REGISTRATION RIGHTS AGREEMENT
Exhibit
10.2
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 XXXXX.
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, Xxxxxx, Xxxxx & Xxxxxxx 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.
00
Xxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000
Attention: Xxxxxxx
Xxxx
Chief Executive Officer
Facsimile: (000)
000-0000
with
a
copy to:
Xxxxxxxxxx
Xxxxxxx PC
00
Xxxxxxxxxx Xxxxxx
Xxxxxxxx,
Xxx Xxxxxx 00000
Attention: Xxxxxxx
Xxxxxxx, 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
Xxxxxxx XxXxxxxxxx
|
|
|
Xxxxxxx
XxXxxxxxxx
|
||
|
Chief
Financial Officer
|
||
|
[l]
|
||
|
By:
|
|
|
|
|
||
|
|
||
|
|
||
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
|
Xxxx
X. Xxxxxxxx and Xxxxxx X. Xxxxxxxx
|
|
Xxxxxxx
X. Xxxxxxx Revocable Trust u/a 10/08/04
|
|
Xxxxx
Xx Xxxxxx
|
|
Xxxxxxx
Xxxxx
|
|
Xxxx
X. Xxxxxxx Living Trust
|
|
Xxxx
Xxxxxx & Xxxxxxxx X. Xxxxxx
|
|
Xxxxxxx
Xxxxx
|
|
Xxxxxxx
X. Xxxxxxxxx
|
|
Xxxxxx
X. Xxxxxxx
|
|
Xxxxxxx
X. Xxxxxx
|
|
Xxxxxx
X. Xxxxxx & Xxxxx X. Xxxxxx
|
|
Xxxxxx
X. Xxxxxx
|
|
Xxxxx
& Xxxxx Xxxxxxxx
|
|
Xxxxx
X. Xxxx
|
|
Xxxx
X. Xxxxxx
|
|
NFS/FMTC
SEP XXX FBO Xxx Xxxxxxxx
|
|
Landmark
Community Bank Collateral Account FBO Estate of Xxxxxxxxx
Xxxxxx
|
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Xxxxxx
Family Trust
|
|
Xxxxx
X. Xxxx & Xxxxx X. Xxxx, JTWROS
|
|
Xxxxxxx
X. Xxxxxx & X. Xxxxxx Xxxxxx,
Xx.
|
A-1
|
Xxxx
Xxxxxxx
|
|
Xxxxxx
X. Xxxxxxx
|
|
Xxxxx
Xxxxx
|
|
Xxxxxx
X. Xxxxxxxx & Xxxxxxx Xxxxxxxx, JTWROS
|
|
Xxxxxxx
Xxxxxxx
|
|
Xxxxxxx
Xxxxxx, Xx.
|
|
Xxxxx
Xxx
|
|
Xxxxxx
X. Xxxxxxx
|
|
Xxxxxxx
X. Xxxxxxxx & Xxxx X. Xxxxxx Family Trust
|
|
Xxxxxxxxx
Xxxx
|
|
Xxxxxx
Xxxxxxxxx
|
|
Xxxxx
X. Xxxxxxxx
|
|
Xxxx
X. Xxxxxxxx
|
|
Xxxxxxx
X. Xxxxxxx
|
|
Xxxxxxx
X. Silver
|
|
Xxxxxx
Xxxxx
|
|
Xxxxxx
Xxxxxxxxx
|
|
Xxxxxx
X. Tanning Rollover XXX
|
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.
|
Signature:
|
||
|
Name:
|
||
|
Title:
|
|
Accepted:
|
||
|
[__________________________________________]
|
|
|
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
|
Date:_______________________________,
20__
|
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|
C-1
