Exhibit
10.5
THIS SENIOR
SECURED PROMISSORY NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES
ONLY AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “
ACT ”) SHALL HAVE BECOME EFFECTIVE
WITH RESPECT THERETO OR (ii) RECEIPT BY THE COMPANY OF AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE
EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED IN
CONNECTION WITH SUCH PROPOSED TRANSFER NOR IS IN VIOLATION OF ANY
APPLICABLE STATE SECURITIES LAWS. THIS LEGEND SHALL BE ENDORSED
UPON ANY NOTE ISSUED IN EXCHANGE FOR THIS NOTE.
MANHATTAN PHARMACEUTICALS, INC.
12% Senior Secured Promissory Note
FOR VALUE RECEIVED, Manhattan Pharmaceuticals,
Inc., a Delaware limited liability corporation (the “
Company ”) with its principal
executive office at 48 Wall Street, Suite 1100, New York, New York
10005, promises to pay to the order of ____________ or registered
assigns (the “ Holder ”) on the
Maturity Date (as defined in Section 2 below), the principal
amount of ________ Dollars ($_______) (the
“ Principal Amount ”), in such
coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private
debts. Interest on this Note shall accrue on the Principal Amount
outstanding from time to time at a rate per annum computed in
accordance with Section 3 hereof.
The Company (i) waives presentment, demand,
protest or notice of any kind in connection with this Note and (ii)
agrees, in the event of an Event of Default (as defined in Section
7 below), to pay to the holder of this Note, on demand, all costs
and expenses (including reasonable legal fees and expenses as and
when incurred), incurred in connection with the enforcement and/or
collection of this Note.
This Note is
one of a series of notes (collectively, the “
Secured Notes ”) being issued
pursuant to the Securities Purchase Agreement (the “
SPA ”) by and between the Company,
the Holder and such other purchasers of Notes (the “
Holders ”). All capitalized terms
used herein and not otherwise defined shall have the meanings
ascribed to them in the SPA.
1.
Prepayment
.
This Note shall be payable at any
time and from time to time, in whole or in part, at the election of
the Company. Any prepayments of this Note prior to the Maturity
Date shall be applied first to the payment of any fees and expenses
then owed to the Holder, second, to accrued and unpaid Interest
(defined below) and third, to the payment of the Principal Amount
then outstanding. Any amounts applied by the Company to the
prepayment of any Secured Notes (including this Note) shall be
allocated pro rata to all Holders based on the amounts then owed to
them with respect to the Secured Notes.
2.
Maturity
Date . The entire unpaid Principal Amount of this Note,
together with all fees and expenses (if any), and accrued, but
unpaid, Interest thereon, shall be immediately due and payable at
12:01 a.m. on November 19, 2010 (the “ Maturity
Date ”). In the event that the Maturity Date
falls on a Saturday, Sunday or a holiday on which banks in the
State of New York are closed, the Maturity Date shall be the first
business day occurring immediately after such date.
(a) Interest Rate . This Note shall bear interest (the “
Interest ”) on the outstanding
Principal Amount at the rate of twelve (12%) percent per annum.
Interest on this Note shall commence accruing on the date hereof
and shall be computed on the basis of a year of 360 days for the
actual number of days elapsed. Interest shall be compounded
quarterly and shall be payable on the Maturity Date as set forth in
Section 4 below.
(b) Maximum Rate . In the event that under the laws relating to
usury applicable to the Company or the indebtedness evidenced by
this Note (“ Applicable Usury Laws
”), the interest charges and fees payable by the Company in
connection herewith or in connection with any other document or
instrument executed and delivered in connection herewith cause the
effective interest rate applicable to the indebtedness evidenced by
this Note to exceed the maximum rate allowed by law (the “
Maximum Rate ”), then such interest
shall be recalculated for the period in question and any excess
over the Maximum Rate paid with respect to such period shall be
credited, without further agreement or notice, to the Principal
Amount outstanding hereunder to reduce said balance by such amount
with the same force and effect as though the Company had
specifically designated such extra sums to be so applied to
principal and the Holder had agreed to accept such extra payment(s)
as a premium-free prepayment. All such deemed prepayments shall be
applied to the principal balance payable at maturity. In no event
shall any agreed-to or actual exaction as consideration for this
Note exceed the limits imposed or provided by Applicable Usury Laws
in the jurisdiction in which the Company is resident applicable to
the use or detention of money or to forbearance in seeking its
collection in the jurisdiction in which the Company is
resident.
