MANHATTAN PHARMACEUTICALS, INC. Subscription Agreement
Exhibit
10.35
MANHATTAN
PHARMACEUTICALS, INC.
Manhattan
Pharmaceuticals, Inc.
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Ladies
and Gentlemen:
1. Subscription. The
undersigned (the “Purchaser”), intending to be legally bound, hereby irrevocably
agrees to purchase from Manhattan Pharmaceuticals, Inc., a Delaware corporation
(the “Company”), the number of units (the “Units”) of the Company set forth on
the signature page hereof at a purchase price of $25,000 per
Unit. This subscription is submitted to you in accordance with and
subject to the terms and conditions described in this Subscription Agreement and
the Confidential Private Placement Memorandum, dated December 28, 2009, as may
amended or supplemented from time to time, including all attachments, schedules
and exhibits thereto (the “Memorandum,” and, together with this Subscription
Agreement, the “Offering Documents”) and relating to the offering (the
“Offering”) by the Company of a minimum of 100 Units ($2,500,000) and a maximum
of 160 Units ($4,000,000) with the right at the sole discretion of the Company
and the Placement Agent to increase the maximum by an additional 40 Units
($1,000,000) (the “Overallotment”). Each Unit is being offered at a
price of $25,000 per Unit and consists of (i) 357,143 shares of common stock,
$0.001 par value per share (the “Common Stock” or “Shares”) of the Company and
(ii) 535,714 warrants (each a “Warrant” and collectively the “Warrants”), each
of which will entitle the holder to purchase one additional share of Common
Stock (each a “Warrant Share” and collectively the “Warrant
Shares”). The Shares, the Warrants and the Warrant Shares may be
collectively referred to in this Subscription Agreement as the
"Securities". The Units are being offered on an exclusive basis
through National Securities Corporation (the “Placement Agent”). The
minimum subscription for a Purchaser in the Offering is one Unit ($25,000);
provided, however, that Placement Agent
and the Company, in their sole discretion, may waive such minimum subscription
requirement from time to time.
2. Payment. The
Purchaser encloses herewith a check payable to, or will immediately make a wire
transfer payment to “Signature Bank, Escrow Agent for Manhattan
Pharmaceuticals, Inc.” in the full amount of the purchase price of the Units
being subscribed for. Such funds will be held for the Purchaser's
benefit, and will be returned promptly, without interest or offset if this
Subscription Agreement is not accepted by the Company or the Offering is
terminated pursuant to its terms or by the Company or the Placement
Agent. Together with a check for, or wire transfer of, the full
purchase price, the Purchaser is delivering (i) a completed and executed Omnibus
Signature Page to this Subscription Agreement and the Registration Rights
Agreement and (ii) an Investor Questionnaire and Investor Profile, which is
annexed hereto.
3. Deposit of
Funds. All payments made as provided in Section 2 hereof shall
be deposited by the Company or the Placement Agent as soon as practicable with
the Escrow Agent, in a non-interest-bearing escrow account (the “Escrow
Account”) until the earliest to occur of (a) the occurrence of a closing, the
first of which shall not occur until $2,500,000 of Units are sold (the “First
Closing”), (b) the rejection of such subscription, or (c) the termination of the
Offering by the Company or the Placement Agent. The Company and the
Placement Agent may continue to offer and sell the Units and conduct additional
closings (each, a “Closing”) for the sale of additional Units after the First
Closing and until the termination of the Offering. In the event that the Company
does not effect a Closing (as defined below), on or before February 28, 2010
(the “Initial Offering Period”), which period may be extended by the Company and
the Placement Agent, in their mutual discretion to a date no later than March
28, 2010 (the “Termination Date”, with this additional period, together with the
Initial Offering Period, being referred to herein as the “Offering Period”), the
Company will refund all subscription funds, without deduction and/or interest
accrued thereon, and will return the subscription documents to each
Purchaser. If the Company and/or the Placement Agent rejects a
subscription, either in whole or in part (which decision is in their sole
discretion), the rejected subscription funds or the rejected portion thereof
will be returned promptly to such Purchaser without interest accrued
thereon.
4. Acceptance of
Subscription. The Purchaser understands and agrees that the
Company and the Placement Agent, in their discretion reserve the right to accept
or reject this or any other subscription for Units, in whole or in part,
notwithstanding prior receipt by the Purchaser of notice of acceptance of this
or any other subscription. The Company shall have no obligation
hereunder until the Company shall execute and deliver to the Purchaser an
executed copy of this Subscription Agreement. If this subscription is
rejected in whole, or the Offering is terminated, all funds received from the
Purchaser will be returned without interest, penalty, expense or deduction, and
this Subscription Agreement shall thereafter be of no further force or
effect. If this subscription is rejected in part, the funds for the
rejected portion of this subscription will be returned without interest,
penalty, expense or deduction, and this Subscription Agreement will continue in
full force and effect to the extent this subscription was accepted.
