UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date
of
Report (Date of earliest event reported): November 19, 2008
Manhattan
Pharmaceuticals, Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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001-32639
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36-3898269
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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48
Wall Street, Suite 1110
New
York, New York 10005
(Address
of principal executive offices) (Zip Code)
(212)
582-3950
(Registrant's
telephone number, including area code)
Not
applicable
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item
1.01 Entry
into a Material Definitive Agreement
Manhattan
Pharmaceuticals, Inc. (the “Company”)
entered into a Securities Purchase Agreement (the “Securities
Purchase Agreement”),
dated
as of November 19, 2008, among the Company and the investors set forth on
Exhibit A-1 and Exhibit A-2 thereto (the “Investors”).
The
Securities Purchase Agreement provides for the sale by the Company of up to
500
units (each a “Unit”
and
collectively, the “Units”)
with
each Unit consisting of (i) a 12% Senior Secured Note Promissory Note in the
principal amount of $5,000 (each a “Note”,
and
collectively, the “Notes”)
and
(ii) a warrant to purchase up to 166,667 shares of the Company’s common stock
(“Common
Stock”)
at an
exercise price of $.09 per share which expire on December 31, 2013 (each a
“Warrant”
and
collectively, the “Warrants”);
provided, that if 500 Units are sold, the Company
may sell
up to an additional 200 Units (the “Overallotment”).
On
November 19, 2008, the Company completed the sale of 207 Units (the
“First
Closing”).
The
Company may sell up to an additional 293 Units (493 Units if the Overallotment
is exercised) in subsequent closings.
All
of
the Investors represented that they were “accredited investors,” as that term is
defined in Rule 501(a) of Regulation D under the Securities Act, and the sale
of
the Units was made in reliance on exemptions provided by Regulation D and
Section 4(2) of the Securities Act of 1933, as amended.
In
connection with the Securities Purchase Agreement, the Company, the placement
agent acting in connection with the private placement (the “Placement
Agent”) and the Investors entered into a Registration Rights Agreement,
dated as of November 19, 2008, and the Company agreed to file a registration
statement to register the resale of the shares of Common Stock issuable upon
exercise of the Warrants (the “Warrant
Shares”),
within 20 days of the final closing date and to cause the registration statement
to be declared effective within 90 days (or 120 days upon full review by the
SEC).
To
secure
its obligations under the Notes, at the First Closing the Company also entered
into a Security Agreement with the Investors (the “Security
Agreement”)
and a
Default Agreement with the Investors (the “Default
Agreement”).
The
Security Agreement provides that the Notes will be secured by a pledge of the
Company’s assets other than (i) its interest in the Hedrin joint venture,
including, without limitation, its interest in Hedrin Pharmaceuticals K/S and
Hedrin Pharmaceuticals General Partner ApS, (ii) the Company’s rent deposit for
its former office space, (iii) the Company’s refund of a prepayment and (iv) the
Company’s tax refund for the 2007 fiscal year from the State of New York and
City of New York. In addition, to provide additional security for its
obligations under the Notes, the Company entered into a Default Agreement which
provides that upon an event of default under the Notes, the Company shall at
the
request of the holders of the Notes use its reasonable commercial efforts to
either (i) sell a part or all of its interests in the Hedrin joint venture
or
(ii) transfer all or part of its interest in the Hedrin JV to the holders of
the
Notes, as necessary, in order to fulfill its obligations under the Notes, to
the
extent required and to the extent permitted by the applicable Hedrin joint
venture agreements.
At
the
First Closing the Company also entered into (i) Amendment No. 2 to the
Employment Agreement with Douglas Abel, its Chief Executive Officer (the
“Abel
Amendment”)
and
(ii) Amendment No. 1 to the Employment Agreement with Michael McGuinness, its
Chief Financial Officer (the “McGuinness
Amendment”).
The
Abel Amendment and the McGuinness Amendment provide for a reduction of up to
1/3
of the salary payable to Messrs. Abel and McGuinness, respectively, until the
Company shall have received at least $2,500,000 of gross proceeds from the
sale
of the Units or other sales of securities or from other revenue received by
the
Company in the operation of its business or any combination of the
foregoing.
In
connection with the First Closing, the Company incurred expenses which included,
without limitation, commissions to the Placement Agent, legal and accounting
fees, and other miscellaneous expenses, of approximately $245,000. In addition,
the Company issued a warrant to purchase 5,175,010 shares of Common Stock at
an
exercise price of $.09 per share to the Placement Agent (the “Placement
Agent Warrant”)
as
additional compensation for its services. Further, the Company granted the
Placement Agent the right to nominate a member of the Board of Directors of
the
Company and such director shall receive all compensation and benefits provided
to the other directors of the Company. Additionally, upon such director’s
appointment to the Board of Directors he shall be issued a warrant to purchase
1,000,000 shares of Common Stock at a per share exercise price equal to the
greater of (i) the fair market value on the date of issuance or (ii)
$.09.
