitate the
disposition of such selling Holders’ Registrable Securities;
(c)
Use commercially reasonable efforts to comply with all applicable rules
and regulations of the SEC under the Securities Act and the Exchange Act,
including, without limitation, Rule 172 under the Securities Act, file any
final
prospectus, including any supplement or amendment thereof, with the SEC pursuant
to Rule 424 under the Securities Act, promptly inform the Holders in writing
if,
at any time during a period of effectiveness, the Company does not satisfy
the
conditions specified in Rule 172 and, as a result thereof, the Holders are
required to deliver a prospectus in connection with any disposition of
Registrable Securities; notify the selling Holders of the happening of any
event
as a result of which the prospectus included in or relating to a Registration
Statement contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading; and, thereafter,
subject to Section
12
hereof,
the Company will promptly prepare (and, when completed, give notice and provide
a copy thereof to each selling Holder) a supplement or amendment to such
prospectus so that such prospectus will not contain an untrue statement of
a
material fact or omit to state any fact necessary to make the statements therein
not misleading; provided,
however,
that
upon such notification by the Company (which shall be a Suspension pursuant
to
Section
12),
the
selling Holders will not offer or sell Registrable Securities until the Company
has notified the selling Holders that it has prepared a supplement or amendment
to such prospectus and filed it with the SEC or, if the Company does not then
meet the conditions for the use of Rule 172, delivered copies of such supplement
or amendment to the selling Holders (it being understood and agreed by the
Company that the foregoing proviso shall in no way diminish or otherwise impair
the Company’s obligation to promptly prepare a prospectus amendment or
supplement as above provided in this Section
6(c)
and
deliver copies of same as above provided in Section
6(b)
hereof);
and
(d)
Use its best efforts to register and qualify the Registrable Securities
covered by a Registration Statement under such other securities or Blue Sky
laws
of such states as shall be reasonably appropriate in the opinion of the Company,
provided,
however,
that
the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions, and provided further
that
(notwithstanding anything in this Agreement to the contrary with respect to
the
bearing of expenses) if any jurisdiction in which any of such Registrable
Securities shall be qualified shall require that expenses incurred in connection
with the qualification therein of any such Registrable Securities be borne
by
the selling Holders, then the selling Holders shall, to the extent required
by
such jurisdiction, pay their pro rata share of such qualification
expenses.
8
(e)
Subject to the terms and conditions of this Agreement, including
Section
3
and
Section
4
hereof,
the Company shall use its commercially reasonable efforts to (i) prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction in the United States, and
(ii) if such an order or suspension is issued, obtain the withdrawal of such
order or suspension at the earliest practicable moment and notify each holder
of
Registrable Securities of the issuance of such order and the resolution thereof
or its receipt of notice of the initiation or threat of any proceeding such
purpose.
(f)
The Company shall (i) comply with all requirements of FINRA with regard
to the issuance of the Registrable Securities and the listing thereof on the
OTC
Bulletin Board and such other securities exchange or automated quotation system,
as applicable, and (ii) engage a transfer agent and registrar to maintain the
Company’s stock ledger for all Registrable Securities covered by a Registration
Statement not later than the effective date of a Registration
Statement.
(g)
The Company will file a Registration Statement and all amendments and
supplements thereto electronically on EDGAR.
7.
OBLIGATIONS
OF THE PLACEMENT AGENT AND THE HOLDERS.
(a) It
shall
be a condition precedent to the obligations of the Company to take any action
pursuant to this Agreement that the selling Holders shall furnish to the Company
a completed Selling Stockholder Questionnaire in the form attached as
Exhibit
B
hereto
(the “Selling
Stockholder Questionnaire”)
and
such other information regarding them and the securities held by them as the
Company shall reasonably request and as shall be required in order to effect
any
registration by the Company pursuant to this Agreement. The Company shall not
be
required to include the Registrable Securities of any Holder who fails to
furnish to the Company a fully completed Selling Stockholder Questionnaire
at
least three (3) Trading Days prior to the Filing Deadline. Additionally, each
Holder shall promptly notify the Company of any changes in the information
furnished in the Selling Stockholder Questionnaire or otherwise to the
Company.
(b) Each
Holder agrees to cooperate with the Company as reasonably requested by the
Company in connection with the filing of any Registration Statement hereunder,
unless such Holder has notified the Company in writing that such Holder elects
to exclude all of its Registrable Securities from such Registration
Statement.
(c) Each
Holder agrees that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section
6(c),
each
Holder shall immediately discontinue disposition of Registrable Securities
pursuant to any Registration Statement covering such Registrable Securities
until such Holders receipt of the copies of the supplemented or amended
prospectus contemplated by Section
6(c)or
receipt of notice that no supplement or amendment is required.
9
(d) Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it or an exemption therefrom
in connection with sale of Registrable Securities pursuant to any Registration
Statement.
(e) Each
Holder and the Placement Agent who are members or affiliated or associated
with
members of FINRA will agree, if requested by FINRA, to sign a lock-up, the
form
of which shall be satisfactory to FINRA (the “FINRA
Lock-Up”),
with
respect to the Warrant and Warrant Shares, in case of the Holders or, in the
case of the Placement Agent, the warrant issued to the Placement Agent in
connection with the transactions contemplated by the Securities Purchase
Agreement (the “Placement
Agent Warrants”)
and
the shares of Common Stock issuable upon exercise thereof.
8.
EXPENSES
OF REGISTRATION.
(a) Except
as
set forth in Section
6(d),
all
expenses incurred in connection with the registration of the Registrable
Securities pursuant to this Agreement (excluding underwriting, brokerage and
other selling commissions and discounts), including without limitation all
registration and qualification and filing fees, printing, fees and disbursements
of counsel for the Company and fees and expenses of one counsel to the Holders,
which shall be Gusrae, Kaplan, Bruno & Nusbaum PLLC (not to exceed $10,000),
shall be borne by the Company; provided,
however,
other
than as provided in this Section
8(a),
the
Holders shall be required to pay the expenses of counsel and any other advisors
for the Holders and any brokerage or other selling discounts or commissions
and
any other expenses incurred by the Holders for their own account. In addition,
the Company shall also reimburse the Placement Agent for the fees and
disbursements of its counsel in connection with its filings with FINRA Rule
2710
that are required with respect to the Placement Agent’s participation in the
public offering with respect to a Registration Statement.
(b) Until
such time as all of the Registrable Securities have been sold pursuant to an
effective Registration Statement, the Company shall take such reasonable action
as the Holder may request (including, without limitation, promptly obtaining
any
required legal opinions from Company counsel necessary to effect the sale of
the
Registrable Securities under Rule 144 and paying the related fees and
expenses of such counsel), all to the extent required from time to time to
enable such Holder to sell the Registrable Securities without registration
under
the Securities Act pursuant to the provisions of Rule 144 under the
Securities Act (or any successor provision). The Company further covenants
to
take such action and to provide such legal opinions within five (5) Business
Days after receipt from such Holder (or its representative) of documentation
reasonably required by the Company counsel to provide such opinion.
9.
DELAY
OF REGISTRATION.
The
Holders shall not take any action to restrain, enjoin or otherwise delay any
registration as the result of any controversy which might arise with respect
to
the interpretation or implementation of this Agreement.
10
10.
INDEMNIFICATION.
(a)
To the extent permitted by law, the Company will indemnify and hold
harmless each selling Holder, and each officer and director of such selling
Holder and each person, if any, who controls such selling Holder, within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which they may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
(i)
any untrue or alleged untrue statement of any material fact contained in a
Registration Statement, in any preliminary prospectus or final prospectus
relating thereto or in any amendments or supplements to a Registration Statement
or any such preliminary prospectus or final prospectus, or arise out of or
are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein
not
misleading; (ii) any blue sky application or other document executed by the
Company specifically for that purpose or based upon written information
furnished by the Company filed in any state or other jurisdiction in order
to
qualify any or all of the Registrable Securities under the securities laws
thereof (any such application, document or information herein called a
“Blue
Sky Application”);
(iii)
the omission or alleged omission to state in a Blue Sky Application a material
fact required to be stated therein or necessary to make the statements therein
not misleading; (iv) any violation by the Company or its agents of any rule
or
regulation promulgated under the Securities Act applicable to the Company or
its
agents and relating to action or inaction required of the Company in connection
with such registration of the Registrable Securities; or (v) any failure to
register or qualify the Registrable Securities included in any such Registration
Statement in any state where the Company or its agents has affirmatively
undertaken or agreed in writing that the Company will undertake such
registration or qualification on a Holder’s behalf; and will reimburse such
selling Holder, or such officer, director or controlling person for any legal
or
other expenses reasonably incurred by them in connection with investigating
or
defending any such loss, claim, damage, liability or action; provided,
however,
that
the indemnity agreement contained in this Section
10(a)
shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, damage, liability or
action to the extent that it arises out of or is based upon (i) an untrue
statement or alleged untrue statement or omission made in connection with a
Registration Statement, any preliminary prospectus or final prospectus relating
thereto or any amendments or supplements to a Registration Statement or any
such
preliminary prospectus or final prospectus, in reliance upon and in conformity
with written information furnished expressly for use in connection with a
Registration Statement or any such preliminary prospectus or final prospectus
by
the selling Holders or (ii) at any time when the Company has advised the Holder
in writing that the Company does not meet the conditions for use of Rule 172
and
as a result that the Holder is required to deliver a current prospectus in
connection with any disposition of Registrable Securities, an untrue statement
or alleged untrue statement or omission in a prospectus that is (whether
preliminary or final) corrected in any subsequent amendment or supplement to
such prospectus that was delivered to the selling Holder before the pertinent
sale or sales by the selling Holder.
11
(b)
To the extent permitted by law, each selling Holder will severally and
not jointly indemnify and hold harmless the Company, each of its directors,
each
of its officers who have signed a Registration Statement, each person, if any,
who controls the Company within the meaning of the Securities Act, against
any
losses, claims, damages or liabilities to which the Company or any such
director, officer, controlling person, may become subject to, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon
any
untrue or alleged untrue statement of any material fact contained in a
Registration Statement or any preliminary prospectus or final prospectus,
relating thereto or in any amendments or supplements to a Registration Statement
or any such preliminary prospectus or final prospectus, or arise out of or
are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent and only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission (i) was
made in a Registration Statement, in any preliminary prospectus or final
prospectus relating thereto or in any amendments or supplements to a
Registration Statement or any such preliminary prospectus or final prospectus,
in reliance upon and in conformity with written information furnished by the
selling Holder expressly for use in connection with a Registration Statement,
or
any preliminary prospectus or final prospectus or (ii) at any time when the
Company has advised the Holder in writing that the Company does not meet the
conditions for use of Rule 172 and as a result that the Holder is required
to
deliver a current prospectus in connection with any disposition of Registrable
Securities, was corrected in any subsequent amendment or supplement to such
prospectus that was delivered to the selling Holder before the pertinent sale
or
sales by the selling Holder; and such selling Holder will reimburse any legal
or
other expenses reasonably incurred by the Company or any such director, officer,
controlling person, or other selling Holder in connection with investigating
or
defending any such loss, claim, damage, liability or action; provided,
however,
that
the liability of each selling Holder hereunder shall be limited to the net
proceeds received by such selling Holder from the sale of Registrable Securities
giving rise to such liability, and provided further,
that
the indemnity agreement contained in this Section
10(b)
shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of those
selling Holder(s) against which the request for indemnity is being made (which
consent shall not be unreasonably withheld).
12
(c)
Promptly after receipt by an indemnified party under this Section
10
of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under
this
Section
10,
notify
the indemnifying party in writing of the commencement thereof and the
indemnifying party shall have the right to participate in and, to the extent
the
indemnifying party desires, jointly with any other indemnifying party similarly
noticed, to assume at its expense the defense thereof with counsel satisfactory
to the indemnifying party or indemnifying parties, but the omission so to notify
the indemnifying party will not relieve it from any liability which it may
have
to any indemnified party for contribution or otherwise under the indemnity
agreement contained in this Section
10
(except
to the extent that such omission materially and adversely affects the
indemnifying person’s ability to defend such action). In the event that the
indemnifying party assumes any such defense, the indemnified party may
participate in such defense with its own counsel and at its own expense,
provided,
however,
if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded,
based on an opinion of counsel reasonably satisfactory to the indemnifying
party, that there may be a conflict of interest between the positions of the
indemnifying party and the indemnified party in conducting the defense of any
such action or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available
to
the indemnifying party, the indemnified party or parties shall have the right
to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party
or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election to assume the defense of such action and approval by
the
indemnified party of counsel, the indemnifying party will not be liable to
such
indemnified party under this Section
10
for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless the indemnified party shall have
employed such counsel in connection with the assumption of legal defenses in
accordance with the proviso to the preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel and one local counsel, reasonably satisfactory
to
such indemnifying party, representing all of the indemnified parties who are
parties to such action in which case the reasonable fees and expenses of counsel
shall be at the expense of the indemnifying party.
13
(d)
Notwithstanding anything to the contrary herein, the indemnifying party
shall not be entitled to settle any claim, suit or proceeding unless in
connection with such settlement the indemnified party receives an unconditional
release with respect to the subject matter of such claim, suit or proceeding
and
such settlement does not contain any admission of fault by the indemnified
party.
(e)
If the indemnification provided for in this Section
10
is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable
by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Company on the one hand and the Holders
on
the other in connection with the statements or omissions or other matters which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, in the case
of an
untrue statement, whether the untrue statement relates to information supplied
by the Company on the one hand or a Holder on the other and the parties’
relative intent, knowledge, access to information and opportunity to correct
or
prevent such untrue statement. The Company and the Holders agree that it would
not be just and equitable if contribution pursuant to this subsection (e) were
determined by pro rata allocation (even if the Holders were treated as one
entity for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to above in this
subsection (e). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (e) shall be deemed to include any legal
or
other expenses reasonably incurred by such indemnified party in connection
with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section
11(f)
of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Holders’ obligations in this
subsection to contribute are several in proportion to their sales of Registrable
Securities to which such loss relates and not joint. In no event shall the
contribution obligation of a Holder be greater in amount than the dollar amount
of the net proceeds (net of all expenses paid by such Holder in connection
with
any claim relating to this Section
10
and the
amount of any damages such Holder has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission)
received by it upon the sale of the Registrable Securities giving rise to such
contribution obligation.
14
11.
REPORTS
UNDER THE EXCHANGE ACT.
With a
view to making available to the Holders the benefits of Rule 144 and any other
rule or regulation of the SEC that may at any time permit the Holders to sell
the Registrable Securities to the public without registration, the Company
agrees: (i) to make and keep public information available as those terms are
understood in Rule 144, (ii) to file with the SEC in a timely manner all reports
and other documents required to be filed by an issuer of securities registered
under the Securities Act or the Exchange Act pursuant to Rule 144, (iii) as
long
as any Holder owns any Registrable Securities, to furnish in writing upon such
Holder’s request a written statement by the Company that it has complied with
the reporting requirements of Rule 144 and of the Securities Act and the
Exchange Act, and to furnish to such Holder a copy of the most recent annual
or
quarterly report of the Company, and such other reports and documents so filed
by the Company as may be reasonably requested in availing such Holder of any
rule or regulation of the SEC permitting the selling of any such Registrable
Securities without registration and (iv) undertake any additional actions
reasonably necessary to maintain the availability of the use of Rule
144.
