As filed with the Securities and Exchange Commission on February 17, 2004
Registration No. 333-______
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------------------
MANHATTAN PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 787 Seventh Avenue, 48th Floor 36-3898269
(State or other New York, NY 10019 (I.R.S. Employer
jurisdiction of Telephone (212) 554-4525 Identification No.)
Incorporation or Facsimile (212) 554-4545
organization)
-------------------------------
2003 Stock Option Plan
(Full title of the Plans)
---------------------------
Nicholas J. Rossettos Copies to:
Chief Financial Officer Christopher J. Melsha, Esq.
Manhattan Pharmaceuticals, Inc. Maslon Edelman Borman & Brand, LLP
787 Seventh Avenue, 48th Floor 90 South 7th Street, Suite 3300
New York, NY 10019 Minneapolis, Minnesota 55402
Telephone (212) 554-4555 Telephone: (612) 672-8200
(Name and address of agent for service) Facsimile: (612) 642-8343
------------------------------------
CALCULATION OF REGISTRATION FEE
==================================================================================================
Proposed
Proposed Maximum
Maximum Offering
Title of Amount to be Price Per Aggregate Amount of
Securities to be Registered Registered (1) Share Fee (2) Offering Price Registration
--------------------------------------------------------------------------------------------------
Common Stock, par value 5,400,000 $1.60 $8,640,000 $1,094.69
$.001 per share
--------------------------------------------------------------------------------------------------
(1) There is also being registered hereunder an indeterminate number of shares
of common stock as shall be issuable as a result of a stock split, stock
dividend, combination or other change in the outstanding shares of common
stock.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with paragraphs (c) and (h) of Rule 457 of the Securities Act
based upon a $1.60 per share average of high and low prices of the
Registrant's common stock on the OTC Bulletin Board on February 13, 2004.
==============================================================================
PART I
As permitted by the rules of the Securities and Exchange Commission, this
registration statement omits the information specified in Part I of Form S-8.
The documents containing the information specified in Part I of this
registration statement will be sent or given to eligible employees as specified
in Rule 428(b) promulgated under the Securities Act of 1933, as amended (the
"Securities Act"). Such documents are not being filed with the Commission either
as part of this registration statement or as prospectuses or prospectus
supplements pursuant to Rule 424 promulgated under the Securities Act.
1
PART II
Item 3. Incorporation of Documents by Reference.
------------------------------------------------
The following documents filed by the Registrant with the Securities and
Exchange Commission are hereby incorporated by reference herein:
1. Annual Report on Form 10-KSB for the fiscal year ended December 31,
2002 (filed on April 14, 2003);
2. Quarterly Reports on Form 10-QSB for the quarters ended March 31, 2003
(including amendment thereto filed on August 11, 2003), June 30, 2003,
and September 30, 2003;
3. Current Reports on Form 8-K filed March 10, 2003, August 15, 2003,
September 23, 2003, and November 11, 2003, and on Form 8-K/A filed May
9, 2003; and
4. The description of capital stock as set forth on Form 8-A filed on
November 28, 1995 (No. 00-27282).
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference in this Registration Statement and to
be a part hereof from the date of filing of such documents.
Item 4. Description of Securities.
----------------------------------
Not applicable.
Item 5. Interests of Named Experts and Counsel.
-----------------------------------------------
As a condition to consenting to allow the Registrant to incorporate by
reference into this registration statement its audit report, KPMG LLP ("KPMG")
has required the Registrant, and the Registrant has agreed, to indemnify and
hold KPMG harmless against and from any and all legal costs and expenses
incurred by KPMG in successful defense of any legal action or proceeding that
arises as a result of KPMG's consent to the incorporation by reference of its
audit report on the Registrant's past financial statements incorporated by
reference in this registration statement.
Item 6. Indemnification of Directors and Officers.
--------------------------------------------------
Under provisions of the certificate of incorporation and bylaws of the
Registrant, directors and officers will be indemnified for any and all
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys fees, in connection with threatened, pending or completed actions,
suits or proceedings, whether civil, or criminal, administrative or
investigative (other than an action arising by or in the right of the
Registrant), if such director or officer has been wholly successful on the
merits or otherwise, or is found to have acted in good faith and in a manner he
or she reasonably believes to be in or not opposed to the best interests of the
Registrant, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. In addition,
directors and officers will be indemnified for reasonable expenses in connection
with threatened, pending or completed actions or suits by or in the right of
Registrant if such director or officer has been wholly successful on the merits
or otherwise, or is found to have acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Registrant, except in the case of certain findings by a court that such person
is liable for negligence or misconduct in his or her duty to the Registrant
unless such court or the Delaware Court of Chancery also finds that such person
is nevertheless fairly and reasonably entitled to indemnity. The Registrant's
Certificate of Incorporation also eliminates the liability of directors of the
Registrant for monetary damages to the fullest extent permissible under Delaware
law.
Section 145 of the Delaware General Corporation Law states:
(a) A corporation shall have the power to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action arising by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(b) A corporation shall have power to indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect to any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expense which the Court of Chancery or
such other court shall deem proper.
Item 7. Exemption from Registration Claimed.
--------------------------------------------
Not applicable.
Item 8. Exhibits.