5. Representations and Warranties of the
Purchaser. The Purchaser hereby acknowledges, represents,
warrants, and agrees as follows:
(a) None
of the Units or the Securities contained in the Units offered pursuant to the
Offering Documents are registered under the Securities Act of 1933, as amended
(the “Securities Act”), or any state securities laws. The Purchaser
understands that the offering and sale of the Units contemplated hereby is
intended to be exempt from registration under the Securities Act, by virtue of
Section 4(2) thereof and the provisions of Regulation D promulgated thereunder,
based, in part, upon the truth and accuracy of, and compliance with,
representations, warranties and agreements of the Purchaser contained in this
Subscription Agreement;
(b) The
Purchaser and the Purchaser’s attorney, accountant, purchaser representative
and/or tax advisor, if any (collectively, the “Advisors”), acknowledges that it
has received the Offering Documents, either in hard copy or electronically, and
all other documents requested by the Purchaser, has carefully reviewed them and
understands the information contained therein, and the Purchaser and the
Advisors, if any, prior to the execution of this Subscription Agreement, have
had access to the same kind of information as would be available in a
registration statement filed by the Company under the Securities
Act. Purchaser’s decision to enter into this Subscription Agreement
and the other Transaction Documents (as defined herein) has been made based
solely on the independent evaluation of the Purchaser and its Advisors, if
any;
(c) Neither
the Securities and Exchange Commission (the “SEC”) nor any state securities
commission or other regulatory body has approved the Units, Shares or Warrants
or passed upon or endorsed the merits of the Offering or confirmed the accuracy
or determined the adequacy of the Offering Documents. Any
representation to the contrary is a criminal offense. The Offering
Documents have not been reviewed by any federal, state or other regulatory
authority. The Units, and the Securities are subject to restrictions
on transferability and resale and may not be transferred or resold except as
permitted under the Securities Act, and the applicable state securities laws,
pursuant to registration or exemption therefrom;
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(d) All
documents, records, and books pertaining to the investment in the Units
(including, without limitation, the Offering Documents) have been made
available, subject to certain confidentiality restrictions, for inspection by
the Purchaser and its Advisors, if any;
(e) The
Purchaser and its Advisors, if any, have had a reasonable opportunity to ask
questions of and receive answers from a person or persons acting on behalf of
the Company concerning the offering of the Units and the business, financial
condition, and results of operations of the Company, and all such questions have
been answered by representatives of the Company to the full satisfaction of the
Purchaser and its Advisors, if any, and the Purchaser and its Advisors have had
access, through the Memorandum and/or the ▇▇▇▇▇ system, to true and complete
copies of the Company’s most recent Annual Report on Form 10-K for the fiscal
year ended December 31, 2008 (the “10-K”) and all other reports
filed by the Company pursuant to the Securities Exchange Act of 1934, as
amended, since the filing of the 10-K and prior to the date hereof
and have reviewed such filings;
(f) In
evaluating the suitability of an investment in the Company, the Purchaser has
not relied upon any representation or other information (oral or written) other
than as stated in the Offering Documents or as contained in documents so
furnished to the Purchaser or its Advisors, if any, by the Company or the
Placement Agent;
(g) The
Purchaser is unaware of, is in no way relying on, and did not become aware of
the offering of the Units directly or indirectly through or as a result of, any
form of general solicitation or general advertising including, without
limitation, any press release, filing with the SEC, article, notice,
advertisement or other communication published in any newspaper, magazine or
similar media or broadcast over television, radio or the internet, in connection
with the offering and sale of the Units and is not subscribing for Units and did
not become aware of the offering of the Units through or as a result of any
seminar or meeting to which the Purchaser was invited by, or any solicitation of
a subscription by, a person not previously known to the Purchaser in connection
with investments in securities generally;
(h) The
Purchaser has taken no action which would give rise to any claim by any person
for brokerage commissions, finder’ fees or the like relating to this
Subscription Agreement or the transactions contemplated hereby (other than
commissions and other compensation to be paid by the Company to the Placement
Agent or as otherwise described in the Offering Documents);
(i) The
Purchaser's decision to enter into this Subscription Agreement and the
Registration Rights Agreement has been made based solely on the independent
evaluation of the Purchaser and its own Advisors, if any, and the Purchaser,
either alone or together with its Advisors, if any, has such knowledge and
experience in financial, tax, and business matters, and, in particular,
investments in securities, so as to enable it to utilize the information made
available to it in connection with the Offering to evaluate the merits and risks
of an investment in the Units and the Company and to make an informed investment
decision with respect thereto;
(j) The
Purchaser is not relying on the Company, the Placement Agent or any of their
respective employees or agents with respect to the legal, tax, economic and
related considerations of an investment in the Units, and the Purchaser has
relied on the advice of, or has consulted with, only its own Advisors, if
any;
(k) The Purchaser 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 Purchaser is a member of FINRA,
or associated or affiliated with a member of FINRA, such Purchaser agrees, if
requested by FINRA, to sign a lock-up, the form of which shall be satisfactory
to FINRA with respect to the Shares, Warrants and the Warrant
Shares. Furthermore, the Purchaser is not an underwriter of the
Common Stock, nor is it an affiliate of an underwriter of the Common
Stock.
