SETTLEMENT AND RELEASE AGREEMENT
SETTLEMENT AND RELEASE
AGREEMENT
This
SETTLEMENT AND RELEASE AGREEMENT (the “Agreement”) dated as
of this 4th day of
January, 2011, between and among MANHATTAN PHARMACEUTICALS, INC. (“Manhattan”), NORDIC
BIOTECH VENTURE FUND II K/S (“Nordic”), and H
PHARMACEUTICALS K/S (F/K/A HEDRIN PHARMACEUTICALS K/S) (the “Joint Venture”)
(Manhattan, Nordic and the Joint Venture are each individually, a “Party” and
collectively, the “Parties”).
BACKGROUND
WHEREAS, Manhattan and Nordic
are parties to that certain Joint Venture Agreement dated January 31, 2008, as
amended on February 18, 2008, and as further amended by an Omnibus Amendment on
June 9, 2008 (the “JV
Agreement”); and
WHEREAS, pursuant to the JV
Agreement, Manhattan issued to Nordic a “Warrant for the Purchase of Shares of
Common Stock” No. 2008-1, dated April 15, 2008 (the “Warrant”), originally
covering 7,142,857 shares of Manhattan common stock (“Common Stock”);
and
WHEREAS, the JV Agreement
contains certain provisions permitting Nordic to purchase shares of Common Stock
under specified circumstances, and requiring Nordic to purchase shares of Common
Stock under other specified circumstances (the “Put/Call”);
and
WHEREAS, pursuant to the JV
Agreement, Manhattan and Nordic entered into a Registration Rights Agreement
dated February 25, 2009 (the “Registration Rights
Agreement”); and
WHEREAS, pursuant to the JV
Agreement, Manhattan and the Joint Venture entered into a Services Agreement
dated February 25, 2009 (the “Services Agreement”);
and
WHEREAS, pursuant to the JV
Agreement, (i) Nordic, Manhattan and H. Pharmaceuticals Partner ApS (the “General Partner”)
entered into a Limited Partnership Agreement dated February 21, 2008, as amended
by an Ominibus Amendment on June 9, 2008 (the “Limited Partnership
Agreement”), (ii) Nordic and Manhattan entered into a Shareholders’
Agreement dated February 21, 2008, as amended by an Omnibus Amendment on June 9,
2008 (the “Shareholders’
Agreement”), (iii) Articles of Association of the Joint Venture dated
February 21, 2008 were filed (the “JV
Articles”), and (iv) a Memorandum of Association aand Articles
of Association of the General Partner dated February 21, 2008 were prepared and
filed (the “GP
Memorandum”) (collectively, the “Danish Agreements”);
and
WHEREAS, the Parties have had
various disagreements and disputes with respect to the operation, ownership,
financing of, and other matters relating to, the Joint Venture (including,
without limitation, the Put/Call), as well as with respect to the Warrant, the
Registration Rights Agreement, the Services Agreement, and the Danish Agreements
(the “Disputes”);
and
WHEREAS, the Parties hereto
have mutually agreed to resolve any and all Disputes pursuant to the terms and
subject to the conditions hereinafter set forth.
NOW, THEREFORE, for good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound hereby, agree as
follows:
A. Terms of
Settlement. The Parties act and agree as follows upon the
effectiveness of this Section A pursuant to Section C of this
Agreement:
1. Payment. The
Partnership shall promptly, but in any event within five (5) Business Days (as
defined in the Partnership Agreement) after receipt of the Amendments duly
executed by Manhattan and the Resignations (as defined below) duly executed by
the parties thereto, make a payment of US$100,000.00 to Manhattan in connection
with this Agreement (the “Initial Payment”)
less the Excess Fees (as defined below), if any.
2. Amendment to Certain Danish
Agreements. Contemporaneously herewith, Nordic, Manhattan and
the General Partner shall take all necessary action to (i) amend and restate the
Limited Partnership Agreement in its entirety in the form of the Consolidated
and Revised Limited Partnership Agreement attached hereto as Exhibit A together
with Appendices 2.5 and 7.7 thereto; and (ii) amend and restate the JV Articles
in their entirety in the form of Articles of Association attached as Appendix
2.5 of Exhibit
A (the “Amendments”).