12.
SUSPENSION.
Notwithstanding anything in this Agreement to the contrary, in the event (i)
of
any non-voluntary demand on the Company by the SEC or any other federal or
state
governmental authority during the period of effectiveness of a Registration
Statement for amendments or supplements to a Registration Statement or related
prospectus or for additional information; (ii) of the issuance by the SEC or
any
other federal or state governmental authority of any stop order suspending
the
effectiveness of a Registration Statement or the initiation of any proceedings
for that purpose; (iii) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction or the
initiation of any proceeding for such purpose; or (iv) of any event or
circumstance which requires to comply with applicable law the making of any
changes in a Registration Statement or related prospectus, or any document
incorporated or deemed to be incorporated therein by reference, so that, in
the
case of a Registration Statement, it will not contain any untrue statement
of a
material fact or any omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and that
in
the case of the prospectus, it will not contain any untrue statement of a
material fact or any omission to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, then the Company
shall
furnish to the selling Holders a certificate signed by the President or Chief
Executive Officer of the Company setting forth in detail the facts relating
to
one or more of the above described circumstances, and the right of the selling
Holders to use a Registration Statement (and the prospectus relating thereto)
shall be suspended for a period (the “Suspension
Period”)
of not
more than ten (10) days after delivery by the Company of the certificate
referred to above in this Section
12.
During
the Suspension Period, none of the Holders shall offer or sell any Registrable
Securities pursuant to or in reliance upon a Registration Statement (or the
prospectus relating thereto). The Company shall use its best efforts to
terminate any Suspension Period as promptly as practicable.
15
14.
ENTIRE
AGREEMENT.
This
Agreement, the Warrants, the Placement Agency Agreement, the Securities Purchase
Agreement and other documents relating to the Offering (and all exhibits and
supplements to such documents) constitute and contain the entire agreement
and
understanding of the parties with respect to the subject matter hereof, and
supersede any and all prior negotiations, correspondence, agreements or
understandings with respect to the subject matter hereof.
(a)
This Agreement may not be amended, modified or terminated, and no rights
or provisions may be waived, except with the written consent of the Company
and
the holders of a majority of the Registrable Securities issued and outstanding
or issuable upon exercise of the Warrants; provided,
that,
no
consent shall be required in order to add additional Investors as parties hereto
in accordance with the Offering.
(b)
This Agreement shall be governed by and construed and enforced solely and
exclusively in accordance with the internal laws of the State of New York and
without regard to any conflicts of laws principles thereof, and shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
personal representatives, permitted transferees, successors or assigns. This
Agreement shall also be binding upon and inure to the benefit of any transferee
of any of the Registrable Securities.
16
(c)
Each of the parties hereto irrevocably and expressly submits to the
exclusive and sole jurisdiction of the courts of the State of New York located
in New York County and the United States District Court for the Southern
District of New York for the purpose of any suit, action, proceeding or judgment
relating to or arising out of this Agreement and the transactions contemplated
hereby. Service of process in connection with any such suit, action or
proceeding may be served on each party hereto anywhere in the world by the
same
methods as are specified for the giving of notices under this Agreement. Each
of
the parties hereto irrevocably consents to the jurisdiction of any such court
in
any such suit, action or proceeding and to the laying of venue in such court.
Each party hereto irrevocably waives any objection to the laying of venue of
any
such suit, action or proceeding brought in such courts and irrevocably waives
any claim that any such suit, action or proceeding brought in any such court
has
been brought in an inconvenient forum. EACH
OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN
CONSULTED SPECIFICALLY AS TO THIS WAIVER.
(d)
Any notices, reports or other correspondence (hereinafter collectively
referred to as “correspondence”) required or permitted to be given hereunder
shall be in writing and shall be sent by postage prepaid first class mail,
courier or telecopy or delivered by hand to the party to whom such
correspondence is required or permitted to be given hereunder, and shall be
deemed sufficient upon receipt when delivered personally or by courier,
overnight delivery service or confirmed facsimile, or three (3) business days
after being deposited in the regular mail as certified or registered mail
(airmail if sent internationally) with postage prepaid, if such notice is
addressed to the party to be notified at such party’s address or facsimile
number as set forth below:
Manhattan
Pharmaceuticals, Inc.
48
Wall
Street, Suite 1100
New
York,
New York 10005
Attention: Douglas
Abel
Chief Executive Officer
Facsimile: (212)
582-3957
with
a
copy to:
Lowenstein
Sandler PC
65
Livingston Avenue
Roseland,
New Jersey 07068
Attention: Anthony
Pergola, Esq.
(ii)
All
correspondence to any Investor shall be sent to such Investor at the address
set
forth in the Investor Counterpart Signature Page to the Securities Purchase
Agreement.
17
(iii)
Any
entity may change the address to which correspondence to it is to be addressed
by written notification as provided for herein.
(e)
The parties acknowledge and agree that in the event of any breach of this
Agreement, remedies at law may be inadequate, and each of the parties hereto
shall be entitled to seek specific performance of the obligations of the other
parties hereto and such appropriate injunctive relief as may be granted by
a
court of competent jurisdiction.
(f)
Should any part or provision of this Agreement be held unenforceable or
in conflict with the applicable laws or regulations of any jurisdiction, the
invalid or unenforceable part or provisions shall be replaced with a provision
which accomplishes, to the extent possible, the original business purpose of
such part or provision in a valid and enforceable manner, and the remainder
of
this Agreement shall remain binding upon the parties hereto.
(g)
This Agreement may be executed in a number of counterparts, any of which
together shall for all purposes constitute one Agreement, binding on all the
parties hereto notwithstanding that all such parties have not signed the same
counterpart.
[Signature
Page to Follow]
18
IN
WITNESS WHEREOF, the parties hereto have executed this Registration Rights
Agreement as of the date and year first above written.
|
MANHATTAN
PHARMACEUTICALS, INC.
|
||
|
By:
|
/s
Michael McGuinness
|
|
|
Michael
McGuinness
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Chief
Financial Officer
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[l]
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By:
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THE
INVESTOR’S SIGNATURE TO THE SECURITES PURCHASE AGREEMENT DATED OF EVEN DATE
HEREWITH SHALL CONSTITUTE THE INVESTOR’S SIGNATURE TO THIS REGISTRATION RIGHTS
AGREEMENT.
Signature
Page to Registration Rights Agreement
19
EXHIBIT
A
INVESTOR
LIST
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Neel
B. Ackerman and Martha N. Ackerman
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Stephen
M. Burnich Revocable Trust u/a 10/08/04
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Ennio
De Pianto
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Matthew
Ernst
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John
M. Goodman Living Trust
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Leon
Kanner & Rosemary E. Kanner
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Richard
Kindt
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Douglas
E. Pritchett
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Jerome
A. Shinkay
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Michael
J. Spezia
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George
D. Wilson & Diane J. Wilson
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Joseph
L. Jerger
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David
& Nancy Pudelsky
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James
R. Buck
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John
O. Dunkin
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NFS/FMTC
SEP IRA FBO Jay Jennings
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Landmark
Community Bank Collateral Account FBO Estate of Catherine
Nasser
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Nasser
Family Trust
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James
R. Kahn & Debra A. Kahn, JTWROS
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Carolyn
N. Taylor & A. Starke Taylor,
Jr.
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A-1
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Mark
Vollmer
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Robert
J. Guercio
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Ralph
Hanby
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Robert
E. Jacobson & Saralee Jacobson, JTWROS
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Michael
Cushing
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Raymond
Yarusi, Jr.
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James
Orr
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Vernon
L. Simpson
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Michael
H. Yokoyama & Jaye S. Venuti Family Trust
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Frederick
Peet
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Ronald
Rasmussen
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Lewis
R. Jacobson
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Mark
B. Ginsburg
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Gregory
J. Dovolis
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William
S. Silver
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Praful
Desai
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Thomas
Gemellaro
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Howard
M. Tanning Rollover IRA
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A-2
EXHIBIT
B
Selling
Stockholder Questionnaire
EXHIBIT
C
Instrument
of Adherence
Reference
is hereby made to that certain Registration Rights Agreement, dated as of
November 19, 2008, among Manhattan Pharmaceuticals, Inc., a Delaware
corporation (the “Company”),
the
Investors and the Investor Permitted Transferees, as amended and in effect
from
time to time (the “Registration
Rights Agreement”).
Capitalized terms used herein without definition shall have the respective
meanings ascribed thereto in the Registration Rights Agreement.
The
undersigned, in order to become the owner or holder of [___________] shares
of
common stock, par value $0.001 per share of the Company (the “Common
Stock”),
or a
Warrant or Warrants to purchase [_______] Warrant Shares, hereby agrees that,
from and after the date hereof, the undersigned has become a party to the
Registration Rights Agreement in the capacity of an Investor Permitted
Transferee, and is entitled to all of the benefits under, and is subject to
all
of the obligations, restrictions and limitations set forth in, the Registration
Rights Agreement that are applicable to Investor Permitted Transferees. This
Instrument of Adherence shall take effect and shall become a part of the
Registration Rights Agreement immediately upon execution.
Executed
as of the date set forth below under the laws of the State of New
York.
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Signature:
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Name:
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Title:
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Accepted:
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[__________________________________________]
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By:
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Name:
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Title:
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Date:_______________________________,
20__
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C-1
Exhibit
10.3
SECURITY
AGREEMENT
THIS
SECURITY AGREEMENT
(the
“Security
Agreement”)
is
dated as of November 19, 2008 by and among Manhattan Pharmaceuticals, Inc.,
a
Delaware corporation (the “Company”
or
the
“Debtor”)
and
each of the persons named on Exhibit
A-1
and
Exhibit
A-2
of the
SPA (as hereinafter defined) (each a “Secured
Party”
and,
collectively, the “Secured
Parties”).
WITNESSETH
WHEREAS,
pursuant
to the Securities Purchase Agreement of even date herewith, as may be amended
or
supplemented from time to time (the “SPA”),
the
Debtor is selling to the Secured Parties up to $3,500,000 aggregate principal
amount of units (the “Units”),
each
Unit consisting of (i) a $5,000 aggregate principal amount senior secured
promissory note (each a “Note,”
and,
collectively, the “Notes”)
of the
Company and (ii) a warrant (the “Warrants”)
to
purchase up to 166,667 shares of the Company’s common stock, par value $0.001
per share (the “Common
Stock”);
and
WHEREAS,
Debtor
has agreed, pursuant to the terms and conditions of the SPA, to secure the
repayment of the Notes, as more specifically provided herein;
NOW,
THEREFORE,
in
consideration of the foregoing, Debtor and the Secured Parties agree as
follows:
SECTION
1. Definitions.
1.1 Certain
Defined Terms.
The
following terms, as used herein, have the meanings set forth below:
“Accounts”
means
all “accounts” (as defined in the UCC) now owned or hereafter created or
acquired by Debtor including all of the following now owned or hereafter created
or acquired by Debtor: (a) accounts receivable, contracts, contract rights,
book debts, notes, drafts and other obligations or indebtedness owing to Debtor
arising from the sale, lease or exchange of goods or other property or the
performance of services; (b) Debtor’s rights in, to and under all purchase
orders for goods, services or other property; (c) Debtor’s rights to any
goods, services or other property represented by any of the foregoing (including
returned or repossessed goods and unpaid sellers’ rights of rescission,
repletion, reclamation and rights to stoppage in transit); (d) monies due
to or to become due to Debtor under all contracts for the sale, lease or
exchange of goods or other property or the performance of services (whether
or
not yet earned by performance on the part of Debtor); and (e) Proceeds of
any of the foregoing and all collateral security and guaranties of any kind
given by any Person with respect to any of the foregoing.
“Collateral”
has
the
meaning assigned to that term in Section 2.
“Collateral
Agent”
has
the
meaning assigned to that term in Section
10.
“Computer
Software”
or
“Software”
means
a
computer program and any supporting information provided in connection with
a
transaction relating to the program.
“Contracts”
means
all contracts and agreements (as defined in the UCC).
“Debtor”
has
the
meaning assigned to that term in the introduction to this Security
Agreement.
“Default
Agreement”
means
the Default Agreement by and among the Company, the Collateral Agent and the
persons listed on Schedule A thereto.
“Documents”
means
all “documents” (as defined in the UCC) or other receipts covering, evidencing
or representing goods now owned or hereafter acquired by Debtor.
“Equipment”
means
all “equipment” (as defined in the UCC) now owned or hereafter acquired by
Debtor including all machinery, motor vehicles, trucks, trailers, vessels,
aircraft and rolling stock and all parts thereof and all additions and
accessions thereto and replacements therefor.
“Event
of Default”
has
the
meaning assigned to that term in Section 8(a).
“Fixtures”
means
all of the following now owned or hereafter acquired by Debtor: plant fixtures;
business fixtures; other fixtures and storage office facilities, wherever
located; and all additions and accessions thereto and replacements therefor.
“General
Intangibles”
means
all “general intangibles” (as defined in the UCC) now owned or hereafter
acquired by Debtor including all right, title and interest of Debtor in and
to:
(a) all Software of the Debtor, including all source code and object code
thereto; (b) all agreements, leases, licenses and contracts to which Debtor
is or may become a party; (c) all obligations or indebtedness owing to
Debtor (other than Accounts) from whatever source arising; (d) all tax
refunds; (e) intellectual property; and (f) all trade secrets and
other confidential information of the Debtor relating to the business of
Debtor.
“Instruments”
means
all “instruments” “chattel paper” or “letters of credit” (each as defined in the
UCC) including promissory notes, drafts, bills of exchange and trade
acceptances, now owned or hereafter acquired by Debtor.
“Inventory”
means
all “inventory” (as defined in the UCC), now owned or hereafter acquired by
Debtor, wherever located including finished goods, raw materials, work in
process and other materials and supplies (including packaging and shipping
materials) used or consumed in the manufacture or production thereof and goods
which are returned to or repossessed by Debtor.
“Note”
has
the
meaning assigned to that term in the introduction to this Security
Agreement.
2
“Partnership
Agreement”
means
the Limited Partnership Agreement between Nordic Biotech Venture Fund II K/S,
the Company and Hedrin Pharmaceuticals General Partner ApS regarding Hedrin
Pharmaceuticals K/S.
“Placement
Agent”
means
[l].
“Proceeds”
means
all proceeds of, and all other profits, rentals or receipts, in whatever form,
arising from the collection, sale, lease, exchange, assignment, licensing or
other disposition of, or realization upon, any Collateral including all claims
of Debtor against third parties for loss of, damage to or destruction of, or
for
proceeds payable under, or unearned premiums with respect to, policies of
insurance with respect to any Collateral, and any condemnation or requisition
payments with respect to any Collateral, in each case whether now existing
or
hereafter arising.
“Required
Lenders”
means
Secured Parties holding a majority of the then outstanding principal amount
of
the Notes.
“Secured
Obligations”
has
the
meaning assigned to that term in Section 3.