The
Company did not use any form of advertising or general solicitation in
connection with the sale of the Units. The Notes, the Warrants and the Warrant
Shares are non-transferable in the absence of an effective registration
statement under the Act, or an available exemption therefrom, and all
certificates are imprinted with a restrictive legend to that
effect.
The
description of the private placement described in this Current Report on Form
8-K does not purport to be complete and is qualified in its entirety by
reference to the Securities Purchase Agreement filed as Exhibit
10.1
hereto,
the Registration Rights Agreement filed as Exhibit
10.2
hereto,
the Security Agreement filed as Exhibit
10.3 hereto,
the Default Agreement filed as Exhibit
10.4
hereto,
the form of Note filed as Exhibit
10.5
hereto,
the form of Warrant filed as Exhibit
10.6
hereto,
the Abel Amendment filed as Exhibit
10.7
hereto,
the McGuinness Amendment filed as Exhibit
10.8
hereto
and the form of Placement Agent Warrant files as Exhibit
10.9
(collectively, the “Transaction
Documents”),
all
of which are incorporated herein by reference. The forms of the Transaction
Documents have been included to provide investors and security holders with
information regarding their terms. They are not intended to provide any other
factual information about the Company. The Transaction Documents contain certain
representations and warranties, as well as indemnification with respect to
a
breach of such representations or warranties. Investors and security holders
should not rely on the representations and warranties as characterizations
of
the actual state of facts because they were made only as of the respective
dates
of the Transaction Documents. In addition, information concerning the subject
matter of the representations and warranties may change after the respective
dates of the Transaction Documents, and such subsequent information may not
be
fully reflected in the Company’s public disclosures. A copy of issued by the
Company in connection with the private placement is filed as Exhibit
99.1
hereto.
Forward
Looking Statements
This
Current Report on Form 8-K contains forward-looking statements made pursuant
to
the safe harbor provisions of the Private Securities Litigation Reform Act
of
1995. Forward-looking statements typically are identified by use of terms such
as "may," "will," "should," "plan," "expect," "anticipate," "estimate" and
similar words, although some forward-looking statements are expressed
differently. Forward-looking statements represent our management's judgment
regarding future events. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, the Company can
give no assurance that such expectations will prove to be correct. All
statements other than statements of historical fact included in this Current
Report on Form 8-K are forward-looking statements. The Company cannot guarantee
the accuracy of the forward-looking statements, and you should be aware that
the
Company's actual results could differ materially from those contained in the
forward-looking statements due to a number of factors, including the statements
under "Risk Factors" contained in the Company's Annual Report on Form 10-K
for
the fiscal year ended December 31, 2007 filed with the Securities and Exchange
Commission.
Item
3.02 Unregistered Sales of Equity Securities
The
information set forth under Item 1.01 of this Current Report on Form 8-K is
incorporated by reference in response to this Item 3.02.
| Item 5.02 |
Departure
of Directors or Certain Officers; Election of Directors; Appointment
of
Certain Officers; Compensatory Arrangements of Certain
Officers
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The
information set forth under Item 1.01 of this Current Report on Form 8-K is
incorporated by reference in response to this Item 5.02.
Item
9.01. Financial Statements and Exhibits.
(d) Exhibits
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10.1
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Securities
Purchase Agreement, dated November 19, 2008, by and among the Company
and
the investors listed on Exhibit A-1 and A-2
thereto.
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10.2
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Registration
Rights Agreement, dated November 19, 2008, by and among the Company,
the
Placement Agent and the investors listed on Exhibit A
thereto.
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10.3
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Security
Agreement, dated November 19, 2008, by and among the Company and
each
person named on Exhibit A-1 and A-2 of the Securities Purchase
Agreement.
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10.4
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Default
Agreement, dated November 19, 2008, by and among the Company and
the
persons and entities listed on Schedule A
thereto.
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10.5
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Form
of 12% Senior Secured Promissory Note
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10.7
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Amendment
No. 2 to the Employment Agreement between the Company and Douglas
Abel,
dated November 19, 2008.
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10.8
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Amendment
No. 1 to the Employment Agreement between the Company and Michael
McGuinness, dated November 19,
2008.
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10.9
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Form
of Placement Agent Warrant
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99.1
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Press
release issued by the Company on November 25,
2008
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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MANHATTAN
PHARMACEUTICALS, INC.
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Date: November
25, 2008
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By:
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/s/
Michael G. McGuinness
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Michael
G. McGuinness
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Chief
Financial Officer
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