3. Termination of
Warrant. The Warrant is hereby terminated in all
respects.
4. Termination of JV Agreement
(including Put/Call). The JV Agreement (which contains the
Put/Call) is hereby terminated in all respects.
5. Termination of Registration
Rights Agreement. The Registration Rights Agreement is hereby
terminated in all respects.
6. Termination of Services
Agreement. The Services Agreement is hereby terminated in all
respects.
7. Termination of the
Stockholders’ Agreement. The Stockholders’ Agreement is hereby
terminated in all respects.
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8. Release by
Nordic. In consideration of and subject to the release being
provided by Manhattan under Section 9 herein, the terms of this Agreement, and
other good and valuable consideration, Nordic, on behalf of itself and any other
person or entity claiming by, through or under it, including its subsidiaries,
affiliates, present and former officers, directors, employees, beneficiaries,
assignees, agents, shareholders, members, partners and owners (collectively, the
“Nordic
Releasors”), hereby unconditionally forever releases, waives, discharges
and gives up any and all Nordic Claims (as defined below), as the case may be,
which Nordic has or may have, directly or indirectly, against Manhattan and
Manhattan’s subsidiaries, affiliates, present and former officers, directors,
employees, beneficiaries, assignees, agents, shareholders, members, partners,
owners, successors and assigns (collectively, “Released Manhattan
Parties”), arising on or prior to the date hereof or relating to acts or
omissions occurring prior to the date hereof. “Nordic Claims” means
any and all actions, charges, controversies, demands, causes of action, suits,
rights, and/or claims whatsoever and whether known or unknown, arising directly
or indirectly from any act or omission, whether intentional or unintentional,
asserted or unasserted, contingent or liquidated, which the Nordic Releasors may
have or had against any of the Released Manhattan Parties, including, without
limitation, (i) those arising under, related to or in connection with the
Disputes, the Joint Venture, the JV Agreement, the Put/Call, the Registration
Rights Agreement, the Services Agreement, the Warrant or any of the Danish
Agreements; and/or (ii) for debts, accounts, sums of money, losses, penalties,
license fees, claims for ownership of intellectual property and costs, attorney
fees, covenants, warranties, guaranties, representations, liens, judgments,
claims, counterclaims, cross claims, defenses, demands and damages, arising,
directly or indirectly, out of any promise, agreement, letter, contract (express
or implied), understanding, common law or tort, or the laws, statutes, and/or
regulations of the State of New York, the State of Delaware or any other state,
or any local ordinance, or the United States of America, or
Denmark. This release covers all Nordic Claims including those of
which Nordic is not aware and those not mentioned in this
Agreement.
9. Release by
Manhattan. In consideration of and subject to the release
being provided by Nordic under Section 8 herein, the terms of this Agreement,
and other good and valuable consideration, Manhattan, on behalf of itself and
any other person or entity claiming by, through or under it, including its
subsidiaries, affiliates, present and former officers, directors, employees,
beneficiaries, assignees, agents, shareholders, members, partners and owners
(collectively, the “Manhattan
Releasors”), hereby unconditionally forever releases, waives, discharges
and gives up any and all Manhattan Claims (as defined below), as the case may
be, which Manhattan has or may have, directly or indirectly, against Nordic, the
Joint Venture and the General Partner, and Nordic’s, the Joint Venture’s and the
General Partner’s respective subsidiaries, affiliates, present and former
officers, directors, employees, beneficiaries, assignees, agents, shareholders,
members, partners, owners, successors and assigns (collectively, “Released Nordic
Parties”), arising on or prior to the date hereof or relating to acts or
omissions occurring prior to the date hereof. “Manhattan Claims”
means any and all actions, charges, controversies, demands, causes of action,
suits, rights, and/or claims whatsoever and whether known or unknown, arising
directly or indirectly from any act or omission, whether intentional or
unintentional, asserted or unasserted, contingent or liquidated, which any of
the Manhattan Releasors may have or had against any of the Released Nordic
Parties, including, without limitation, (i) those arising under, related to or
in connection with the Disputes, the Joint Venture, the JV Agreement, the
Put/Call, the Registration Rights Agreement, the Services Agreement, the Warrant
or any of the Danish Agreements; and/or (ii) for debts, accounts, sums of money,
losses, penalties, license fees, claims for ownership of intellectual property
and costs, attorney fees, covenants, warranties, guaranties, representations,
liens, judgments, claims, counterclaims, cross claims, defenses, demands and
damages, arising, directly or indirectly, out of any promise, agreement, letter,
contract (express or implied), understanding, common law or tort, or the laws,
statutes, and/or regulations of the State of New York, the State of Delaware or
any other state, or any local ordinance, or the United States of America, or
Denmark. This release covers all Manhattan Claims including those of
which Manhattan is not aware and those not mentioned in this
Agreement.