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(l) The
Purchaser is acquiring the Units solely for such Purchaser's own account for
investment purposes only and not with a view to or intent of resale or
distribution thereof, in whole or in part. The Purchaser has no
agreement or arrangement, formal or informal, with any person to sell or
transfer all or any part of the Units, the Shares, the Warrants or the Warrant
Shares, and the Purchaser has no plans to enter into any such agreement or
arrangement;
(m) The
purchase of the Units represents a high risk capital investment and the
Purchaser is able to afford an investment in a speculative venture having the
risks and objectives of the Company. The Purchaser must bear the
substantial economic risks of the investment in the Units indefinitely because
none of the Units, the Shares, the Warrants or the Warrant Shares may be sold,
hypothecated or otherwise disposed of unless subsequently registered under the
Securities Act and applicable state securities laws or an exemption from such
registration is available. Legends shall be placed on the Units, the
Shares, the Warrants and the Warrant Shares to the effect that they have not
been registered under the Securities Act or applicable state securities laws and
appropriate notations thereof will be made in the Company's
books. Stop transfer instructions will be placed with the transfer
agent of the Shares, if any, or with the Company. There can be no
assurance that there will be any market for resale of the Units, the Shares, the
Warrants or the Warrant Shares. The Company has agreed that
purchasers of the Units will have, with respect to the Shares and the Warrant
Shares, the registration rights described in the Registration Rights Agreement
in the form annexed to the Memorandum;
(n) The
Purchaser has adequate means of providing for such Purchaser's current financial
needs and foreseeable contingencies and has no need for liquidity of its
investment in the Securities for an indefinite period of time;
(o) The
Purchaser is aware that an investment in the Units involves a number of very
significant risks and has carefully read and considered the matters set forth
under the caption “Risk Factors” in the Offering Documents, and, in particular,
acknowledges that the Company has a limited operating history and limited
assets, the Company has not had any revenues from product sales to date, the
Company has incurred loses since its inception in 1993, the Company is engaged
in a highly competitive business and the Company's independent registered public
accounting firm has included an explanatory paragraph in its opinion on the
Company’s financial statements for the fiscal years ended December 31, 2008,
expressing doubt as to the Company's ability to continue as a going
concern;
(p) The
Purchaser meets the requirements of at least one of the suitability standards
for an “accredited investor” as that term is defined in Regulation D under the
Securities Act, and has truthfully and accurately completed the Investor
Questionnaire attached hereto;
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(q) The
Purchaser: (i) if a natural person, represents that the Purchaser has reached
the age of 21 and has full power and authority to execute and deliver this
Subscription Agreement and all other related agreements or certificates and to
carry out the provisions hereof and thereof; (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, the consummation of the transactions
contemplated hereby is authorized by, and will not result in a violation of any
law applicable to it or its charter or other organizational documents, such
entity has full power and authority to execute and deliver this Subscription
Agreement and all other related agreements or certificates and to carry out the
provisions hereof and thereof and to purchase and hold the Units and the
Securities, the execution and delivery of this Subscription Agreement has been
duly authorized by all necessary action, this Subscription Agreement has been
duly executed and delivered on behalf of such entity and is a legal, valid and
binding obligation of such entity; or (iii) if executing this Subscription
Agreement in a representative or fiduciary capacity, represents that it has full
power and authority to execute and deliver this Subscription Agreement in such
capacity and on behalf of the subscribing individual, ▇▇▇▇, partnership, trust,
estate, corporation, or limited liability company or partnership, or other
entity for whom the Purchaser is executing this Subscription Agreement, and such
individual, partnership, ▇▇▇▇, trust, estate, corporation, or limited liability
company or partnership, or other entity has full right and power to perform
pursuant to this Subscription Agreement and make an investment in the Company,
and represents that this Subscription Agreement constitutes a legal, valid and
binding obligation of such entity. The execution and delivery of this
Subscription Agreement will not violate or be in conflict with any order,
judgment, injunction, agreement or controlling document to which the Purchaser
is a party or by which it is bound;
(r) The