“Security
Agreement”
means
this Security Agreement as it may be amended, supplemented or otherwise modified
from time to time.
“Security
Interests”
means
the security interest granted pursuant to Section 2,
as well
as all other security interests created or assigned as additional security
for
the Secured Obligations pursuant to the provisions of this Security
Agreement.
“Shareholders’
Agreement”
means
the Shareholders’ Agreement between Nordic Biotech Venture Fund II K/S and the
Company.
“UCC”
means
the Uniform Commercial Code as in effect on the date hereof in the State of
New
York, as amended from time to time, and any successor statute; provided
that if
by reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the Security Interest in any Collateral is
governed by the Uniform Commercial Code as in effect on or after the date hereof
in any other jurisdiction, “UCC”
shall
also mean the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provision hereof relating to such perfection or effect
of
perfection or non-perfection.
1.2 Other
Definition Provisions.
References to “Sections”
“subsections,”
“Exhibits”
and
“Schedules”
shall
be to Sections, subsections, Exhibits and Schedules, respectively, of this
Security Agreement unless otherwise specifically provided. References to the
words “including,” “includes” and “include” shall be deemed to be followed by
the words “without limitation;” and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or.” Any of the
terms defined in subsection 1.1 may, unless the context otherwise requires,
be used in the singular or the plural depending on the reference. All references
to statutes and related regulations shall include any amendments of same and
any
successor statutes and regulations.
3
SECTION
2. Grant
of Security Interest.
In
order
to secure the payment and performance of the Secured Obligations in accordance
with the terms thereof, except as otherwise specifically provided in this
Security Agreement, the Debtor hereby grants to the Secured Parties a continuing
first priority security interest and lien in and to all right, title and
interest of Debtor in the following property, whether now owned or existing
or
hereafter acquired or arising and regardless of where located (all being
collectively referred to as the “Collateral”).
(a) Accounts;
(b) Inventory;
(c) Computer
Software;
(d) General
Intangibles;
(e) Documents;
(f) Instruments;
(g) Equipment;
(h) Fixtures;
(i) Contracts;
(j) All
deposit accounts of Debtor maintained with any bank or financial
institution;
(k) All
books, records, ledger cards, files, correspondence, computer programs, tapes,
disks and related data processing software that at any time evidence or contain
information relating to any of the property described in subparts (a)
- (j)
above or
are otherwise necessary or helpful in the collection thereof or realization
thereon;
(l) any
and
all other assets of the Debtor, whether currently held or hereafter acquired;
and
(m) Proceeds
of all or any of the property described in subparts (a)
- (l)
above.
Notwithstanding
anything herein to the contrary, neither the term “Collateral” nor any other
defined term used herein (including “Instruments,” “Documents” or “General
Intangibles”) shall include, and no security interest is created or granted
hereunder in, Debtor’s interest in (1) Debtor’s joint venture with Nordic
Biotech Venture Fund K/S, created pursuant to a Joint Venture Agreement, dated
as of January 31, 2008, as amended (the “Joint
Venture Agreement”),
including, without limitation, (i) Debtor’s limited partnership interest in
Hedrin Pharmaceuticals K/S, a Danish limited partnership (the “Partnership”)
and
Debtor’s shares of the Partnership and (ii) Debtor’s interest in Hedrin
Pharmaceuticals General Partner ApS and its shares therein, or in any of the
agreements relating thereto, including, without limitation, the Joint Venture
Agreement and the Partnership Agreement and Shareholders’ Agreement referred to
therein (2) the rent deposit held by Metropolitan 810 7th
Avenue
LLC pursuant to a lease for office space, (3) a refund of a prepayment in the
amount of $10,000 from Dow Pharmaceutical Sciences, Inc. or (4) Debtor’s tax
refund for the 2007 tax year from the State of New York and City of New York.
4
Notwithstanding
Debtor’s grant of a security interest as set forth above, so long as no Event of
Default has occurred and is continuing, Debtor shall have the exclusive,
non-transferable right and license to use the Collateral and the exclusive
right
to sell, transfer, convey, rent, lease, and grant to third parties licenses
and
sublicenses with respect to the Collateral, provided that any such sale,
transfer, conveyance, rental, lease, license or sublicense is effected in the
Debtor’s ordinary course of business. In the event that the Debtor sells any of
its inventory in the ordinary course of business, such shall be transferred
without any liens under the terms of this Security Agreement. The parties
acknowledge and agree that any security interest granted by Debtor to the
Secured Parties with respect to the Debtor’s rights under any franchise, license
or similar agreements are granted in accordance with Section 9-408 of Revised
Article 9 of the Uniform Commercial Code as in effect in the State of New York
and are subject to all limitations on enforcement and other restrictions
contained therein. Further, the parties acknowledge and agree that any attempt
by the borrower to waive the limitations on enforcement and other restrictions
imposed on the Secured Parties by Section 9-408 of Revised Article 9 of the
Uniform Commercial Code are void and deemed unless those limitations or
restrictions are explicitly waived in writing by all parties to the affected
agreement.
SECTION
3. Security
for Obligations.
This
Security Agreement secures the payment and performance of all obligations of
Debtor to the Secured Parties with respect to the Notes, including any and
all
accrued (and accruing) but unpaid interest on all such indebtedness (all such
debts, obligations and liabilities of Debtor being collectively called the
“Secured
Obligations”).
SECTION
4. Debtor
Remains Liable.
Anything
herein to the contrary notwithstanding: (a) Debtor shall remain liable
under the contracts and agreements included in the Collateral to the extent
set
forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Security Agreement had not been executed; (b) the
exercise by the Secured Parties of any of the rights hereunder shall not release
Debtor from any of its duties or obligations under the contracts and agreements
included in the Collateral; and (c) the Secured Parties shall not have any
obligation or liability under the contracts and agreements included in the
Collateral by reason of this Security Agreement, nor shall the Secured Parties
be obligated to perform any of the obligations or duties of Debtor thereunder
or
to take any action to collect or enforce any claim for payment assigned
hereunder.
5
SECTION
5. Representations
and Warranties.
Debtor
represents and warrants as follows:
5.1. Binding
Obligation; Authorization.
This
Security Agreement and the Notes are legally valid and binding obligations
of
Debtor, enforceable against it in accordance with their terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium and other
laws
of general application affecting enforcement of creditors’ rights generally. The
execution, delivery and performance of this Security Agreement and the Notes
by
the Debtor has been duly approved by the Board of Directors of the Debtor and
all other actions required to authorize and effect the granting of the Security
Interests and the issuance of the Notes have been duly taken and approved by
the
Debtor.
5.2. Location
of Equipment and Inventory.
All of
the Equipment and Inventory is located at the places specified on Schedule I.
5.3. Ownership
of Collateral.
Debtor
owns the Collateral free and clear of any liens, security interests, charges
or
other encumbrances (collectively, “Liens”).
No
financing statement or other form of Lien notice covering all or any part of
the
Collateral is on file in any recording office, except for those in favor of
the
Secured Parties.
5.4. Office
Locations; Fictitious Names. The
chief
place of business, the chief executive office and the office where Debtor keeps
its books and records are located at the places specified on Schedule I.
5.5. Deposit
and Security Accounts.
Set
forth on Schedule
II
hereto
are all of Debtor’s deposit accounts maintained with any bank or financial
intermediary including, with respect to each such account, the names and
addresses and telephone numbers of such banks or financial intermediaries,
the
names in which the accounts are held, a description of the purpose of the
account and the respective account numbers.
5.6. Perfection.
This
Security Agreement creates a valid security interest in the Collateral, securing
the payment of the Secured Obligations. Upon the filing of the appropriate
financing statements on Form UCC-1, this Security Agreement shall create a
perfected security interest in all items of Collateral for which the security
interest created by this Security Agreement may be perfected by filing a Form
UCC-1 under the UCC. All filings and other actions necessary or desirable to
perfect and protect such security interest will be taken immediately by the
Debtor as provided in Section
6.1
or as
may be requested by the Collateral Agent; provided,
nothing
herein constitutes a representation as to actions that must be taken, if any,
to
perfect a security interest in any item of Equipment, the ownership of which
is
evidenced by a certificate of title.
5.7. Governmental
Authorizations.
No
authorization, approval or other action by, and no notice to or filing with,
any
governmental authority or regulatory body is required either (a) for the
grant by Debtor of the Security Interests granted hereby or for the execution,
delivery or performance of this Security Agreement and/or the Notes by Debtor
or
(b) for the perfection of or the exercise by the Secured Parties of their
rights and remedies hereunder except (i) for the filing under the Code of
financing statements on Form UCC-1, (ii) for the filing in the United States
Patent and Trademark Office of (1) patent collateral assignments and (2) the
trademark security agreements with respect to Debtor’s patents and trademarks
(and applications therefore) and (iii) as may be required in connection with
the
sale of any Collateral by laws affecting the offering and sale of securities
generally.
6
5.8. Accurate
Information.
All
information heretofore, herein or hereafter supplied to the Secured Parties
by
or on behalf of Debtor with respect to the Collateral is and will be accurate
and complete in all material respects.
SECTION
6. Further
Assurances; Covenants.
6.1. Other
Documents and Actions.
Debtor
will, from time to time, at its expense, immediately execute and deliver all
further instruments and documents and take all further action that may be
necessary or desirable, or that the Collateral Agent may reasonably request,
in
order to perfect and protect any security interest granted or purported to
be
granted hereby or to enable the Secured Parties to exercise and enforce their
rights and remedies hereunder with respect to any Collateral. Without limiting
the generality of the foregoing, Debtor will: (a) on the date of the First
Closing (as defined in the SPA), execute and file such financing statements
on
Form UCC-1 and such other instruments or notices as may be necessary or
desirable in order to perfect (to the extent that such security interests may
be
perfected by filing a Form UCC-1 under the UCC) and preserve the security
interests granted or purported to be granted hereby; (b) immediately upon
request of the Collateral Agent, execute and file such other financing
statements or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the Collateral
Agent may request, in order to perfect and preserve the security interests
granted or purported to be granted hereby (in such jurisdictions and with such
officers as the Collateral Agent may request); (b) upon demand by the
Collateral Agent exhibit the Collateral to allow inspection of the Collateral
by
the Collateral Agent or persons designated by the Collateral Agent; and
(c) upon the Collateral Agents’ request, appear in and defend any action or
proceeding that may affect Debtor’s title to or the Secured Parties’ security
interest in the Collateral.
6.2. Business
Locations.
Debtor
will keep the Collateral at the locations specified on Schedule I & Schedule
II hereto.
6.3. Insurance.
At
its
sole expense, the Debtor shall insure the Collateral at all times for the full
insurable value thereof against casualty and theft and against such other risks,
in such form and with such insurers, as may be satisfactory to the Collateral
Agent from time to time. In addition, each such policy shall (i) name the
Secured Parties as mortgagees and loss payees as their interest may appear
and
name the Secured Parties as additional insureds relating to liability risks,
(ii) provide that no act of omission or commission or misrepresentation or
breach of warranty by the Debtor shall affect the Secured Parties’ rights
thereunder, (iii) provide that the Secured Parties shall not be liable for
any premiums or other amounts and (iv) upon the agreement of the insurer,
at the Debtor’s request, provide that the insurer shall give the Collateral
Agent, on behalf of the Secured Parties not less than twenty (20) days’ prior
written notice of cancellation or lapse. If the Debtor shall fail at any time
to
maintain such insurance, the Required Lenders may direct the Collateral Agent
to
obtain such insurance coverage, at the cost of the Required Lenders and the
Debtor agrees to reimburse the Required Lenders therefor on demand with interest
thereon at the rate specified in the Notes. The Debtor shall notify the
Collateral Agent, on behalf of the Secured Parties promptly if any loss or
casualty relating to the Collateral occurs.
6.4. Taxes
and Claims.
Debtor
will pay promptly when due all property and other taxes, assessments and
governmental charges or levies imposed upon, and all claims against, the
Collateral (including claims for labor, materials and supplies), except to
the
extent the validity thereof is being contested in good faith.
7
6.5. Use
of Collateral.
Debtor
will not use or permit any Collateral to be used unlawfully or in violation
of
any provision of this Security Agreement or any applicable statute, regulation
or ordinance or any policy of insurance covering any of the
Collateral.
6.6. Condition
of Collateral.
The
Debtor shall maintain the Collateral in good condition and operate the
Collateral with reasonable care and caution and the Debtor hereby indemnifies
and holds the Secured Parties harmless from any and all loss, damage and
liability suffered, incurred or asserted by or against the Secured Parties
as a
result of the use and operation of the Collateral.
6.7. Records
Relating to Collateral.
The
Debtor will keep its records concerning the Collateral at its address designated
on Schedule
I
hereof
or at such other place or places of which the Secured Parties shall have been
notified in writing upon no less than ten (10) days’ advance written notice. The
Debtor (a) will hold and preserve such records and will permit representatives
of the Secured Parties at any time during normal business hours without
disrupting the Debtor’s business to examine, inspect and to make abstracts from
such records and (b) will furnish to the Secured Parties such information and
reports regarding the Collateral as the Secured Parties may from time to time
request.
6.8. Other
Information.
Debtor
will, promptly upon request of the Secured Parties, provide to the Secured
Parties all information and evidence they may reasonably request concerning
the
Collateral, and in particular the Accounts, to enable the Secured Parties to
enforce the provisions of this Security Agreement.
SECTION
7. Transfers
and Other Liens.
(a) Except
in
the ordinary course of business, Debtor shall not:
(i) Sell,
assign (by operation of law or otherwise) or otherwise dispose of, or grant
any
option with respect to, any of the Collateral; or
(ii) Create
or
suffer to exist any Liens with respect to any of the Collateral to secure
indebtedness of any Person except for (1) the Security Interests created by
this
Security Agreement, (2) any Liens and/or security interests existing prior
to
the date of this Security Agreement; (3) any security interests that are junior
and subordinate to the Security Interests created by this Security Agreement,
and (4) any purchase money security interests required in connection with
Debtor’s purchase or lease of Equipment.
(b) In
the
event that Debtor sells at least $1,000,000 of Units but less than $2,000,000
of
Units, Debtor shall not: (i) other than pursuant to the Default Agreement,
and
subject to the Joint Venture Agreement, Partnership Agreement and Shareholders’
Agreement, sell, assign (by operation of law or otherwise) or otherwise dispose
of, or grant any option with respect to (1) the Joint Venture Agreement, (2)
Debtor’s limited partnership interest in the Partnership or (3) Debtor’s shares
of the Partnership or (4) Debtor’s interest in Hedrin Pharmaceuticals General
Partner ApS (collectively, the “Joint
Venture Assets”)
or
(ii) create or suffer to exist any Liens with respect to any of the Joint
Venture Assets; except that Debtor shall be permitted to sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option
with
respect to the percentage of the Joint Venture Assets determined by subtracting
(x) the quotient obtained by dividing the dollar amount of Units sold by
$2,000,000, from (y) one (1).
8
(c) In
the
event that Debtor sells at least $2,000,000 of Units, Debtor shall not: (i)
other than pursuant to the Default Agreement, and subject to the Joint Venture
Agreement, Partnership Agreement and Shareholders’ Agreement, sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option
with
respect to the Joint Venture Assets or (ii) create or suffer to exist any Liens
with respect to any of the Joint Venture Assets.