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10. Resignations. The
Resignations (as defined below) of Xxxxxxx X. XxXxxxxxxx and Xxxxxxx Xxxx as
members of the Board of Directors of the General Partner shall become
effective.
B. Representations, Warranties
and Covenants of all Parties. Each Party hereby represents,
warrants and covenants to the other Parties to this Agreement as of the date
hereof as follows:
1. Such
Party has taken all such action necessary to, and has the power and authority
to, enter into, deliver and perform all of its obligations under this Agreement
and to consummate the transactions contemplated hereby so far as they relate to
such Party.
2. This
Agreement is a legal, valid, and binding obligation of such Party enforceable in
accordance with its terms, except as limited by laws of general applicability
limiting the enforcement of creditors’ rights or by the exercise of judicial
discretion in accordance with general principles of equity.
3. Such
Party warrants and represents to each other Party hereto that it has not
assigned, pledged, hypothecated and/or otherwise divested itself, and/or
encumbered all or any part, of the claims being released hereby and that such
Party hereby agrees to indemnify and hold harmless any and all of the Parties to
which a release is being granted hereby against whom any claim based on such an
asserted assignment, pledge, hypothecation, divestiture and/or
encumbrance.
4. Such
Party has not filed any complaint, charge, or lawsuit against the other Party
concerning any claims released under this Agreement with any local, state,
federal or national agency or court, that each will not do so at any time
hereafter, and that if such agency or court assumes jurisdiction of any
complaint, charge or lawsuit against the other Party, the Party initiating same
will request such agency or court to withdraw from the matter, or withdraw the
other Party’s name or names from the matter.
5. Such
Party represents and warrants that it: (i) has had sufficient opportunity to
review this Agreement with counsel or has chosen voluntarily not to do so, (ii)
has read this Agreement, (iii) understands all the terms and conditions hereof,
(iv) has entered into this Agreement of its own free will and volition, (v) has
duly executed and delivered this Agreement, and (vi) understands that,
except as otherwise agreed, it is responsible for his or its own attorney’s fees
and costs.