Purchaser and the Advisors, if any, have had the opportunity to obtain any
additional information, to the extent the Company had such information in its
possession or could acquire it without unreasonable effort or expense, necessary
to verify the accuracy of the information contained in the Offering Documents
and all documents received or reviewed in connection with the purchase of the
Units and have had the opportunity to have representatives of the Company
provide them with such additional information regarding the terms and conditions
of this particular investment and the financial condition, results of
operations, business and prospects of the Company deemed relevant by the
Purchaser or the Advisors, if any, and all such requested information, to the
extent the Company had such information in its possession or could acquire it
without unreasonable effort or expense, has been provided by the Company to the
full satisfaction of the Purchaser and the Advisors, if any;
(s) Any
information which the Purchaser has heretofore furnished or is furnishing
herewith to the Company or the Placement Agent is complete and accurate and may
be relied upon by the Company and the Placement Agent in determining the
availability of an exemption from registration under Federal and state
securities laws in connection with the Offering. The Purchaser
further represents and warrants that it will notify and supply corrective
information to the Company and the Placement Agent immediately upon the
occurrence of any change therein occurring prior to the Company's issuance of
the securities underlying the Units;
(t) The
Purchaser has significant prior investment experience, including investments in
high risk securities. The Purchaser is knowledgeable about
investments in small and thinly capitalized, development stage
companies. The Purchaser has a sufficient net worth to sustain a loss
of its entire investment in the Company in the event such a loss should
occur. The Purchaser's overall commitment to investments which are
not readily marketable is not excessive in view of the Purchaser’s net worth and
financial circumstances and the purchase of the Units will not cause such
commitment to become excessive. The investment is a suitable one for
the Purchaser;
(u) The
Purchaser is satisfied that the it has received adequate information with
respect to all matters which it or the Advisors, if any, consider material to
its decision to make this investment;
(v) The
Purchaser acknowledges that any estimates or forward-looking statements or
projections included in the Offering Documents were prepared by the Company in
good faith but that the attainment of any such projections, estimates or
forward-looking statements cannot be guaranteed and will not be updated by the
Company and should not be relied upon;
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(w) No
oral or written representations have been made, or oral or written information
furnished, to the Purchaser or its Advisors, if any, in connection with the
Offering which are in any way inconsistent with the information contained in the
Offering Documents;
(x) Within
five (5) business days after receipt of a request from the Company or the
Placement Agent, the Purchaser will provide such information and deliver such
documents as may reasonably be necessary to comply with any and all laws and
ordinances to which the Company or the Placement Agent is subject;
(y) The
Purchaser’s substantive relationship with the Company, the Placement Agent or
subagent through which the Purchaser is subscribing for Units predates the
Company’s, Placement Agent’s or such subagent's contact with the Purchaser
regarding an investment in the Units;
(z) THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATES AND ARE BEING OFFERED AND
SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT
AND SUCH LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY
OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED
UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE
OFFERING DOCUMENTS. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL;
(aa) Other
than with respect to the transactions contemplated herein, since the earlier to
occur of (i) the time that the Purchaser was first contacted by the Company, the
Placement Agent or any other person regarding an investment in the Company and
(ii) the thirtieth (30th) day
prior to the date hereof, neither the Purchaser nor any affiliate of the
Purchaser which (i) had knowledge of the transactions contemplated hereby, (ii)
has or shares discretion relating to the Purchaser’s investments or trading or
information concerning the Purchaser’s investments, including in respect of the
Securities, or (iii) is subject to the Purchaser’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 the Purchaser 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”).
(bb) The
Purchaser understands that affiliates and/or employees of the Placement Agent
(i) beneficially own in the aggregate approximately 7,883,085 shares of Common
Stock, (ii) will receive the compensation set forth elsewhere in the Offering
Documents 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.