SECTION
8. Events
of Default; Remedies
(a) An
“Event
of Default”
under
this Security Agreement shall mean any Event of Default as that term is defined
in the Notes.
(b) If
any
Event of Default shall have occurred and be continuing, the Collateral Agent,
on
behalf of all Secured Parties, may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to them, all the right and remedies of a secured party on default
under the UCC (whether or not the UCC applies to the affected Collateral) and
also may: (a) require Debtor to, and Debtor hereby agrees that it will, at
its expense and upon request of the Collateral Agent, assemble all or part
of
the Collateral as directed by the Collateral Agent and make it available to
the
Collateral Agent, on behalf of all Secured Parties, at a place to be designated
by the Collateral Agent which is reasonably convenient to the Debtor;
(b) without notice or demand or legal process, enter upon any premises of
Debtor and take possession of the Collateral; and (c) without notice except
as specified below, sell the Collateral or any part thereof in one or more
parcels at public or private sale, at such time or times, for cash, on credit
or
for future delivery, and at such price or prices and upon such other terms
as
the Collateral Agent may deem commercially reasonable. Debtor agrees that,
to
the extent notice of sale shall be required by law, at least two (2) days’
notice to Debtor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable notification.
At any sale of the Collateral, if permitted by law, the Collateral Agent, on
behalf of all Secured Parties, may bid (which bid may be, in whole or in part,
in the form of cancellation of indebtedness) for the purchase of the Collateral
or any portion thereof for the account of the Secured Parties. The Secured
Parties shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Collateral Agent, on behalf of all Secured
Parties, may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
To
the extent permitted by law, Debtor hereby specifically waives all rights of
redemption, stay or appraisal which it has or may have under any law now
existing or hereafter enacted. All cash proceeds received by the Secured Parties
resulting from the disposition of or collection from the Collateral may be
held
by the Secured Parties as collateral for the Secured Obligations and/or then
or
at any time thereafter applied in payment of all or any of the Secured
Obligations in such order as the Collateral Agent, on behalf of all Secured
Parties, shall elect. The balance of such cash proceeds held by the Secured
Parties and remaining after payment in full of the Secured Obligations shall
be
paid over to the Debtor or to the person who may be lawfully entitled to such
balance. The remedies provided in this Security Agreement are cumulative and
not
exclusive of any other remedies provided by law including, without limitation,
any rights of setoff available to the Secured Parties.
9
SECTION
9. Limitation
on Duty of the Secured Parties with Respect to
Collateral.
Beyond
the safe custody thereof, the Secured Parties shall have no duty with respect
to
any Collateral in their possession or control (or in the possession or control
of the Secured Parties or bailee) or with respect to any income thereon or
the
preservation of rights against prior parties or any other rights pertaining
thereto. The Secured Parties shall be deemed to have exercised reasonable care
in the custody and preservation of the Collateral in their possession if the
Collateral is accorded treatment substantially equal to that which they accord
their own property. The Secured Parties shall not be liable or responsible
for
any loss or damage to any of the Collateral, or for any diminution in the value
thereof, by reason of the act or omission of any warehouseman, carrier,
forwarding agency, consignee or other agent or bailee selected by the Collateral
Agent, on behalf of the Secured Parties, in good faith.
SECTION
10. Appointment
of Collateral Agent for Secured Parties
(a) Each
of
the Secured Parties hereby agrees that at any time and from time to time, the
Placement Agent shall have the right, but not the obligation, to appoint a
collateral agent (the “Collateral
Agent”)
to act
for and on behalf of all Secured Parties as collateral agent under this Security
Agreement and the Default Agreement. If the Placement Agent has not appointed
a
Collateral Agent within ten (10) business days after the occurrence of an Event
of Default, then the Secured Party holding the largest principal amount
outstanding of Notes (the “Largest
Holder”)
shall
have ten (10) business days to appoint a Collateral Agent. If the Largest Holder
has not appointed a Collateral Agent within such ten (10) business day period,
then the Secured Party holding the next largest principal amount outstanding
of
Notes (the “Next
Largest Holder”)
shall
have ten (10) business days to a Collateral Agent. In the event that the Next
Largest Holder has not appointed a Collateral Agent within such ten (10)
business day period, then the Required Lenders may appoint a Collateral
Agent.
(b) Failure
to Appoint a Collateral Agent.
In the
event that a Collateral Agent has not been appointed, as required herein, then
references to the Collateral Agent in this Security Agreement shall be deemed
to
mean the Required Lenders and the Required Lenders shall have the right to
take
all actions which the Collateral Agent is entitled to take.
(c) Notice
of Appointment.
Upon
the appointment of a Collateral Agent pursuant hereto, the party appointing
such
Collateral Agent shall provide written notice to each of the Secured Parties,
the Company and the Placement Agent of the appointment of the Collateral Agent
and the terms pursuant to which such Collateral Agent has agreed to serve as
Collateral Agent.
(d) Exculpation.
Notwithstanding anything to the contrary provided herein or elsewhere, each
of
the Secured Parties and the Company hereby expressly acknowledge and agree
that
neither the Placement Agent nor any Collateral Agent shall be liable for any
action taken, suffered or omitted by it in connection with, arising out of
and/or pursuant to the Security Agreement or Default Agreement, except for
actions determined by a court of competent jurisdiction following the exhaustion
of all appeals that such action was directly based upon the Placement Agent’s or
Collateral Agent’s own bad faith or willful misconduct.
10
(e) Indemnification.
The
Company and each Secured Party jointly and severally agree to indemnify and
hold
harmless to the fullest extent permitted by law, the Placement Agent and any
Collateral Agent, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever that may be imposed on, incurred by, or
asserted against Placement Agent and/or any Collateral Agent in any way relating
to or arising out of this Security Agreement or the Default Agreement or any
action taken or omitted to be taken by Placement Agent and/or any Collateral
Agent in connection therewith; provided, that no Secured Party shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
Placement Agent’s and/or any Collateral Agent’s actions determined by a court of
competent jurisdiction following the exhaustion of all appeals that such action
was directly based upon the Placement Agent’s or Collateral Agent’s own bad
faith willful misconduct.
SECTION
11. Collateral
Agent Appointed Attorney-In-Fact.
Debtor
hereby irrevocably appoints the Collateral Agent, if and when a Collateral
Agent
is appointed (and if not appointed, the Required Lenders), as Debtor’s
attorney-in-fact, with full authority in the place and stead of Debtor and
in
the name of Debtor to take any action and to execute any instrument that the
Collateral Agent may deem necessary and/or advisable under this Security
Agreement and the Default Agreement, as applicable, as follows:
(a) to
obtain
and adjust insurance required to be paid to the Secured Parties if Debtor has
not done so in the ordinary course of its business;
(b) to
ask,
demand, collect, sue for, recover, compound, receive and give receipts for
moneys due and to become due under or in respect of any of the Collateral upon
the occurrence of an Event of Default;
(c) to
receive, endorse, and collect any drafts or other instruments, documents and
chattel paper, in connection with clauses (a) and (b) above upon the
occurrence of an Event of Default;
(d) to
file
any claims or take any action or institute any proceedings that the Secured
Parties may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of the Secured Parties with
respect to any of the Collateral if Debtor has not done so in the ordinary
course of its business;
(e) to
pay or
discharge taxes or liens, levied or placed upon or threatened against the
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Collateral Agent in its sole
discretion, and such payments made by the Secured Parties to become obligations
of Debtor to the Secured Parties, due and payable immediately without demand
if
Debtor has not done so in the ordinary course of its business;
11
(f) to
sign
and endorse any invoices, freight or express bills, bills of lading, storage
or
warehouse receipts, assignments, verifications and notices in connection with
Accounts and other documents relating to the Collateral upon the occurrence
of
an Event of Default;
(g) generally
to sell, transfer, pledge, make any agreement with respect to or otherwise
deal
with any of the Collateral as fully and completely as though the Secured Parties
were the absolute owner thereof for all purposes, and to do, at the Collateral
Agent’s option and Debtor’s expense, at any time or from time to time, all acts
and things that the Collateral Agent’s deem necessary to protect, preserve or
realize on the Collateral upon the occurrence of an Event of Default;
and
(h) to
accomplish the purposes of this Security Agreement if Debtor has not done so
in
the ordinary course of its business.
Neither
the Secured Parties nor any person designated by the Secured Parties shall
be
liable for any acts or omissions or for any error of judgment or mistake of
fact
or law. This power, being coupled with an interest, is irrevocable so long
as
this Security Agreement shall remain in force.
SECTION
12. Expenses.
Debtor
shall pay all insurance expenses and all expenses of protecting, storing,
warehousing, appraising, insuring, handling, maintaining and shipping the
Collateral, all costs, fees and expenses of perfecting, and maintaining the
Security Interest, any and all excise, property, sales and use taxes imposed
by
any state, federal or local authority on any of the Collateral, or with respect
to periodic appraisals and inspections of the Collateral, or with respect to
the
sale or other disposition thereof. If Debtor fails to promptly pay any portion
of the above expenses when due or to perform any other obligation of Debtor
under this Security Agreement, the Secured Parties may, at the option of the
Required Lenders, but shall not be required to, pay or perform the same and
charge Debtor’s account for all costs and expenses incurred therefor, and Debtor
agrees to reimburse the Secured Parties therefor on demand. All sums so paid
or
incurred by the Secured Parties (at the option of the Required Lenders) for
any
of the foregoing, any and all other sums for which Debtor may become liable
hereunder and all costs and expenses (including reasonable and documented
attorneys’ fees, legal expenses and court costs) incurred by the Secured Parties
in enforcing or protecting the Security Interests or any of their rights or
remedies under this Security Agreement, the SPA, or the Notes shall be payable
on demand, shall constitute Secured Obligations and shall be secured by the
Collateral.
SECTION
13. Termination
of Security Interests; Release of Collateral.
Upon
payment in full of all Secured Obligations, including the aggregate principal
amount of the Notes, including all Interest (as defined in the Notes), the
Security Interests shall immediately terminate and all rights to the Collateral
shall revert to Debtor automatically and without the need for further action
to
be taken on the part of the Debtor or the Secured Parties. Upon such termination
of the Security Interests or release of any Collateral, the Secured Parties
will, at the expense of Debtor, execute and deliver to Debtor such documents
as
Debtor shall reasonably request to evidence the termination of the Security
Interests or the release of such Collateral, as the case may be; provided that,
any such documents may be executed and delivered by the Collateral Agent on
behalf of all the Secured Parties.
12
SECTION
14. Notices.
All
notices, requests, demands and other communications provided for hereunder
shall
be in writing and directed to the applicable party at the addresses set forth
below, as to each party, at such other address as shall be designated by such
party in a written notice to the other parties complying as to delivery with
the
terms of this Section
14:
The
Company:
Manhattan
Pharmaceuticals, Inc.
48
Wall
Street, Suite 1100
New
York,
NY 10005
Facsimile:
(212) 582-3957
Attention:
Doug Abel
Chief
Executive Officer
With
a
copy to:
Lowenstein
Sandler PC
65
Livingston Avenue
Roseland,
NJ 07068-1791
Facsimile:
(973) 597-2445
Attention:
Anthony Pergola, Esq.
The
Secured Parties:
As
per
the contact information provided on the signature page hereof.
All
such
notices, requests, demands and other communication shall be deemed given upon
the earlier to occur of (i) the third (3rd)
day
following deposit thereof with the United States Postal Service for mailing
via
certified or registered mail, return receipt requested, or (ii) the actual
receipt by the party to whom such notice is directed.
SECTION
15. Waivers,
Non-Exclusive Remedies.
No
failure on the part of the Secured Parties to exercise, and no delay in
exercising and no course of dealing with respect to, any right under the Notes
or this Security Agreement shall operate as a waiver thereof; nor shall any
single or partial exercise by the Secured Parties of any right under the Notes
or this Security Agreement preclude any other or further exercise thereof or
the
exercise of any other right. The rights in this Security Agreement and/or the
Notes are cumulative and are not exclusive of any other remedies provided by
law.
13
SECTION
16. Successors
and Assigns.
This
Security Agreement is for the benefit of the Secured Parties and each of their
respective successors and assigns, and in no event shall the Debtor without
the
prior express written consent of the Collateral Agent, on behalf of all Secured
Parties, assign all or any portion of the Secured Obligations, the rights
hereunder, or the Notes. This Security Agreement shall be binding on Debtor
and
its successors and all permitted assigns.
SECTION
17. Severability.
If
any
provisions hereof are invalid or unenforceable in any jurisdiction, the other
provisions hereof shall remain in full force and effect in such jurisdiction
and
shall be liberally construed in favor of the Secured Parties.
SECTION
18. Changes
in Writing.
None
of
the terms or provisions of this Security Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed
by
the Debtor, the Collateral Agent and the Required Lenders (which waiver,
amendment, supplement or modification shall be binding on all Secured Parties).
SECTION
19. Governing
Law; Venue; Waiver Of Jury Trial.
This
Security Agreement shall be governed by and construed exclusively in accordance
with the internal laws of the State of New York without regard to the conflicts
of laws principles thereof. The parties hereto hereby expressly and irrevocably
agree that any suit or proceeding arising directly and/or indirectly pursuant
to, arising out of or under this Security Agreement, shall be brought solely
and
exclusively in a federal or state court located in the City, County and State
of
New York. By their execution hereof, the parties hereby expressly covenant
and
irrevocably submit to the in personam
jurisdiction of the federal and state courts located in the City, County and
State of New York and agree that any process in any such action may be served
upon any of them personally, or by certified mail or registered mail upon them
or their agent, return receipt requested, with the same full force and effect
as
if personally served upon them in New York City. The parties hereto expressly
and irrevocably waive any claim that any such jurisdiction is not a convenient
forum for any such suit or proceeding and any defense or lack of in personam
jurisdiction with respect thereto. In the event of any such action or proceeding
(including, but not limited to, any motions made), the party prevailing therein
shall be entitled to payment from the other party hereto of its reasonable
counsel fees and disbursements. The Company and the Secured Parties hereby
waive
all rights to a trial by jury.
SECTION
20. Distributions.
Unless
otherwise specifically provided herein, whenever the Secured Parties are
entitled to the distribution of monies, Collateral or any other property,
pursuant to the terms of this Security Agreement, such monies, Collateral and/or
other property shall be distributed to the Secured Parties, on a pro-rata basis,
based on the outstanding principal amounts under the Notes.
14
SECTION
21. Headings.
Section and
subsection headings in this Security Agreement are included herein for
convenience of reference only and shall not constitute a part of this Security
Agreement for any other purpose or be given any substantive effect.