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6. Manhattan
represents and warrants to the other Parties that (i) the Waiver and Forbearance
Agreement (substantially in the form annexed hereto as Exhibit C) shall
become effective and binding on the holders of all of Manhattan’s 12% Senior
Secured Promissory Notes which were issued pursuant to that certain Securities
Purchase Agreement dated as of November 19, 2008 by and among Manhattan and the
lenders party thereto (the “Notes”) upon the
approval of Waiver and Forbearance Agreement by the holders of at least a
majority of the aggregate principal amount of the Notes (the “Requisite Holders”)
and (ii) the execution and delivery by Manhattan of this Agreement and the
Amendments, the consummation of the transactions contemplated hereby and the
compliance with any of the provisions hereof will not result in the violation of
any law, statute, rule, regulation, order, writ, injunction, judgment or decree
of any court or governmental authority to or by which Manhattan is bound, or of
any provision of the Certificate of Incorporation or By-Laws of Mantattan, and
will not conflict with, or result in a breach or violation of, any of the terms
or provisions of, or constitute (with due notice or lapse of time or both) a
default under (or give rise to any right of termination, cancellation or
acceleration under), any lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument to which Manhattan is a party
or by which it is bound or to which any of its properties or assets is subject,
nor result in the creation or imposition of any lien upon any of the properties
or assets of Manhattan
7. Manhattan
represents and warrants to the other Parties that (i) Manhattan’s fair saleable
value of its assets exceeds the amount that will be required to be paid on or in
respect of Manhattan’s existing debts and other liabilities (including known
contingent liabilities) as they mature, (ii) Manhattan’s assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by Manhattan, and projected capital requirements and capital
availability thereof, and (iii) the current cash flow of Manhattan, together
with the proceeds Manhattan would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debt when such amounts are
required to be paid. Manhattan does not intend to incur debts beyond
its ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its
debt). Manhattan has no knowledge of any facts or circumstances which
lead it to believe that it will file for reorganization or liquidation under the
bankruptcy or reorganization laws of any jurisdiction within one year from the
date of this Agreement. Manhattan is not in default with respect to
any debts and other liabilities.
C. Conditions
Precedent. The rights, releases, obligations and agreements
set forth in Section A of
this Agreement shall be effective upon the date on which all of the following
shall have been satisfied (the “Effective
Date”):
1. Each
of the Parties shall have delivered executed Amendments, and this Agreement, to
the other.
2. Nordic
shall have made the Initial Payment (less the Excess Fees, if any) to
Manhattan.
3. Nordic
shall have made an additional, non-dilutive capital contribution of
US$1,200,000.00 to the Joint Venture. (For avoidance of doubt, this
sum is in addition to the US$300,000.00 contributed by Nordic to the Joint
Venture on December 15, 2010.)
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4. The
Joint Venture shall have paid $75,000 to Manhattan representing the entire
outstanding amount due to Manhattan under the Services Agreement for services
rendered through the Effective Date.
5. Manhattan
shall have delivered to the Joint Venture the resignations of Xxxxxxx X.
XxXxxxxxxx and Xxxxxxx Xxxx as members of the Board of Directors of the General
Partner (the “Resignations”).
D. Second
Payment.
1. The
Partnership shall, within five (5) business days after conditions set forth in
Section D.2. below are satisfied, pay US$400,000.00 to Manhattan less any Excess
Fees that have not previously been paid or credited to the Joint Venture (the
“Second
Payment”).
2. Payment
of the Second Payment shall be conditioned upon the delivery to Nordic on or
before December 31, 2011 of (i) written evidence reasonably satisfactory to
Nordic that the Requisite Holders have extended the Maturity Date (as defined in
the Notes) of the Notes to at least December 31, 2011 and confirmed that no
Event of Default (as defined in the Notes) exists as of the date of such
extension or (ii) written evidence reasonably satisfactory to Nordic that all of
the outstanding Notes have converted to solely into shares of common stock or
other equity securities of Manhattan.
E. Miscellaneous.
1. Enforcement; Court
Costs. Subject to Section 10 below, in any action to enforce
the terms of this Agreement, the prevailing party shall be entitled to recover
its attorneys’ fees and court costs and other non-reimbursable litigation
expenses. Otherwise, each Party shall bear its own attorneys’ fees
and expenses.
2. No
Admission. Nothing in this Agreement shall be construed as an
admission or concession of liability or wrongdoing by any Party hereto and or
that any Party fails to satisfy the standard under applicable law for
advancement and indemnification.