(cc) (For ERISA plans
only) The fiduciary of the ERISA plan represents
that such fiduciary has been informed of and understands the Company’s
investment objectives, policies and strategies, and that the decision to invest
“plan assets” (as such term is defined in ERISA) in the Company is consistent
with the provisions of ERISA that require diversification of plan assets and
impose other fiduciary responsibilities. The Purchaser fiduciary or
Plan (a) is responsible for the decision to invest in the Company; (b) is
independent of the Company or any of its affiliates; (c) is qualified to make
such investment decision; and (d) in making such decision, the Purchaser
fiduciary or Plan has not relied primarily on any advice or recommendation of
the Company or any of its affiliates;
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(dd) The Purchaser should check the Office
of Foreign Assets Control (“OFAC”) website at <▇▇▇▇://▇▇▇.▇▇▇▇▇.▇▇▇/▇▇▇▇>
before making the following representations. The Purchaser represents
that the amounts invested by it in the Company in the Offering were not and are
not directly or indirectly derived from activities that contravene federal,
state or international laws and regulations, including anti-money laundering
laws and regulations. Federal regulations and Executive Orders administered by
OFAC prohibit, among other things, the engagement in transactions with, and the
provision of services to, certain foreign countries, territories, entities and
individuals. The lists of OFAC prohibited countries, territories,
persons and entities can be found on the OFAC website at
<▇▇▇▇://▇▇▇.▇▇▇▇▇.▇▇▇/▇▇▇▇>. In addition, the programs
administered by OFAC (the “OFAC Programs”) prohibit dealing with
individuals1 or
entities in certain countries regardless of whether such individuals or entities
appear on the OFAC lists;
(ee) To the best of the Purchaser’s
knowledge, none of: (1) the Purchaser; (2) any person controlling or controlled
by the Purchaser; (3) if the Purchaser is a privately-held entity, any person
having a beneficial interest in the Purchaser; or (4) any person for whom the
Purchaser is acting as agent or nominee in connection with this investment is a
country, territory, individual or entity named on an OFAC list, or a person or
entity prohibited under the OFAC Programs. Please be advised that the
Company may not accept any amounts from a prospective investor if such
prospective investor cannot make the representation set forth in the preceding
paragraph. The Purchaser agrees to promptly notify the Company and
the Placement Agent should the Purchaser become aware of any change in the
information set forth in these representations. The Purchaser
understands and acknowledges that, by law, the Company may be obligated to
“freeze the account” of the Purchaser, either by prohibiting additional
subscriptions from the Purchaser, declining any redemption requests and/or
segregating the assets in the account in compliance with governmental
regulations, and the Placement Agent may also be required to report such action
and to disclose the Purchaser’s identity to OFAC. The Purchaser
further acknowledges that the Company may, by written notice to the Purchaser,
suspend the redemption rights, if any, of the Purchaser if the Company
reasonably deems it necessary to do so to comply with anti-money laundering
regulations applicable to the Company and the Placement Agent or any of the
Company’s other service providers. These individuals include
specially designated nationals, specially designated narcotics traffickers and
other parties subject to OFAC sanctions and embargo programs;
(ff) To the best of the Purchaser’s
knowledge, none of: (1) the Purchaser; (2) any person controlling or controlled
by the Purchaser; (3) if the Purchaser is a privately-held entity, any person
having a beneficial interest in the Purchaser; or (4) any person for whom the
Purchaser is acting as agent or nominee in connection with this investment is a
senior foreign political figure2, or
any immediate family3
member or
close associate4 of a
senior foreign political figure, as such terms are defined in the footnotes
below; and
1 These individuals include
specially designated nationals, specially designated narcotics traffickers and
other parties subject to OFAC sanctions and embargo
programs.
2 A “senior foreign
political figure” is defined as a senior official in the executive, legislative,
administrative, military or judicial branches of a foreign government (whether
elected or not), a senior official of a major foreign political party, or a
senior executive of a foreign government-owned corporation. In addition, a
“senior foreign political figure” includes any corporation, business or other
entity that has been formed by, or for the benefit of, a senior foreign
political figure.
3 “Immediate family” of a
senior foreign political figure typically includes the figure’s parents,
siblings, spouse, children and in-laws.
4 A “close associate” of a senior foreign
political figure is a person who is widely and publicly known to maintain an
unusually close relationship with the senior foreign political figure, and
includes a person who is in a position to conduct substantial domestic and
international financial transactions on behalf of the senior foreign political
figure.
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(gg) If
the Purchaser is affiliated with a non-U.S. banking institution (a “Foreign
Bank”), or if the Purchaser receives deposits from, makes payments on behalf of,
or handles other financial transactions related to a Foreign Bank, the Purchaser
represents and warrants to the Company that: (1) the Foreign Bank has a fixed
address, other than solely an electronic address, in a country in which the
Foreign Bank is authorized to conduct banking activities; (2) the Foreign Bank
maintains operating records related to its banking activities; (3) the Foreign
Bank is subject to inspection by the banking authority that licensed the Foreign
Bank to conduct banking activities; and (4) the Foreign Bank does not provide
banking services to any other Foreign Bank that does not have a physical
presence in any country and that is not a regulated affiliate.