Signature
Page Follows
15
IN
WITNESS WHEREOF,
the
undersigned have executed this Security Agreement as of the day and year first
above written.
|
DEBTOR:
|
|||
|
MANHATTAN
PHARMACEUTICALS, INC.
|
|||
|
By:
|
/s/
Michael McGuinness
|
||
|
Name:
Michael
McGuinness
|
|||
|
Title:
Chief Financial Officer
|
|||
|
|
SECURED
PARTIES:
The
Secured Parties executing the Signature Page in the form attached
hereto
as Annex
A
and delivering the same to the Company or its agents shall be deemed
to
have executed this Security Agreement and agreed to the terms
hereof.
|
16
ANNEX
A
Investor
Counterpart Signature Page
The
undersigned, desiring to enter into this Security Agreement dated as of November
19, 2008 (the “Security
Agreement”),
between the undersigned, Manhattan Pharmaceuticals, Inc., a Delaware corporation
(the “Company”),
and
the other parties thereto, in or substantially in the form furnished to the
undersigned, hereby agrees that execution by the Investor of this Investor
Counterpart Signature Page shall constitute an agreement to join the Security
Agreement as a party thereto, with all the rights and privileges appertaining
thereto, and to be bound in all respects by the terms and conditions of the
Security Agreement.
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Neel B. Ackerman
|
|
|
Signature:
|
Signature: /s/
Neel B. Ackerman
|
|
|
Date:
|
Date:
October 27, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name: Martha N. Ackerman
|
|
|
Title:
|
Co-Investor
Signature: /s/ Martha N. Ackerman
|
|
|
Date:
October 27, 2008
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|||
|
Print Name of Entity:
|
Stephen M. Burnich
Revocable Trust u/a 10/08/04
|
Print
Name:
|
||
|
Signature: /s/
Stephen M. Burnich
|
Signature:
|
|||
|
Date:
October 29, 2008
|
Date:
|
|||
|
Print
Name: Stephen M. Burnich
|
Co-Investor
Print Name:
|
|||
|
Title:Trustee
|
Co-Investor
Signature:
|
|||
|
Date:
|
||||
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Ennio De Pianto
|
|
|
Signature:
|
Signature:
/s/ Ennio De Pianto
|
|
|
Date:
|
Date: October
29, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Matthew Ernst
|
|
|
Signature:
|
Signature:
/s/ Matthew Ernst
|
|
|
Date:
|
Date: October
29, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity: John
M. Goodman Living Trust
|
Print
Name:
|
|
|
Signature: /s/
John M. Goodman
|
Signature:
|
|
|
Date: November
4, 2008
|
Date:
|
|
|
Print
Name: John M. Goodman
|
Co-Investor
Print Name:
|
|
|
Title: Trustee
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Leon Kanner
|
|
|
Signature:
|
Signature: /s/
Leon Kanner
|
|
|
Date:
|
Date:
October 29, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name: Rosemary
Kanner
|
|
|
Title:
|
Co-Investor
Signature: /s/
Rosemary Kanner
|
|
|
Date:
October 29, 2008
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Richard Kindt
|
|
|
Signature:
|
Signature: /s/
Ricahrd Kindt
|
|
|
Date:
|
Date:
October 29, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Douglas E. Pritchett
|
|
|
Signature:
|
Signature: /s/
Douglas E. Pritchett
|
|
|
Date:
|
Date:
October 31, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Jerome A. Shinkay
|
|
|
Signature:
|
Signature: /s/
Jerome A. Shinkay
|
|
|
Date:
|
Date:
October 31, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Michael J. Spezia
|
|
|
Signature:
|
Signature: /s/
Michael J. Spezia
|
|
|
Date:
|
Date:
November 3, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: George D. Wilson
|
|
|
Signature:
|
Signature: /s/
George D. Wilson
|
|
|
Date:
|
Date:
October 27, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name: Diane
J. Wilson
|
|
|
Title:
|
Co-Investor
Signature: /s/
Diane J. Wilson
|
|
|
Date:
October 27, 2008
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Joseph L. Jerger
|
|
|
Signature:
|
Signature: /s/
Joseph L. Jerger
|
|
|
Date:
|
Date:
November 6, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: David Pudelsky
|
|
|
Signature:
|
Signature: /s/
David Pudelsky
|
|
|
Date:
|
Date: November
6, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name: Nancy
Pudelsky
|
|
|
Title:
|
Co-Investor
Signature: /s/
Nancy Pudelsky
|
|
|
|
|
Date:
November 6, 2008
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
|
Print
Name: James R. Buck
|
|
Signature:
|
Signature: /s/
James R. Buck
|
|
|
Date:
|
Date:
November 6, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
|
|
|
|
Print
Name of Entity:
|
|
Print
Name: John O. Dunkin
|
|
Signature:
|
Signature: /s/
John O. Dunkin
|
|
|
Date:
|
Date:
November 4, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
|
IF
AN ENTITY:
|
|
IF
AN INDIVIDUAL:
|
|
|
|
|
|
Print
Name of Entity: NFS/FMTC
SEP IRA FBO
Jay Jennings
|
|
Print
Name:
|
|
Signature: /s/
Jay Jennings
|
Signature:
|
|
|
Date: October
29, 2008
|
Date:
|
|
|
Print
Name: Jay Jennings
|
Co-Investor
Print Name:
|
|
|
Title: IRA
Owner
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity: Landmark
Community Bank
Collateral
Account FBO
Estate of Catherine Nasser
|
Print
Name:
|
|
|
Signature:
/s/ William K. Nasser, Jr.
|
Signature:
|
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Date: November
4, 2008
|
Date:
|
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Print
Name: William K. Nasser, Jr.
|
Co-Investor
Print Name:
|
|
|
Title:
Attorney-in-fact
|
Co-Investor
Signature:
|
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|
Date:
|
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IF
AN ENTITY:
|
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IF
AN INDIVIDUAL:
|
|
|
|
|
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Print
Name of Entity: Nasser
Family Trust
|
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Print
Name:
|
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Signature: /s/
William K. Nasser
|
Signature:
|
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Date: November
4, 2008
|
Date:
|
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Print
Name: William K. Nasser
|
Co-Investor
Print Name:
|
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Title: Trustee
|
Co-Investor
Signature:
|
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|
Date:
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IF
AN ENTITY:
|
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IF
AN INDIVIDUAL:
|
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Print
Name of Entity:
|
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Print
Name: James R. Kahn
|
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Signature:
|
Signature:
/s/ James R. Kahn
|
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Date:
|
Date:
November 12, 2008
|
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Print
Name:
|
Co-Investor
Print Name: Debra
A. Kahn
|
|
|
Title:
|
Co-Investor
Signature: /s/
Debra A. Kahn
|
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Date:
November 12, 2008
|
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IF
AN ENTITY:
|
|
IF
AN INDIVIDUAL:
|
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|
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Print
Name of Entity:
|
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Print
Name: A. Starke Taylor, Jr.
|
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Signature:
|
Signature:
/s/ A. Starke Taylor, Jr.
|
|
|
Date:
|
Date:
October 7, 2008
|
|
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Print
Name:
|
Co-Investor
Print Name: Carolyn Taylor
|
|
|
Title:
|
Co-Investor
Signature: /s/
Carolyn Taylor
|
|
|
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Date:
October 7, 2008
|
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IF
AN ENTITY:
|
|
IF
AN INDIVIDUAL:
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|
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Print
Name of Entity:
|
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Print
Name: Mark Vollmer
|
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Signature:
|
Signature: /s/
Mark Vollmer
|
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Date:
|
Date:
November 11, 2008
|
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Print
Name:
|
Co-Investor
Print Name:
|
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Title:
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Co-Investor
Signature:
|
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Date:
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IF
AN ENTITY:
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IF
AN INDIVIDUAL:
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Print
Name of Entity:
|
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Print
Name: Robert J. Guercio
|
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Signature:
|
Signature:
/s/ Robert J. Guercio
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Date:
|
Date:
November 6, 2008
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Print
Name:
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Co-Investor
Print Name:
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Title:
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Co-Investor
Signature:
|
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Date:
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IF
AN ENTITY:
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IF
AN INDIVIDUAL:
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Print
Name of Entity:
|
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Print
Name: Ralph Hanby
|
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Signature:
|
Signature:
/s/ Ralph Hanby
|
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Date:
|
Date:
November 13, 2008
|
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Print
Name:
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Co-Investor
Print Name:
|
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Title:
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Co-Investor
Signature:
|
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Date:
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IF
AN ENTITY:
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IF
AN INDIVIDUAL:
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Print
Name of Entity:
|
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Print
Name: Robert E. Jacobson
|
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Signature:
|
Signature:
/s/ Robert E. Jacobson
|
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Date:
|
Date:
November 10, 2008
|
|
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Print
Name:
|
Co-Investor
Print Name: Saralee
Jacobson
|
|
|
Title:
|
Co-Investor
Signature: /s/
Saralee Jacobson
|
|
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|
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Date:
November 10, 2008
|
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IF
AN ENTITY:
|
|
IF
AN INDIVIDUAL:
|
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|
|
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Print
Name of Entity:
|
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Print
Name: Michael Cushing
|
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Signature:
|
Signature:
/s/ Michael Cushing
|
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Date:
|
Date:
November 13, 2008
|
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Print
Name:
|
Co-Investor
Print Name:
|
|
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Title:
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
|
IF
AN ENTITY:
|
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IF
AN INDIVIDUAL:
|
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|
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Print
Name of Entity:
|
|
Print
Name: Raymond Yarusi, Jr.
|
|
Signature:
|
Signature:
/s/ Raymond Yarusi, Jr.
|
|
|
Date:
|
Date:
November 12, 2008
|
|
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Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
|
IF
AN ENTITY:
|
|
IF
AN INDIVIDUAL:
|
|
|
|
|
|
Print
Name of Entity:
|
|
Print
Name: James C. Orr
|
|
Signature:
|
Signature:
/s/ James C. Orr
|
|
|
Date:
|
Date:
November 9, 2008
|
|
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Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
|
IF
AN ENTITY:
|
|
IF
AN INDIVIDUAL:
|
|
|
|
|
|
Print
Name of Entity:
|
|
Print
Name: Vernon L. Simpson
|
|
Signature:
|
Signature:
/s/ Vernon L. Simpson
|
|
|
Date:
|
Date:
November 17, 2008
|
|
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Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
|
IF
AN ENTITY:
|
|
IF
AN INDIVIDUAL:
|
|
|
|
|
|
Print
Name of Entity: Michael
Yokoyama & Jaye
Ventui Family Trust
|
|
Print
Name:
|
|
Signature:
/s/ Michael Yokoyama & /s/ Jaye Venuti
|
Signature:
|
|
|
Date: November
12, 2008
|
Date:
|
|
|
Print
Name: Michael Yokoyama & Jaye Ventui
|
Co-Investor
Print Name:
|
|
|
Title: Co-Trustees
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
|
IF
AN ENTITY:
|
|
IF
AN INDIVIDUAL:
|
|
|
|
|
|
Print
Name of Entity:
|
|
Print
Name: Frederick Peet
|
|
Signature:
|
Signature:
/s/ Frederick Peet
|
|
|
Date:
|
Date:
November 7, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
|
IF
AN ENTITY:
|
|
IF
AN INDIVIDUAL:
|
|
|
|
|
|
Print
Name of Entity:
|
|
Print
Name: Ronald Rasmussen
|
|
Signature:
|
Signature:
/s/ Ronald Rasmussen
|
|
|
Date:
|
Date:
November 12, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
|
IF
AN ENTITY:
|
|
IF
AN INDIVIDUAL:
|
|
|
|
|
|
Print
Name of Entity:
|
|
Print
Name: Lewis R. Jacobson
|
|
Signature:
|
Signature:
/s/ Lewis R. Jacobson
|
|
|
Date:
|
Date:
November 17, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
|
IF
AN ENTITY:
|
|
IF
AN INDIVIDUAL:
|
|
|
|
|
|
Print
Name of Entity:
|
|
Print
Name: Mark B. Ginsburg
|
|
Signature:
|
Signature: /s/
Mark B. Ginsburg
|
|
|
Date:
|
Date:
November 18, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
|
IF
AN ENTITY:
|
|
IF
AN INDIVIDUAL:
|
|
|
|
|
|
Print
Name of Entity:
|
|
Print
Name: Gregory Dovolis
|
|
Signature:
|
Signature: /s/
Greogory Dovolis
|
|
|
Date:
|
Date:
November 3, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
|
IF
AN ENTITY:
|
|
IF
AN INDIVIDUAL:
|
|
|
|
|
|
Print
Name of Entity:
|
|
Print
Name: William S. Silver
|
|
Signature:
|
Signature:
/s/ William S. Silver
|
|
|
Date:
|
Date:
November 5, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
|
IF
AN ENTITY:
|
|
IF
AN INDIVIDUAL:
|
|
|
|
|
|
Print
Name of Entity:
|
|
Print
Name: Praful Desai
|
|
Signature:
|
Signature:
/s/ Praful Desai
|
|
|
Date:
|
Date:
November 5, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
|
IF
AN ENTITY:
|
|
IF
AN INDIVIDUAL:
|
|
|
|
|
|
Print
Name of Entity:
|
|
Print
Name: Thomas Gemellaro
|
|
Signature:
|
Signature:
/s/ Thomas Gemellaro
|
|
|
Date:
|
Date:
November 13, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
|
IF
AN ENTITY:
|
|
IF
AN INDIVIDUAL:
|
|
|
|
|
|
Print
Name of Entity: Howard
M. Tanning Rollover
IRA
|
|
Print
Name:
|
|
Signature:
/s/ Howard M. Tanning
|
Signature:
|
|
|
Date:
November 3, 2008
|
Date:
|
|
|
Print
Name: Howard M. Tanning
|
Co-Investor
Print Name:
|
|
|
Title:
IRA Owner
|
Co-Investor
Signature:
|
|
|
|
|
Date:
|
SCHEDULE
I TO SECURITY AGREEMENT
Locations
of Equipment, Inventory, Books and Records, Chief Executive Office
Locations
of Equipment and Inventory:
48
Wall
Street
New
York,
New York 10005
Location
of Books and Records and Chief Executive Office:
48
Wall
Street
New
York,
New York 10005
SCHEDULE
II TO SECURITY AGREEMENT
Deposit
Accounts
|
Name, Address and
Telephone Number
|
Account Name
|
Description
|
Account Number
|
|||
|
Chase
45
Wall Street
New
York, New York 10005
|
Manhattan
Pharmaceuticals, Inc.
|
Checking
|
904
807 479
|
|||
|
Signature
Bank
261
Madison Avenue, New York, New York 10016
|
Manhattan
Pharmaceuticals, Inc.
|
Deposit
|
1501126434
|
Exhibit
10.4
DEFAULT
AGREEMENT
Default
Agreement, dated as of November 19, 2008, by and among Manhattan
Pharmaceuticals, Inc. (the “Company”),
a
Delaware corporation, with a principal address at 48 Wall Street, Suite 1100,
New York, New York 10005, and the persons and entities listed on Schedule
A
hereto
(individually, a “Lender”
and,
collectively, the “Lenders”).