4. Manner of Payment .
The Principal Amount, Interest, and
all other amounts due under this Note shall be due and payable on
the Maturity Date, in lawful money of the United States of America,
to the Holder at such address as designated from time to time by
the Holder in writing to the Company or by electronic wire funds
transfer of immediately available funds pursuant to written
instructions provided to the Company by the Holder. All amounts due
from the Company to the Holder under this Note shall be made
without benefit of any setoff, counterclaim or other defense. All
payments on this Note shall be applied first to the payment of fees
and expenses, if any, then to accrued but unpaid Interest and then
to the payment of the Principal Amount.
5.
Security
.
The Company’s obligations
under this Note are secured, pursuant to and in accordance with the
terms and conditions of (i) that certain Security Agreement dated
as of the date hereof by and between, the Company, the Holder and
the Holders (the “ Security Agreement
”) and (ii) that certain Default Agreement, dated even date
herewith, issued by the Company, in favor of the Holder and the
Holders (the “ Default Agreement
”). Forms of the Security Agreement and the Default Agreement
are annexed as Exhibit E and Exhibit F ,
respectively, to the SPA.
6. Covenants of the Company
. The Company covenants that so long
as any of its obligations under the Notes remain outstanding and
unpaid, the Company shall not without the prior written consent of
the Holders holding a majority of the then outstanding principal
amount of the Secured Notes (the “ Requisite
Holders ”):
(a) Indebtedness of Borrowed Money
. Create, incur, assume or suffer to
exist any indebtedness for borrowed money except:
|
|
|
the 10% secured
promissory notes of the Company in the aggregate principal amount
of $70,000 due March 10, 2009.
|
(b) Limitation on Contingent Obligations.
Guarantee or otherwise be or become
liable directly or indirectly for the obligations of any other
Person whether by agreement to purchase or repurchase obligations,
or by agreement to supply funds for the purpose of enabling such
other Person to pay any obligations, excluding from this
restriction, the endorsement of negotiable instruments in the
ordinary course of business in the course of collection.
(c) Dividends . Except as expressly provided in the SPA, pay
or declare any dividend on any class of its securities or make any
other distribution or redeem, purchase or otherwise acquire or
retire directly or indirectly any securities, other than redemption
of unvested options or restricted stock redeemed by the Company, at
cost, in connection upon termination of such persons employment or
other engagement with the Company.
(d) Sale of Obligations Owing to the
Company . Sell, discount
or dispose of notes, accounts receivables, or other obligations
owing to the Company, with or without recourse, other than in the
normal course of business.
(e) Loans and Advances to Others
. Make any loans or advances to any
other Person other than loans and advances in the ordinary course
of the Company’s business.
|
|
|
Prohibitions
of Fundamental Changes and Acquisitions .
|
|
|
|
issue any
securities or enter into any agreements to issue securities, or
rights, options or warrants for the issuance of any securities,
other than (1) issuances under the Company’s 2003 Stock
Option Plan, provided that the Company shall not increase the
number of shares eligible for issuance thereunder, (2) issuances of
Common Stock upon the exercise of options or warrants outstanding
on the date hereof, (3) pursuant to the SPA, (4) the issuance of
the Warrants and shares of Common Stock issuable upon exercise
thereof , (5) the issuance warrants issued to the Placement Agent
in connection with the transactions contemplated by the SPA and the
shares of Common Stock issuable upon exercise thereof and (6)
issuances pursuant to the Joint Venture Agreement, between the
Company and Nordic Biotech Venture Fund II K/S. dated January 31,
2008, as amended from time to time (the “ JV
Agreement ”);
|
|
|
|
consolidate
with or merge into any other Person;
|
|
|
|
except as may
otherwise be required under the Default Agreement, sell, lease,
exchange or otherwise dispose of, any of its securities in one
transaction or a series of related transactions, or dispose of any
of its assets except in the ordinary course of business or make any
material change in the present methods of conducting
business;
|
|
|
|
except as
contemplated by the JV Agreement, acquire the business of any other
Person by way of a purchase of securities or of all or
substantially all of the assets of such other Person;
and
|
|
|
|
form any
subsidiary; dissolve or liquidate.
|
(g) Limitation on Liens . Create, assume or suffer to exist any Lien of
any kind upon any of its property or assets (including real
property lea
|