6. Representations, Warranties and
Covenants of the Company. The Company hereby represents,
warrants, acknowledges and agrees as follows:
(a) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company is not in
violation of any of the provisions of its certificate of incorporation, by-laws
or other organizational or charter documents (the “Internal
Documents”). Except as described in the Memorandum, the Company has no
subsidiaries and does not have an equity interest in any other firm,
partnership, association or other entity. The Company is qualified to
transact business as a foreign corporation and is in good standing under the
laws of each jurisdiction where the location of its properties or the conduct of
its business makes such qualification necessary, except where the failure to be
so qualified would not have a Material Adverse Effect.
(b) The
Company has all power and authority to: (i) conduct its business as presently
conducted and as proposed to be conducted (as described in the Memorandum); (ii)
enter into and perform its obligations under this Subscription
Agreement, the Warrants and the Registration Rights Agreement
(collectively, the “Transaction Documents”); and (iii) issue, sell and deliver
the Units. The execution and delivery of each of the Transaction
Documents has been duly authorized by the necessary corporate
action. This Subscription Agreement has been duly executed and when
delivered will constitute, and each of the other Transaction Documents, upon due
execution and delivery, will constitute, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms (i) except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting creditors’ rights generally, including the
effect of statutory and other laws regarding fraudulent conveyances and
preferential transfers, and except that no representation is made herein
regarding the enforceability of the Company’s obligations to provide
indemnification and contribution remedies under the securities laws and (ii)
subject to the limitations imposed by general equitable principles (regardless
of whether such enforceability is considered in a proceeding at law or in
equity).
8.
Registration
Rights. Purchaser shall have the registration rights described
in the Registration Rights Agreement in the form annexed to the Memorandum as
Exhibit C.
9. Indemnification. The
Purchaser agrees to indemnify and hold harmless the Company, the Placement
Agent, and their respective officers, directors, employees, agents, attorneys,
control persons and affiliates from and against all losses, liabilities, claims,
damages, costs, fees and expenses whatsoever (including, but not limited to, any
and all expenses incurred in investigating, preparing or defending against any
litigation commenced or threatened) based upon or arising out of any actual or
alleged false acknowledgment, representation or warranty, or misrepresentation
or omission to state a material fact, or breach by the Purchaser of any covenant
or agreement made by the Purchaser herein or in any other document delivered in
connection with this Subscription Agreement.
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10. Irrevocability; Binding
Effect. The Purchaser hereby acknowledges and agrees that the
subscription hereunder is irrevocable by the Purchaser, except as required by
applicable law, and that this Subscription Agreement shall survive the death or
disability of the Purchaser and shall be binding upon and inure to the benefit
of the parties and their heirs, executors, administrators, successors, legal
representatives, and permitted assigns. If the Purchaser is more than
one person, the obligations of the Purchaser hereunder shall be joint and
several and the agreements, representations, warranties, and acknowledgments
herein shall be deemed to be made by and be binding upon each such person and
such person's heirs, executors, administrators, successors, legal
representatives, and permitted assigns.
11. Modification. Any
of the terms or provisions of this Subscription Agreement shall not be modified
or waived except by an instrument in writing signed by the party against whom
any such modification or waiver is sought.
12. Immaterial Modifications to the Transaction
Documents. The Company may, at any time prior to the First
Closing, amend the Transaction Documents if necessary to clarify any provision
therein, without first providing notice or obtaining prior consent of the
Purchaser, if, and only if, such modification is not material in any
respect.
13. Notices. Any notice
or other communication required or permitted to be given hereunder shall be in
writing and shall be mailed by certified mail, return receipt requested, or
delivered against receipt to the party to whom it is to be given (a) if to the
Company, at the address set forth above, or (b) if to the Purchaser, at the
address set forth on the signature page hereof (or, in either case, to such
other address as the party shall have furnished in writing in accordance with
the provisions of this Section 13). Any notice or other communication
given by certified mail shall be deemed given at the time of certification
thereof, except for a notice changing a party's address which shall be deemed
given at the time of receipt thereof.
14. Assignability. This
Subscription Agreement and the rights, interests and obligations hereunder are
not transferable or assignable by the Purchaser and the transfer or assignment
of the Units shall be made only in accordance with all applicable
laws.