WHEREAS,
the Company holds 500 shares (the “Shares”)
of
Hedrin Pharmaceuticals K/S, a Danish limited partnership (the “Partnership”);
WHEREAS,
the Lenders are the holders of the Company’s 12% Senior Secured Notes (the
“Notes”)
in the
principal amounts set forth opposite their names on Schedule A
hereto;
WHEREAS,
in connection with the issuance and sale of the Notes, the Company has entered
into a Security Agreement, dated as of November 19, 2008 (the “Security
Agreement”),
with
the Lenders, pursuant to which the Company has granted to the Lenders a security
interest in all of the Company’s assets, other than the Shares;
WHEREAS,
the Company wishes to provide, as additional security for its Secured
Obligations (as defined in the Security Agreement) under the Notes, for the
sale
of the Shares to the extent necessary to generate proceeds for the payment
of
amounts due under the Notes in the event of an Event of Default (as defined
in
the Notes) under the Notes, and
NOW,
THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and
to induce the Lenders to make the loans under the Notes, the Company hereby
agrees with the Lenders as follows:
1. Defined
Terms.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings ascribed thereto in the Security Agreement.
2. Rights
Upon an Event of Default.
(a) Pursuant
to and in accordance with the Security Agreement, the Collateral Agent, if
and
when so appointed (and if not appointed, the Required Lenders) shall act for
and
on behalf of the Lenders as Collateral Agent under this Default Agreement and
has been appointed the Company’s attorney in fact, with full authority in the
place and stead of the Company and in the name of the Company to take any and
all action including, but not limited to, executing any and all instruments
that
the Collateral Agent may deem necessary and/or advisable under this Default
Agreement, as applicable, to enforce Lenders’ rights hereunder.
(b) Upon
an
Event of Default, the Collateral Agent shall have the right, subject to
Section
3
below,
with respect to the Shares to give the Company a written notice (the
“Sale
Notice”)
that
all or a portion (as necessary) of the Shares must be immediately sold in order
to generate proceeds to fulfill any and all Secured Obligations of the Company
to the Lenders. The Sale Notice may be revoked at any time by written notice
solely by the Collateral Agent and shall be rescinded and null and void if
and
at such time as there is no longer any outstanding uncured Event of
Default.
(c) After
receipt of the Sale Notice, the Company shall promptly use its commercially
reasonable efforts to sell all or a portion (as necessary to pay the Secured
Obligations) of the Shares to an unaffiliated third party (a “Third
Party Purchaser”)
on an
arms’ length basis. The Company may undertake any reasonable process for selling
the Shares and the Company shall not be required to retain any investment
banker, finder, or other financial advisor in connection with the sale of the
Shares. Any sale of Shares to a Third Party Purchaser shall be subject to the
approval of the Board of Directors of the Company in the exercise of its
fiduciary obligations under applicable law.
(d) To
the
extent that the Company is unsuccessful in entering into an agreement with
a
Third Party Purchaser with respect to a sale of the Shares within sixty (60)
days of the Sale Notice, the Company shall on the sixty first (61st)
day (or
earlier) inform the Lenders in writing of such fact and, and the Placement
Agent
and/or the Required Lenders shall have the option of accepting Shares in
fulfillment of the Secured Obligations, or requiring the Company to engage
an
investment banking firm, acceptable to either the Placement Agent or the
Required Lenders, to complete the sale of Shares to a Third Party Purchaser.
Any
acceptance of Shares by the Lenders, or requirement to engage an investment
banker, shall be made in writing by the Collateral Agent and shall be binding
on
all Lenders. The number of Shares to be transferred to the Lenders shall be
determined by dividing the amount of the Secured Obligations to be paid by
the
fair market value of a Share. The fair market value of a Share shall be
determined by a reputable investment banker (the “Banker”),
unaffiliated with the Company or any of the Lenders, and chosen by the Board
of
Directors of the Company and reasonably acceptable to the Collateral Agent.
The
Company shall pay the fees and expenses of the Banker.
(e) In
the
event that (i) the value of all the Shares, together with the value of cash
and
other assets available to apply to the Secured Obligations is greater than
the
Secured Obligations and (ii) the Collateral Agent provides notice to the Company
that the Lenders will accept Shares as partial fulfillment of the Secured
Obligations, then to the extent that any of the Company’s cash and other assets
do not fulfill all of the Secured Obligations of the Company to the Lenders
then
the Company shall, transfer such number of Shares equal to the value of any
remaining outstanding Secured Obligations to the Lenders as fulfillment of
any
remaining outstanding Secured Obligations of the Company. Any Shares, cash
and
other property transferred to the Lenders shall (unless otherwise agreed by
the
Company and all the Lenders) be allocated to the Lenders pro rata based on
the
amount of Secured Obligations owed to each such Lender so that, each Lender
shall receive the same combination of Shares, cash and other
property.
-2-
3. Joint
Venture Agreements.
(a) Reference
is made to the Limited Partnership Agreement of the Partnership, dated February,
2008, as amended (the “Partnership
Agreement”),
and
the Shareholders’ Agreement, dated February 2008, as amended (the “Shareholders’
Agreement”)
of
Hedrin Pharmaceuticals General Partner ApS (the “General
Partner”),
among
the holders of shares of the General Partner. It is acknowledged and agreed
that, in accordance with the Shareholders’ Agreement, any transfer of Shares
must be accompanied by a transfer of a pro rata number of shares of the General
Partner (“General
Partner Shares”).
Any
transfer of Shares hereunder and a corresponding transfer of General Partner
Shares, including any sale to a Third Party Purchaser or transfer to the
Lenders, shall be subject to compliance with the terms of the Partnership
Agreement and the Shareholders’ Agreement. Without limiting the foregoing, the
Lenders acknowledge that (i) the Shares are subject to a right of first refusal
in favor of the other limited partners of the Partnership as set forth in the
Partnership Agreement, (ii) the other limited partners of the Partnership have
certain tag-along rights (“Tag-Along
Rights”)
with
respect to transfers of the Shares as set forth in the Partnership Agreement
and
(iii) the Shareholders’ Agreement contains certain restrictions on transfer of
the General Partner Shares. In addition, under the Joint Venture Agreement,
dated January 31, 2008, as amended, by and between the Company and Nordic
Biotech Venture Fund II K/S (“Nordic”),
Nordic has certain rights to sell its shares in the Partnership and the General
Partner (the “Put
Rights”)
to the
Company.
(b) The
Company shall have no liability hereunder to the extent that any sale or
transfer of the Shares contemplated by this Agreement is not completed because
of any action or inaction by the other limited partners of the Partnership
or
shareholders of the General Partner, including due to any exercise by Nordic
of
its Put Rights or Tag-Along Rights. In the event that any action or inaction
by
the other limited partners of the Partnership or shareholders of the General
Partnership, are in violation of the Partnership Agreement or the Shareholders’
Agreement, as the case may be, the Company will use its reasonable commercial
efforts to cause such parties to comply with the terms of the Partnership
Agreement and/or the Shareholders’ Agreement, as applicable. The Company may, in
its sole discretion, cease all efforts to sell Shares (and General Partner
Shares) to a Third Party Purchaser or transfer Shares (and General Partner
Shares) to the Lenders hereunder, without any liability to the Lenders
hereunder, if Nordic exercises any of its Put Rights or Tag-Along Rights.
(c) Nothing
contained herein shall be deemed a transfer, attempted transfer, lien, pledge
or
other encumbrance on the Shares or the General Partner Shares. Nothing contained
herein shall prevent, or require any Lender consent for, the Company’s exercise
of all rights and privileges of a shareholder of the Partnership or the General
Partner with respect to the Shares and General Partner Shares, including any
sale of the Shares or the General Partner Shares.
(d) In
accordance with the Partnership Agreement, upon any transfer of the Shares
and
General Partner Shares to the Lenders, the Lenders shall execute and adhere
to
the Partnership Agreement and the Shareholders’ Agreement. BY
EXECUTING THIS AGREEMENT EACH LENDER AGREES THAT UPON EXECUTION OF THE
PARTNERSHIP AGREEMENT AND THE SHAREHOLDERS’ AGREEMENT BY THE COLLATERAL AGENT,
SOLELY ON BEHALF OF THE LENDERS, EACH LENDER SHALL BE BOUND BY THE PARTNERSHIP
AGREEMENT AND THE SHAREHOLDERS’ AGREEMENT AS IF HE, SHE OR IT WERE A PARTY
SIGNATORY THERETO.
-3-
4. Paragraph
Headings.
The
paragraph headings used in this Agreement are for convenience of reference
only
and are not to affect the construction hereof or be taken into consideration
in
the interpretation hereof.
5. No
Waiver; Cumulative Remedies.
The
Lenders shall not by any act, delay, indulgence, omission or otherwise be deemed
to have waived any right or remedy hereunder or to have acquiesced in any Event
of Default or in any breach of any of the terms and conditions hereof. No
failure to exercise, nor any delay in exercising, on the part of the Lenders,
any right, power or privilege hereunder shall operate as a waiver thereof.
No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Lenders of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right
or
remedy which the Lenders would otherwise have on any future occasion. The rights
and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights or remedies provided by law.
6. Waivers
and Amendments; Successors and Assigns.
None of
the terms or provisions of this Agreement may be waived, amended, supplemented
or otherwise modified except by a written instrument executed by the Company
and
the Collateral Agent. This Agreement shall be binding upon the successors and
assigns of the Borrower; provided that any Third Party Purchaser of the Shares
or the General Partner Shares shall not be bound by this Agreement, and, subject
to the foregoing, shall inure to the benefit of the Lenders and their respective
successors and assigns.
7. Notices.
Any
notice required or permitted hereunder shall be given in writing and shall
be
deemed effectively given: (a) when personally delivered, (b) five (5) days
after
having been deposited in the United States mail, certified or registered, return
receipt requested, postage prepaid, or (c) one (1) business day after having
been dispatched by a nationally recognized overnight courier service, addressed
to (i) in the case of the Company, at its address as set forth above and (ii)
in
the case of the Lenders, at the addresses set forth on Schedule
A
to this
Agreement.
8. Governing
Law; Venue; Waiver Of Jury Trial. This
Agreement shall be governed by and construed exclusively in accordance with
the
internal laws of the State of New York without regard to the conflicts of laws
principles thereof. The parties hereto hereby expressly and irrevocably agree
that any suit or proceeding arising directly and/or indirectly pursuant to,
arising out of or under this Agreement, shall be brought solely and exclusively
in a federal or state court located in the City, County and State of New York.
By their execution hereof, the parties hereby expressly covenant and irrevocably
submit to the in personam
jurisdiction of the federal and state courts located in the City, County and
State of New York and agree that any process in any such action may be served
upon any of them personally, or by certified mail or registered mail upon them
or their agent, return receipt requested, with the same full force and effect
as
if personally served upon them in New York City. The parties hereto expressly
and irrevocably waive any claim that any such jurisdiction is not a convenient
forum for any such suit or proceeding and any defense or lack of in personam
jurisdiction with respect thereto. In the event of any such action or proceeding
(including, but not limited to, any motions made), the party prevailing therein
shall be entitled to payment from the other party hereto of its reasonable
counsel fees and disbursements. The Company and the Lenders hereby waive all
rights to a trial by jury.
9. Termination.
This
Agreement shall terminate and be of no further force or effect at such time
as
the Company shall have fully satisfied its Secured Obligations or shall have
disposed of all of the Shares.
-4-
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.
|
MANHATTAN
PHARMACEUTICALS, INC.
|
||
|
|
By:
|
/s/
Michael McGuinness
|
|
|
Name:
Michael McGuinness
Title:
Chief Financial Officer
|
|
|
|
LENDERS:
The
LENDERS executing the Signature Page in the form attached hereto
as
Annex
A
and delivering the same to the Company or its agents shall be deemed
to
have executed this Agreement and agreed to the terms
hereof.
|
ANNEX
A
Investor
Counterpart Signature Page
The
undersigned, desiring to enter into this Default Agreement dated as of November
19, 2008 (the “Default
Agreement”),
between the undersigned, Manhattan Pharmaceuticals, Inc., a Delaware corporation
(the “Company”),
and
the other parties thereto, in or substantially in the form furnished to the
undersigned, hereby agrees that execution by the Investors of this Investor
Counterpart Signature Page shall constitute an agreement to join the Security
Agreement as a party thereto, with all the rights and privileges appertaining
thereto, and to be bound in all respects by the terms and conditions of the
Default Agreement.
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Neel B. Ackerman
|
|
|
Signature:
|
Signature: /s/
Neel B. Ackerman
|
|
|
Date:
|
Date:
October 27, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name: Martha N. Ackerman
|
|
|
Title:
|
Co-Investor
Signature: /s/ Martha N. Ackerman
|
|
|
Date:
October 27, 2008
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity: Stephen M. Burnich
Revocable Trust u/a 10/08/04
|
Print
Name:
|
|
|
Signature: /s/
Stephen M. Burnich
|
Signature:
|
|
|
Date: October
29, 2008
|
Date:
|
|
|
Print
Name: Stephen M. Burnich
|
Co-Investor
Print Name:
|
|
|
Title: Trustee
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Ennio De Pianto
|
|
|
Signature:
|
Signature: /s/
Ennio De Pianto
|
|
|
Date:
|
Date: October
29, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Matthew Ernst
|
|
|
Signature:
|
Signature: /s/
Matthew Ernst
|
|
|
Date:
|
Date: October
29, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
|
||
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity: John M. Goodman Living Trust
|
Print
Name:
|
|
|
Signature: /s/
John M. Goodman
|
Signature:
|
|
|
Date: November
4, 2008
|
Date:
|
|
|
Print
Name: John M. Goodman
|
Co-Investor
Print Name:
|
|
|
Title: Trustee
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Leon Kanner
|
|
|
Signature:
|
Signature: /s/
Leon Kanner
|
|
|
Date:
|
Date:
October 29, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name: Rosemary Kanner
|
|
|
Title:
|
Co-Investor
Signature: /s/ Rosemary Kanner
|
|
|
Date:
October 29, 2008
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Richard Kindt
|
|
|
Signature:
|
Signature: /s/
Ricahrd Kindt
|
|
|
Date:
|
Date:
October 29, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Douglas E. Pritchett
|
|
|
Signature:
|
Signature: /s/
Douglas E. Pritchett
|
|
|
Date:
|
Date:
October 31, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Jerome A. Shinkay
|
|
|
Signature:
|
Signature: /s/
Jerome A. Shinkay
|
|
|
Date:
|
Date:
October 31, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Michael J. Spezia
|
|
|
Signature:
|
Signature: /s/
Michael J. Spezia
|
|
|
Date:
|
Date:
November 3, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: George D. Wilson
|
|
|
Signature:
|
Signature: /s/
George D. Wilson
|
|
|
Date:
|
Date:
October 27, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name: Diane J. Wilson
|
|
|
Title:
|
Co-Investor
Signature: /s/ Diane J. Wilson
|
|
|
Date:
October 27, 2008
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Joseph L. Jerger
|
|
|
Signature:
|
Signature: /s/
Joseph L. Jerger
|
|
|
Date:
|
Date:
November 6, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: David Pudelsky
|
|
|
Signature:
|
Signature: /s/
David Pudelsky
|
|
|
Date:
|
Date: November
6, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name: Nancy Pudelsky
|
|
|
Title:
|
Co-Investor
Signature: /s/ Nancy Pudelsky
|
|
|
Date:
November 6, 2008
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: James R. Buck
|
|
|
Signature:
|
Signature: /s/
James R. Buck
|
|
|
Date:
|
Date:
November 6, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: John O. Dunkin
|
|
|
Signature:
|
Signature: /s/
John O. Dunkin
|
|
|
Date:
|
Date:
November 4, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity: NFS/FMTC SEP IRA FBO
Jay Jennings
|
Print
Name:
|
|
|
Signature: /s/
Jay Jennings
|
Signature:
|
|
|
Date: October
29, 2008
|
Date:
|
|
|
Print
Name: Jay Jennings
|
Co-Investor
Print Name:
|
|
|
Title: IRA
Owner
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity: Landmark Community Bank
Collateral Account FBO
Estate of Catherine Nasser
|
Print
Name:
|
|
|
Signature:
/s/ William K. Nasser, Jr.