3. Governing
Law. Each Party agrees that the formation, interpretation and
performance of this Agreement shall be governed by the laws of the State of New
York without giving effect to the principles of conflicts of law of such
state. The language of all parts of this Agreement shall in all cases
be construed as a whole, according to its fair meaning, and not strictly for or
against any Party. The Parties hereto agree that any suit or
proceeding arising out of this Agreement or the consummation of the transactions
contemplated hereby shall be brought by a Party only in the Court of Chancery or
such other Delaware courts as may have jurisdiction, in the event that the Court
of Chancery does not have subject matter jurisdiction and each of the Parties
hereby submits to in
personam jurisdiction in Delaware with respect to any claims arising out
of this Agreement or the consummation of the transactions contemplated
hereby. The Parties hereto each waive any claim that such
jurisdiction is not a convenient jurisdiction or forum for any such suit or
proceeding and the defense of personal jurisdiction.
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4. Entire Agreement;
Amendment. Each Party agrees that this Agreement and, together
with the Amendments, as and when read together set forth the entire agreement
among them on this subject and taken together as a whole supersede all other
oral and written understandings or agreements among the Parties regarding the
subject matter of this Agreement. The terms of this Agreement are
contractual and not mere recitals. This Agreement may be modified or
terminated only in writing signed by all Parties.
5. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original and all of which shall be deemed to constitute one and the
same instrument.
6. Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective successors and permitted
assigns.
7. Headings,
Captions. All indexes, titles, subject headings, section
titles and similar items are provided for the purpose of reference and
convenience and are not intended to affect the meaning, content or scope of this
Agreement.
8. Severability. If
any term of this Agreement shall be held to be invalid or unenforceable for any
reason, it will not invalidate the remaining terms, and such term shall be
deemed modified to the extent necessary to make it enforceable.
9. Construction. Unless
the context of this Agreement otherwise clearly requires, (i) references to
the plural include the singular, and references to the singular include the
plural, (ii) references to any gender include the other genders,
(iii) the words “include,” “includes” and “including” do not limit the
preceding terms or words and shall be deemed to be followed by the words
“without limitation”, (iv) the terms “hereof”, “herein”, “hereunder”,
“hereto” and similar terms in this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement.
10. Expenses. Manhattan
shall bear its own legal and other costs and expenses with respect to the
negotiation and preparation of this Agreement and the Amendments and the
completion of the transactions contemplated by this Agreement, and the Joint
Venture shall bear its and Nordic’s legal and other costs and expenses with
respect to the negotiation and preparation of this Agreement and the Amendments,
the completion of the transactions contemplated by this Agreement, and any
challenge to the enforceability of this Agreement, the Amendments or any other
documents delivered in connection herewith brought by or behalf of Manhattan or
any of its stockholders or creditor, whether in a bankruptcy proceeding or
otherwise. If Nordic’s and the Joint Venture’s reasonable, actual
out-of-pocket legal and other costs and expenses incurred in good faith with
respect to the negotiation and preparation of this Agreement and the Amendments,
the completion of the transactions contemplated by this Agreement, and any
challenge to the enforceability of this Agreement, the Amendments or any other
documents delivered in connection herewith brought by or behalf of Manhattan or
any of its stockholders or creditor, whether in a bankruptcy proceeding or
otherwise exceed US$70,000.00, then the amount of such excess shall be referred
to herein as the “Excess
Fees.”
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IN WITNESS WHEREOF, the parties have
caused this Agreement to be executed and delivered in their name and on their
behalf as of the date first above written.
MANHATTAN
PHARMACEUTICALS, INC.
By:
S/Xxxxxxx XxXxxxxxxx
Print
Name: Xxxxxxx XxXxxxxxxx
Title:
Chief Operating and Financial Officer
NORDIC
BIOTECH VENTURE FUND II K/S
By:
S/Xxxxxxx Xxxxxxxxxxxx
Print
Name: Xxxxxxx Xxxxxxxxxxxx
Title:
Principal
H
PHARMACEUTICALS K/S
(F/K/A
HEDRIN PHARMACEUTICALS K/S)
By: H. PHARMACEUTICALS PARTNER
APS
By: S/Xxxx
Xxxxxxxxx
Print
Name: Xxxx Xxxxxxxxx
Title:
Director
By: S/Xxxx
Xxxxx
Print
Name: Xxxx Xxxxx
Title:
Director