15. Applicable
Law. This Subscription Agreement shall be governed by and
construed under the laws of the State of New York as applied to agreements among
New York residents entered into and to be performed entirely within New
York. Each of the parties hereto (1) agree that any legal suit,
action or proceeding arising out of or relating to this Agreement shall be
instituted exclusively in the state or federal courts located in New York
County, New York, (2) waive any objection which the Company may have now or
hereafter to the venue of any such suit, action or proceeding, and
(3) irrevocably consent to the jurisdiction of such courts in any such
suit, action or proceeding. Each of the parties hereto further agrees
to accept and acknowledge service of any and all process which may be served in
any such suit, action or proceeding in such courts and agree that service of
process upon it mailed by certified mail to its address shall be deemed in every
respect effective service of process upon it, in any such suit, action or
proceeding. THE PARTIES HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS SUBSCRIPTION AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED
HEREBY.
9
16. Blue Sky
Qualification. The purchase of Units under this Subscription
Agreement is expressly conditioned upon the exemption from qualification of the
offer and sale of the Units from applicable federal and state securities
laws. The Company shall not be required to qualify this transaction
under the securities laws of any jurisdiction and, should qualification be
necessary, the Company shall be released from any and all obligations to
maintain its offer, and may rescind any sale contracted, in the
jurisdiction.
17. Use of
Pronouns. All pronouns and any variations thereof used herein
shall be deemed to refer to the masculine, feminine, neuter, singular or plural
as the identity of the person or persons referred to may require.
18. Confidentiality. The
Purchaser acknowledges and agrees that any information or data the Purchaser has
acquired from or about the Company, not otherwise properly in the public domain,
was received in confidence (the “Confidential
Information”). Any distribution of the Confidential
Information to any person other than the Purchaser named above, in whole or in
part, or the reproduction of the Confidential Information, or the divulgence of
any of its contents (other than to the Purchaser’s tax and financial advisers,
attorneys and accountants, who will likewise be required to maintain the
confidentiality of the Confidential Information) is unauthorized, except that
any Purchaser (and each employee, representative, or other agent of such
Purchaser) may disclose to any and all persons, without limitations of any kind
(except as provided in the next sentence) the tax treatment and tax structure of
the transaction and all materials of any kind (including opinions or other tax
analyses) that are provided to the Purchaser relating to such tax treatment and
tax structure. Any such disclosure of the tax treatment, tax
structure and other tax-related materials shall not be made for the purpose of
offering to sell the Units offered hereby or soliciting an offer to purchase any
such securities. Except as provided above with respect to tax
matters, the above named Purchaser agrees not to divulge, communicate or
disclose, except as may be required by law or for the performance of this
Subscription Agreement, or use to the detriment of the Company or for the
benefit of any other person or persons, or misuse in any way, any Confidential
Information of the Company, including any scientific, technical, trade or
business secrets of the Company and any scientific, technical, trade or business
materials that are treated by the Company as confidential or proprietary,
including, but not limited to, ideas, discoveries, inventions, developments and
improvements belonging to the Company and confidential information obtained by
or given to the Company about or belonging to third parties.
19. Miscellaneous.
(a) The
Offering Documents, together with the Transaction Documents, constitute the
entire agreement between the Purchaser and the Company with respect to the
subject matter hereof and supersede all prior oral or written agreements and
understandings, if any, relating to the subject matter hereof.
(b) The
representations and warranties of the Company made in this Subscription
Agreement shall survive the execution and delivery hereof and delivery of the
Units hereunder for a
period of twelve (12) months from the date of issuance. The representations and
warranties of the Purchaser made in this Subscription Agreement shall survive
the execution and delivery hereof and delivery of the Units hereunder
indefinitely.
(c) Each
of the parties hereto shall pay its own fees and expenses (including the fees of
any attorneys, accountants, appraisers or others engaged by such party) in
connection with this Subscription Agreement and the transactions contemplated
hereby whether or not the transactions contemplated hereby are
consummated.
10
(d) This
Subscription Agreement may be executed in one or more counterparts each of which
shall be deemed an original, but all of which shall together constitute one and
the same instrument.
(e) Each
provision of this Subscription Agreement shall be considered separable and, if
for any reason any provision or provisions hereof are determined to be invalid
or contrary to applicable law, such invalidity or illegality shall not impair
the operation of or affect the remaining portions of this Subscription
Agreement.
(f)
Paragraph titles are
for descriptive purposes only and shall not control or alter the meaning of this
Subscription Agreement as set forth in the text.
(g) The
Purchaser understands and acknowledges that there may be multiple Closings for
the Offering.