|
Signature:
|
|
|
Date: November
4, 2008
|
Date:
|
|
|
Print
Name: William K. Nasser, Jr.
|
Co-Investor
Print Name:
|
|
|
Title:
Attorney-in-fact
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity: Nasser Family Trust
|
Print
Name:
|
|
|
Signature: /s/
William K. Nasser
|
Signature:
|
|
|
Date: November
4, 2008
|
Date:
|
|
|
Print
Name: William K. Nasser
|
Co-Investor
Print Name:
|
|
|
Title: Trustee
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: James R. Kahn
|
|
|
Signature:
|
Signature:
/s/ James R. Kahn
|
|
|
Date:
|
Date:
November 12, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name: Debra A. Kahn
|
|
|
Title:
|
Co-Investor
Signature: /s/ Debra A. Kahn
|
|
|
Date:
November 12, 2008
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: A. Starke Taylor, Jr.
|
|
|
Signature:
|
Signature:
/s/ A. Starke Taylor, Jr.
|
|
|
Date:
|
Date:
October 7, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name: Carolyn Taylor
|
|
|
Title:
|
Co-Investor
Signature: /s/ Carolyn Taylor
|
|
|
Date:
October 7, 2008
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Mark Vollmer
|
|
|
Signature:
|
Signature: /s/
Mark Vollmer
|
|
|
Date:
|
Date:
November 11, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Robert J. Guercio
|
|
|
Signature:
|
Signature:
/s/ Robert J. Guercio
|
|
|
Date:
|
Date:
November 6, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
|
||
|
Print
Name of Entity:
|
Print
Name: Ralph Hanby
|
|
|
|
||
|
Signature:
|
Signature:
/s/ Ralph Hanby
|
|
|
Date:
|
Date:
November 13, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Robert E. Jacobson
|
|
|
Signature:
|
Signature:
/s/ Robert E. Jacobson
|
|
|
Date:
|
Date:
November 10, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name: Saralee Jacobson
|
|
|
Title:
|
Co-Investor
Signature: /s/ Saralee Jacobson
|
|
|
Date:
November 10, 2008
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Michael Cushing
|
|
|
Signature:
|
Signature:
/s/ Michael Cushing
|
|
|
Date:
|
Date:
November 13, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Raymond Yarusi, Jr.
|
|
|
Signature:
|
Signature:
/s/ Raymond Yarusi, Jr.
|
|
|
Date:
|
Date:
November 12, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: James C. Orr
|
|
|
Signature:
|
Signature:
/s/ James C. Orr
|
|
|
Date:
|
Date:
November 9, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Vernon L. Simpson
|
|
|
Signature:
|
Signature:
/s/ Vernon L. Simpson
|
|
|
Date:
|
Date:
November 17, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity: Michael Yokoyama & Jaye
Ventui Family Trust
|
Print
Name:
|
|
|
|
||
|
Signature:
/s/ Michael Yokoyama & /s/ Jaye Venuti
|
Signature:
|
|
|
Date: November
12, 2008
|
Date:
|
|
|
Print
Name: Michael Yokoyama & Jaye Ventui
|
Co-Investor
Print Name:
|
|
|
Title: Co-Trustees
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Frederick Peet
|
|
|
Signature:
|
Signature:
/s/ Frederick Peet
|
|
|
Date:
|
Date:
November 7, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Ronald Rasmussen
|
|
|
Signature:
|
Signature:
/s/ Ronald Rasmussen
|
|
|
Date:
|
Date:
November 12, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Lewis R. Jacobson
|
|
|
Signature:
|
Signature:
/s/ Lewis R. Jacobson
|
|
|
Date:
|
Date:
November 17, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Mark B. Ginsburg
|
|
|
Signature:
|
Signature: /s/
Mark B. Ginsburg
|
|
|
Date:
|
Date:
November 18, 2008
|
|
|
|
||
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Gregory Dovolis
|
|
|
Signature:
|
Signature: /s/
Greogory Dovolis
|
|
|
Date:
|
Date:
November 3, 2008
|
|
|
|
||
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: William S. Silver
|
|
|
Signature:
|
Signature:
/s/ William S. Silver
|
|
|
Date:
|
Date:
November 5, 2008
|
|
|
|
||
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Praful Desai
|
|
|
Signature:
|
Signature:
/s/ Praful Desai
|
|
|
Date:
|
Date:
November 5, 2008
|
|
|
|
||
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity:
|
Print
Name: Thomas Gemellaro
|
|
|
Signature:
|
Signature:
/s/ Thomas Gemellaro
|
|
|
Date:
|
Date:
November 13, 2008
|
|
|
Print
Name:
|
Co-Investor
Print Name:
|
|
|
Title:
|
Co-Investor
Signature:
|
|
|
Date:
|
|
IF
AN ENTITY:
|
IF
AN INDIVIDUAL:
|
|
|
Print
Name of Entity: Howard M. Tanning Rollover
IRA
|
Print
Name:
|
|
|
Signature:
/s/ Howard M. Tanning
|
Signature:
|
|
|
Date:
November 3, 2008
|
Date:
|
|
|
Print
Name: Howard M. Tanning
|
Co-Investor
Print Name:
|
|
|
Title:
IRA Owner
|
Co-Investor
Signature:
|
|
|
Date:
|
Schedule
A
|
Name of Lenders
|
Principal Amount
of Note
|
|||
|
Neel
B. Ackerman and Martha N. Ackerman
|
$
|
200,000
|
||
|
Stephen
M. Burnich Revocable Trust u/a 10/08/04
|
$
|
25,000
|
||
|
Ennio
De Pianto
|
$
|
50,000
|
||
|
Matthew
Ernst
|
$
|
25,000
|
||
|
John
M. Goodman Living Trust
|
$
|
25,000
|
||
|
Leon
Kanner & Rosemary E. Kanner
|
$
|
25,000
|
||
|
Richard
Kindt
|
$
|
10,000
|
||
|
Douglas
E. Pritchett
|
$
|
50,000
|
||
|
Jerome
A. Shinkay
|
$
|
10,000
|
||
|
Michael
J. Spezia
|
$
|
25,000
|
||
|
George
D. Wilson & Diane J. Wilson
|
$
|
10,000
|
||
|
Joseph
L. Jerger
|
$
|
10,000
|
||
|
David
& Nancy Pudelsky
|
$
|
25,000
|
||
|
James
R. Buck
|
$
|
10,000
|
||
|
John
O. Dunkin
|
$
|
15,000
|
||
|
NFS/FMTC
SEP IRA FBO Jay Jennings
|
$
|
15,000
|
||
|
Landmark
Community Bank Collateral Account FBO Estate of Catherine
Nasser
|
$
|
65,000
|
||
|
Nasser
Family Trust
|
$
|
25,000
|
||
|
James
R. Kahn & Debra A. Kahn, JTWROS
|
$
|
5,000
|
||
|
Carolyn
N. Taylor & A. Starke Taylor, Jr.
|
$
|
50,000
|
||
|
Mark
Vollmer
|
$
|
5,000
|
||
|
Robert
J. Guercio
|
$
|
25,000
|
||
|
Ralph
Hanby
|
$
|
5,000
|
||
|
Robert
E. Jacobson & Saralee Jacobson, JTWROS
|
$
|
10,000
|
||
|
Michael
Cushing
|
$
|
30,000
|
||
|
Raymond
Yarusi, Jr.
|
$
|
5,000
|
||
|
James
Orr
|
$
|
25,000
|
||
|
Vernon
L. Simpson
|
$
|
25,000
|
||
|
Michael
H. Yokoyama & Jaye S. Venuti Family Trust
|
$
|
25,000
|
||
|
Frederick
Peet
|
$
|
20,000
|
||
|
Ronald
Rasmussen
|
$
|
10,000
|
||
|
Lewis
R. Jacobson
|
$
|
5,000
|
||
|
Mark
B. Ginsburg
|
$
|
25,000
|
||
|
Gregory
J. Dovolis
|
$
|
20,000
|
||
|
William
S. Silver
|
$
|
25,000
|
||
|
Praful
Desai
|
$
|
25,000
|
||
|
Thomas
Gemellaro
|
$
|
5,000
|
||
|
Howard
M. Tanning Rollover IRA
|
$
|
70,000
|
||
|
TOTAL:
|
1,035,000
|
|||
Exhibit
10.5
THIS
SENIOR SECURED PROMISSORY NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES
ONLY
AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNTIL
(i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”)
SHALL
HAVE BECOME EFFECTIVE WITH RESPECT THERETO OR (ii) RECEIPT BY THE COMPANY
OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT
THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED
TRANSFER NOR IS IN VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS. THIS
LEGEND SHALL BE ENDORSED UPON ANY NOTE ISSUED IN EXCHANGE FOR THIS
NOTE.
MANHATTAN
PHARMACEUTICALS, INC.
12%
Senior Secured Promissory Note
|
Note
No.: __
|
November
19, 2008
|
FOR
VALUE
RECEIVED, Manhattan Pharmaceuticals, Inc., a Delaware limited liability
corporation (the “Company”)
with
its principal executive office at 48 Wall Street, Suite 1100, New York, New
York
10005, promises to pay to the order of ____________ or registered assigns
(the
“Holder”)
on the
Maturity Date (as defined in Section
2
below),
the principal amount of ________ Dollars ($_______)
(the “Principal
Amount”),
in
such coin or currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts. Interest
on
this Note shall accrue on the Principal Amount outstanding from time to time
at
a rate per annum computed in accordance with Section 3
hereof.
The
Company (i) waives presentment, demand, protest or notice of any kind in
connection with this Note and (ii) agrees, in the event of an Event of Default
(as defined in Section 7 below), to pay to the holder of this Note, on demand,
all costs and expenses (including reasonable legal fees and expenses as and
when
incurred), incurred in connection with the enforcement and/or collection
of this
Note.
This
Note
is one of a series of notes (collectively, the “Secured
Notes”)
being
issued pursuant to the Securities Purchase Agreement (the “SPA”)
by and
between the Company, the Holder and such other purchasers of Notes (the
“Holders”).
All
capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to them in the SPA.
1. Prepayment.
This
Note shall be payable at any time and from time to time, in whole or in part,
at
the election of the Company. Any prepayments of this Note prior to the Maturity
Date shall be applied first to the payment of any fees and expenses then
owed to
the Holder, second, to accrued and unpaid Interest (defined below) and third,
to
the payment of the Principal Amount then outstanding. Any amounts applied
by the
Company to the prepayment of any Secured Notes (including this Note) shall
be
allocated pro rata to all Holders based on the amounts then owed to them
with
respect to the Secured Notes.
2. Maturity
Date.
The
entire unpaid Principal Amount of this Note, together with all fees and expenses
(if any), and accrued, but unpaid, Interest thereon, shall be immediately
due
and payable at 12:01 a.m. on November 19, 2010 (the “Maturity
Date”).
In
the event that the Maturity Date falls on a Saturday, Sunday or a holiday
on
which banks in the State of New York are closed, the Maturity Date shall
be the
first business day occurring immediately after such date.
3. Interest;
Etc.
(a) Interest
Rate.
This
Note shall bear interest (the “Interest”)
on the
outstanding Principal Amount at the rate of twelve (12%) percent per annum.
Interest on this Note shall commence accruing on the date hereof and shall
be
computed on the basis of a year of 360 days for the actual number of days
elapsed. Interest shall be compounded quarterly and shall be payable on the
Maturity Date as set forth in Section
4
below.
(b) Maximum
Rate.
In the
event that under the laws relating to usury applicable to the Company or
the
indebtedness evidenced by this Note (“Applicable
Usury Laws”),
the
interest charges and fees payable by the Company in connection herewith or
in
connection with any other document or instrument executed and delivered in
connection herewith cause the effective interest rate applicable to the
indebtedness evidenced by this Note to exceed the maximum rate allowed by
law
(the “Maximum
Rate”),
then
such interest shall be recalculated for the period in question and any excess
over the Maximum Rate paid with respect to such period shall be credited,
without further agreement or notice, to the Principal Amount outstanding
hereunder to reduce said balance by such amount with the same force and effect
as though the Company had specifically designated such extra sums to be so
applied to principal and the Holder had agreed to accept such extra payment(s)
as a premium-free prepayment. All such deemed prepayments shall be applied
to
the principal balance payable at maturity. In no event shall any agreed-to
or
actual exaction as consideration for this Note exceed the limits imposed
or
provided by Applicable Usury Laws in the jurisdiction in which the Company
is
resident applicable to the use or detention of money or to forbearance in
seeking its collection in the jurisdiction in which the Company is
resident.
4.
Manner
of Payment.
The
Principal Amount, Interest, and all other amounts due under this Note shall
be
due and payable on the Maturity Date, in lawful money of the United States
of
America, to the Holder at such address as designated from time to time by
the
Holder in writing to the Company or by electronic wire funds transfer of
immediately available funds pursuant to written instructions provided to
the
Company by the Holder. All amounts due from the Company to the Holder under
this
Note shall be made without benefit of any setoff, counterclaim or other defense.
All payments on this Note shall be applied first to the payment of fees and
expenses, if any, then to accrued but unpaid Interest and then to the payment
of
the Principal Amount.
5. Security.
The
Company’s obligations under this Note are secured, pursuant to and in accordance
with the terms and conditions of (i) that certain Security Agreement dated
as of
the date hereof by and between, the Company, the Holder and the Holders (the
“Security
Agreement”)
and
(ii) that certain Default Agreement, dated even date herewith, issued by
the
Company, in favor of the Holder and the Holders (the “Default
Agreement”).
Forms
of the Security Agreement and the Default Agreement are annexed as Exhibit
E
and
Exhibit
F,
respectively, to the SPA.
-2-
6.
Covenants
of the Company.
The
Company covenants that so long as any of its obligations under the Notes
remain
outstanding and unpaid, the Company shall not without the prior written consent
of the Holders holding a majority of the then outstanding principal amount
of
the Secured Notes (the “Requisite
Holders”):
(a) Indebtedness
of Borrowed Money.
Create,
incur, assume or suffer to exist any indebtedness for borrowed money
except:
|
(i)
|
the
Notes; and
|
|
(ii)
|
the
10% secured promissory notes of the Company in the aggregate principal
amount of $70,000 due March 10,
2009.
|
(b) Limitation
on Contingent Obligations.