20. Omnibus Signature
Page. This Subscription Agreement is intended to be read and
construed in conjunction with the Registration Rights Agreement pertaining to
the issuance by the Company of the Shares and Warrants to subscribers pursuant
to the Memorandum. Accordingly, pursuant to the terms and conditions
of this Subscription Agreement and such related agreement it is hereby agreed
that the execution by the Purchaser of this Subscription Agreement, in the place
set forth herein, shall constitute agreement to be bound by the terms and
conditions hereof and the terms and conditions of the Registration Rights
Agreement, with the same effect as if each of such separate, but related
agreement, were separately signed.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
11
To
subscribe for Units in the private offering of
Manhattan
Pharmaceuticals, Inc.
|
1.
|
Date and Fill in the
number of Units being purchased and Complete and Sign the
Subscription Agreement.
|
|
2.
|
Initial the Accredited
Investor Certification page attached to this Subscription
Agreement.
|
|
3.
|
Complete and return the
Investor Profile and, if applicable, Wire Transfer Authorization attached
to this letter.
|
|
4.
|
Fax all forms to [_____]
at [______] and then send all signed original documents with check
to:
|
National Securities
Corporation
[__________________________]
|
5.
|
Please
make your subscription payment payable to the order of "Signature Bank, Escrow Agent
for Manhattan Pharmaceuticals,
Inc.”
|
Questions
regarding completion of the subscription documents should be directed to
[______].
12
ANTI
MONEY LAUNDERING REQUIREMENTS
|
The USA PATRIOT Act
|
What is money
laundering?
|
How big is the problem
and why is it important?
|
||
|
The
USA PATRIOT Act is designed to detect, deter, and punish terrorists in the
United States and abroad. The Act imposes new anti-money
laundering requirements on brokerage firms and financial
institutions. Since April 24, 2002 all brokerage firms have
been required to have new, comprehensive anti-money laundering
programs.
To
help you understand these efforts, the Placement Agent wants to provide
you with some information about money laundering and its steps to
implement the USA PATRIOT Act.
|
|
Money
laundering is the process of disguising illegally obtained money so that
the funds appear to come from legitimate sources or
activities. Money laundering occurs in connection with a wide
variety of crimes, including illegal arms sales, drug trafficking,
robbery, fraud, racketeering, and terrorism.
|
|
The
use of the U.S. financial system by criminals to facilitate terrorism or
other crimes could well taint our financial markets. According
to the U.S. State Department, one recent estimate puts the amount of
worldwide money laundering activity at $1 trillion a
year.
|
|
What
is the Placement Agent required to do to eliminate money
laundering?
|
||
|
Under
new rules required by the USA PATRIOT Act, the Placement Agent’s
anti-money laundering program must designate a special compliance officer,
set up employee training, conduct independent audits, and establish
policies and procedures to detect and report suspicious transaction and
ensure compliance with the new laws.
|
As
part of its required program, the Placement Agent may ask you to provide
various identification documents or other information. Until
you provide the information or documents the Placement Agent needs, we may
not be able to effect any transactions for
you.
|
|
13
MANHATTAN
PHARMACEUTICALS, INC.
OMNIBUS
SIGNATURE PAGE TO THE
SUBSCRIPTION
AGREEMENT AND
REGISTRATION
RIGHTS AGREEMENT
Subscriber
hereby elects to subscribe under the Subscription Agreement for a total of
______ Units at a price of $25,000 per Unit (NOTE: to be completed by
subscriber) and executes the Subscription Agreement and Registration Rights
Agreement.
Date
(NOTE: To be completed by subscriber): ___________________________,
20__
If the Purchaser is an INDIVIDUAL, and if purchased as JOINT TENANTS, as TENANTS IN COMMON, or as COMMUNITY PROPERTY:
|
|
|
|
|
Print
Name(s)
|
Social
Security Number(s)
|
|
|
|
|
|
|
Signature(s)
of Subscriber(s)
|
Signature
|
|
|
|
|
|
|
Date
|
Address
|
If the
Purchaser is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY COMPANY or
TRUST:
|
|
|
|
|
Name
of Partnership,
|
Federal
Taxpayer
|
|
|
Corporation,
Limited
|
Identification
Number
|
|
|
Liability
Company or Trust
|
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By:
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Name:
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State
of Organization
|
||
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Title:
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|||
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||
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Date
|
Address
|
||
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MANHATTAN
PHARMCEUTICALS, INC.
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NATIONAL
SECURITIES CORP.
|
|||
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By:
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By:
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|
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Authorized
Officer
|
Authorized
Officer
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|||
14