Guarantee or otherwise be or become liable directly or indirectly for the
obligations of any other Person whether by agreement to purchase or repurchase
obligations, or by agreement to supply funds for the purpose of enabling
such
other Person to pay any obligations, excluding from this restriction, the
endorsement of negotiable instruments in the ordinary course of business
in the
course of collection.
(c) Dividends.
Except
as expressly provided in the SPA, pay or declare any dividend on any class
of
its securities or make any other distribution or redeem, purchase or otherwise
acquire or retire directly or indirectly any securities, other than redemption
of unvested options or restricted stock redeemed by the Company, at cost,
in
connection upon termination of such persons employment or other engagement
with
the Company.
(d) Sale
of Obligations Owing to the Company.
Sell,
discount or dispose of notes, accounts receivables, or other obligations
owing
to the Company, with or without recourse, other than in the normal course
of
business.
(e) Loans
and Advances to Others.
Make
any loans or advances to any other Person other than loans and advances in
the
ordinary course of the Company’s business.
|
(f)
|
Prohibitions
of Fundamental Changes and Acquisitions.
|
|
(i)
|
issue
any securities or enter into any agreements to issue securities,
or
rights, options or warrants for the issuance of any securities,
other than
(1) issuances under the Company’s 2003 Stock Option Plan, provided that
the Company shall not increase the number of shares eligible for
issuance
thereunder, (2) issuances of Common Stock upon the exercise of
options or
warrants outstanding on the date hereof, (3) pursuant to the SPA,
(4) the
issuance of the Warrants and shares of Common Stock issuable upon
exercise
thereof , (5) the issuance warrants issued to the Placement Agent
in
connection with the transactions contemplated by the SPA and the
shares of
Common Stock issuable upon exercise thereof and (6) issuances pursuant
to
the Joint Venture Agreement, between the Company and Nordic Biotech
Venture Fund II K/S. dated January 31, 2008, as amended from time
to time
(the “JV
Agreement”);
|
-3-
|
(ii)
|
consolidate
with or merge into any other
Person;
|
|
(iii)
|
except
as may otherwise be required under the Default Agreement, sell,
lease,
exchange or otherwise dispose of, any of its securities in one
transaction
or a series of related transactions, or dispose of any of its assets
except in the ordinary course of business or make any material
change in
the present methods of conducting
business;
|
|
(iv)
|
except
as contemplated by the JV Agreement, acquire the business of any
other
Person by way of a purchase of securities or of all or substantially
all
of the assets of such other Person;
and
|
|
(v)
|
form
any subsidiary; dissolve or
liquidate.
|
(g) Limitation
on Liens.
Create,
assume or suffer to exist any Lien of any kind upon any of its property or
assets (including real property leases), income or profits, whether now owned
or
hereafter acquired, except:
|
(i)
|
Liens
existing on the date hereof;
|
|
(ii)
|
Liens
and security interests in favor of Holders securing the Company’s
obligations under the Notes;
|
|
(iii)
|
Liens
for taxes not yet due or which are being contested in good faith
and by
appropriate proceedings, if adequate reserves with respect thereto
are
maintained on the books of the
Company;
|
|
(iv)
|
deposits
to secure the performances of leases, contracts, surety bonds,
performance
bonds and other obligations of like nature incurred in the ordinary
course
of business; and
|
|
(v)
|
carriers’,
warehousemen’s, mechanics’ or other like liens arising in the ordinary
course of business for sums not yet due for a period of more than
thirty
days or which are being contested in good faith and by appropriate
proceedings.
|
(h) Expenditures.
Make
capital expenditures or commitments for such expenditures, in any fiscal
year,
in excess of an aggregate of $50,000 in such year.
(i) Change
in Business.
Engage,
directly or indirectly, in any business other than its current
business.
-4-
(j) Transactions
with Affiliates.
Enter
into any transaction including, without limitation, the purchase, sale or
exchange of property or assets or the rendering or accepting of any service
with
or to any of its Affiliates except with respect to (i) any employment agreement
or amendment to an existing employment agreement, (ii) any transaction with
Hedrin Pharmaceuticals K/S or Hedrin Pharmaceuticals General Partner ApS
or
(iii) in the ordinary course of business and pursuant to the reasonable
requirements of the business of the Company and upon terms not less favorable
to
the Company than it could obtain in a comparable arm’s length transaction with a
third party other than such Affiliate.
7. Events
of Defaults and Remedies
7.1 Event
of Default.
An
“Event
of Default”
shall
exist if any one or more of the following shall occur:
(a) failure
by the Company to pay any of its obligations under the Notes when due, whether
on the date fixed for payment or by acceleration or otherwise; or
(b) if
any
representation or warranty made by the Company in any of the Transaction
Documents or in any certificate, financial or other statement furnished at
the
time of closing or pursuant to any other Transaction Document shall prove
to
have been untrue or misleading in any material respect at the time made which
shall not have been cured within ten (10) days of the Company’s receipt of the
Holder written notice to the Company; or
(c) default
by the Company in the performance or observance of any covenant or agreement
contained in this Note, the SPA and/or in any other Transaction Document
which
is not cured within any applicable grace period for therein, if any;
or
(d) a
final
judgment for the payment of money in excess of $50,000 shall be rendered
against
the Company, and such judgment shall remain undischarged for a period of
sixty
(60) days from the date of entry thereof unless within such sixty (60) day
period such judgment shall be stayed, and appeal taken therefrom and the
execution thereon stayed during such appeal, other than any judgment arising
out
of the enforcement of the arbitration award or otherwise in favor of Swiss
Pharma Contract LTD (as described in the Company’s Confidential Private
Placement Memorandum); or
(e) The
Company shall:
|
(i)
|
apply
for, consent to, or acquiesce in, the appointment of a trustee,
receiver,
sequestrator or other custodian for the Company or any of its properties,
or make a general assignment for the benefit of
creditors;
|
|
(ii)
|
in
the absence of such application, consent or acquiesce in, permit
or suffer
to exist the appointment of a trustee, receiver, sequestrator or
other
custodian for the Company or for any part of its properties, and
such
trustee, receiver, sequestrator or other custodian shall not be
discharged
within thirty (30) days;
|
-5-
|
(iii)
|
permit
or suffer to exist the commencement of any bankruptcy, reorganization,
debt arrangement or other case or proceeding under any bankruptcy
or
insolvency law, or any dissolution, winding up or liquidation proceeding,
in respect of the Company, and, if such case or proceeding is not
commenced by the Company or converted to a voluntary case, such
case or
proceeding shall be consented to or acquiesced in by the Company
or shall
result in the entry of an order for relief or shall remain for
sixty (60)
days undismissed; or
|
|
(iv)
|
take
any corporate action authorizing, or in furtherance of, any of
the
foregoing;
|
(f) the
Security Agreement shall cease at any time after its execution and delivery
and
for any reason to create a valid first priority security interest in and
to the
property subject thereto or the validity or priority of such security interest
shall be contested by the Company or any of its Affiliates or by any other
Person; or any of the other Transaction Documents shall at any time after
their
execution and delivery for any reason cease to be in full force and effect
or
shall be declared null or void, or the validity or enforceability thereof
shall
be contested by the Company or any of its Affiliates or by any other
Person.
(g) Cross-Default.
The
Company shall default in the payment when due (including any applicable grace
period) of any amount payable under any other obligation of the Company for
money borrowed in excess of $50,000, which default shall continue uncured
for
three (3) business days;
(h) Cross-Acceleration.
Any
indebtedness for borrowed money of the Company (1) shall be duly declared
to be or shall become due and payable prior to the stated maturity thereof
or
(2) shall not be paid as and when the same becomes due and payable
including any applicable grace period, except in each case with respect to
trade
payables and expense accruals;
7.2 Remedies.
Upon
the occurrence of an Event of Default, specified in Section
7.1(e)
above,
the outstanding Principal Amount of this Note and all other obligations
hereunder shall automatically be and become immediately due and payable,
without
notice or demand. Upon the occurrence of an Event of Default other than those
specified in Section
7.1(e),
the
Requisite Holders and/or the Placement Agent may declare, at their option,
so
long as the Event of Default is continuing at the time notice thereof is
given,
upon five (5) days’ notice or demand, the Secured Notes to be immediately due
and payable. In any case, the Secured Notes shall become due and payable
without
presentment, demand or protest, all of which are hereby expressly waived.
Upon
the occurrence of an Event of Default and after the expiration of any grace
period therefor specified herein, the Holder and/or the Placement Agent shall
thereupon have, in addition to any rights it may have to proceed directly
against the Company as a result of such default, the rights, benefits, and
remedies afforded to it under any of the Transaction Documents. The Company
agrees that the Holder and the Placement Agent may or may not proceed, as
each
determines in their sole discretion, with any or all other rights, benefits,
and
remedies which they may have against the Company. The rights afforded to
the
Holder and the Placement Agent under all of the foregoing shall be
cumulative.
-6-
8. Amendments
and Waivers.
(a) The
provisions of this Note may from time to time be amended, modified or waived,
if
such amendment, modification or waiver is in writing and consented to in
writing
by the Company and the Requisite Holders, provided, that any such amendment,
modification or waiver must apply to all outstanding Secured Notes.
(b) No
failure or delay on the part of the Holder to exercise any right, power or
privilege under this Note and no course of dealing between the Company and
the
Holder shall impair such right, power or privilege or operate as a waiver
of any
default or an acquiescence therein, nor shall any single or partial exercise
of
any such right, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. No notice
to or
demand on the Company in any case shall entitle it to any notice or demand
in
similar or other circumstances. No waiver or approval by the Requisite Holders
shall, except as may be otherwise stated in such waiver or approval, be
applicable to subsequent transactions. No waiver or approval hereunder shall
require any similar or dissimilar waiver or approval thereafter to be granted
hereunder.
(c) To
the
extent that the Company makes a payment or payments to the Holder, and such
payment or payments or any part thereof are subsequently for any reason
invalidated, set aside and/or required to be repaid to a trustee, receiver
or
any other party under any bankruptcy law, state or federal law, common law
or
equitable cause, then to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied, and all rights and remedies
therefor, 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.
(d) After
any
waiver, amendment or supplement under this section becomes effective, the
Company shall mail to the Holder a copy thereof.
9.
Miscellaneous.
(a) Parties
in Interest.
All
covenants, agreements and undertakings in this Note binding upon the Company
or
the Holder shall bind and inure to the benefit of the successors and permitted
assigns of the Company and the Payee, respectively, whether so expressed
or
not.
(b) Notices. Except
as
may be otherwise provided herein, all notices, requests, waivers and other
communications made pursuant to this Note shall be in writing and shall be
conclusively deemed to have been duly given (a) when hand delivered to the
other
party; (b) when received when sent by facsimile at the address and number
set
forth below; (c) three (3) business days after deposit in the U.S. mail with
first class or certified mail, return receipt requested, postage prepaid,
and
addressed to the other party as set forth below; or (d) the next business
day
after deposit with a national overnight delivery service, postage prepaid,
addressed to the parties as set forth below with next-business-day delivery
guaranteed, provided that the sending party receives a confirmation of delivery
from the delivery service provider.
-7-
|
To
Holder:
|
To
the Company:
|
|
Manhattan
Pharmaceuticals, Inc.
|
|
|
48
Wall Street, Suite 1100
New
York, New York 10005
|
|
|
Attn:
Douglas Abel
Chief Executive Officer
|
|
|
Fax
Number:
|
Fax
Number: (212) 582-3957
|
(c) Notice
of Certain Transactions.
In case
at any time:
(i) There
shall be any capital reorganization of the Company, or a sale of all or
substantially all of the assets of the Company, or a consolidation or merger
of
the Company with another corporation (other than a merger with a wholly owned
subsidiary of the Company in which merger the Company is the continuing
corporation and which does not result in any reclassification); or
(ii) There
shall be a voluntary or involuntary dissolution; liquidation or winding-up
of
the Company; or
(iii) The
occurrence of an Event of Default, a default and/or breach of any provision
of
this Note and/or any Transaction Document and/or any event occurs that with
the
passage of time or otherwise could result in an Event of Default;
then,
in
any one or more of said cases, the Company shall cause to be mailed to the
Holder at the earliest practicable time (and, in any event not less than
twenty
(20) days before any record date or other date set for definitive action,
if any
need be taken), written notice of the date on which the books of the Company
shall close for such reorganization, reclassification, sale, consolidation,
merger or dissolution, liquidation or winding-up shall take place, as the
case
may be. Such notice shall also set forth such facts as shall indicate the
effect
of such action (to the extent such effect may be known at the date of such
notice) on this Note.
Nothing
herein shall be construed as the consent of the Holder to any action otherwise
prohibited by the terms of this Note or as a waiver of any such
prohibition.
(d) Expenses. The
Company agrees to pay all costs and expenses, including, but not limited
to,
reasonable attorneys’ fees and costs of suit and preparation therefor (as and
when incurred), incurred in connection with the collection and enforcement
of
this Note.
(e) Assignment.
The
rights, interests and obligations hereunder may not be assigned, by operation
of
law or otherwise, in whole or in part, by the Company without the prior written
consent of the Holder. The Holder is entitled to assign its rights hereunder,
subject to compliance with applicable securities laws.
-8-
(f) Partial
Invalidity.
In case
any one or more of the provisions of this Note shall be invalid or unenforceable
in any respect, the validity and enforceability of the remaining terms and
provisions of this Note shall not in any way be affected or impaired thereby
and
the parties will attempt in good faith to agree upon a valid and enforceable
provision which shall be a commercially reasonable substitute therefor, and
upon
so agreeing, shall incorporate such substitute provision in this
Note.
(g) Governing
Law; Venue; Waiver Of Jury Trial.
This
Note shall be governed by and construed exclusively in accordance with the
internal laws of the State of New York without regard to the conflicts of laws
principles thereof. The parties hereto hereby expressly and irrevocably agree
that any suit or proceeding arising directly and/or indirectly pursuant to,
arising out of or under this Note, shall be brought solely and exclusively
in a
federal or state court located in the City, County and State of New York.
By its
execution hereof, the parties hereby expressly covenant and irrevocably submit
to the in personam jurisdiction of the federal and state courts located in
the
City, County and State of New York and agree that any process in any such
action
may be served upon any of them personally, or by certified mail or registered
mail upon them or their agent, return receipt requested, with the same full
force and effect as if personally served upon them in New York City. The
parties
hereto expressly and irrevocably waive any claim that any such jurisdiction
is
not a convenient forum for any such suit or proceeding and any defense or
lack
of in personam jurisdiction with respect thereto. In the event of any such
action or proceeding (including, but not limited to, any motions made), the
party prevailing therein shall be entitled to payment from the other party
hereto of its reasonable counsel fees and disbursements. The Company and
Holders
hereby waive all rights to a trial by jury.
(h) Titles
and Subtitles. The
titles of the paragraphs and subparagraphs of this Note are for convenience
of
reference only and are not to be considered in construing this
Note.
[Signature
Page Follows]
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IN
WITNESS WHEREOF,
this
Note has been executed and delivered on the date specified above by the duly
authorized representative of the Company.
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Manhattan
Pharmaceuticals, Inc.
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By:
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Name:
Michael McGuinness
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Title:
Chief Financial Officer
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