-----------------
Exhibit Description
4.1 Registrant's 2003 Stock Option Plan.
5.1 Opinion of Maslon Edelman Borman & Brand, LLP.
23.1 Consent of J.H. Cohn LLP.
23.2 Consent of Weinberg & Company, P.A.
23.3 Consent of KPMG LLP.
23.4 Consent of Maslon Edelman Borman & Brand, LLP
(included in Exhibit 5.1).
24.1 Power of Attorney (included on signature page hereof).
Item 9. Undertakings.
---------------------
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person connected with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City and State of New York, on the 11th day of February,
2004.
MANHATTAN PHARMACEUTICALS, INC.
By: /s/ Leonard Firestone
--------------------------------------
Leonard Firestone
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature to this Registration Statement appears below
hereby constitutes and appoints Nicholas J. Rossettos as his or her true and
lawful attorney-in-fact and agent, with full power of substitution, to sign on
his or her behalf individually and in the capacity stated below and to perform
any acts necessary to be done in order to file all amendments to this
Registration Statement and any and all instruments or documents filed as part of
or in connection with this Registration Statement or the amendments thereto and
each of the undersigned does hereby ratify and confirm all that said
attorney-in-fact and agent, or his substitutes, shall do or cause to be done by
virtue hereof. The undersigned also grants to said attorney-in-fact, full power
and authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted. This Power of
Attorney shall remain in effect until revoked in writing by the undersigned.
Pursuant to the requirements of the Securities Exchange Act of 1933, this
Registration Statement has been signed as of the 11th day of February, 2004, by
the following persons in the capacities indicated.
Name Title
/s/ Leonard Firestone President and Chief Executive Officer
------------------------------------ (Principal Executive Officer)
Leonard Firestone
/s/ Nicholas J. Rossettos Chief Operating Officer, Chief Financial
------------------------------------ Officer, Treasurer and Secretary
Nicholas J. Rossettos (Principal Financial and Accounting
Officer)
/s/ Joshua Kazam Director
------------------------------------
Joshua Kazam
/s/ Joan Pons Gimbert Director
------------------------------------
Joan Pons Gimbert
/s/ David M. Tanen Director
------------------------------------
David M. Tanen
/s/ Michael Weiser Director
------------------------------------
Michael Weiser
INDEX TO EXHIBITS
Exhibit Description
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4.1 Registrant's 2003 Stock Option Plan.
5.1 Opinion of Maslon Edelman Borman & Brand, LLP.
23.1 Consent of J.H. Cohn LLP.
23.2 Consent of Weinberg & Company, P.A.
23.3 Consent of KPMG LLP.
23.4 Consent of Maslon Edelman Borman & Brand, LLP (included in
Exhibit 5.1).
24.1 Power of Attorney (included on signature page hereof).
EXHIBIT 4.1
MANHATTAN PHARMACEUTICALS, INC.
2003 STOCK OPTION PLAN
1. Purpose. The purpose of the 2003 Stock Option Plan (the "Plan") of
Manhattan Pharmaceuticals, Inc., a Delaware corporation (the "Company"), is to
increase stockholder value and to advance the interests of the Company by
furnishing a variety of economic incentives ("Incentives") designed to attract,
retain and motivate employees, directors and consultants. Incentives may consist
of opportunities to purchase or receive shares of common stock, $0.001 par
value, of the Company ("Common Stock"), monetary payments or both on terms
determined under this Plan.
2. Administration.
2.1 The Plan shall be administered by a committee (the "Committee")
of the Board of Directors of the Company (the "Board"). The Committee
shall consist of not less than two directors of the Company who shall be
appointed from time to time by the board of directors of the Company. Each
member of the Committee shall be a "non-employee director" within the
meaning of Rule 16b-3 of the Exchange Act of 1934, as amended (together
with the rules and regulations promulgated thereunder, the "Exchange
Act"), and an "outside director" as defined in Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). The Committee
shall have complete authority to determine all provisions of all
Incentives awarded under the Plan (as consistent with the terms of the
Plan), to interpret the Plan, and to make any other determination which it
believes necessary and advisable for the proper administration of the
Plan. The Committee's decisions and matters relating to the Plan shall be
final and conclusive on the Company and its participants. No member of the
Committee will be liable for any action or determination made in good
faith with respect to the Plan or any Incentives granted under the Plan.
The Committee will also have the authority under the Plan to amend or
modify the terms of any outstanding Incentives in any manner; provided,
however, that the amended or modified terms are permitted by the Plan as
then in effect and that any recipient on an Incentive adversely affected
by such amended or modified terms has consented to such amendment or
modification. No amendment or modification to an Incentive, however,
whether pursuant to this Section 2 or any other provisions of the Plan,
will be deemed to be a re-grant of such Incentive for purposes of this
Plan. If at any time there is no Committee, then for purposes of the Plan
the term "Committee" shall mean the entire Board.
2.2 In the event of (i) any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock
split, combination of shares, rights offering, extraordinary dividend or
divestiture (including a spin-off) or any other similar change in
corporate structure or shares, (ii) any purchase, acquisition, sale or
disposition of a significant amount of assets or a significant business,
(iii) any change in accounting principles or practices, or (iv) any other
similar change, in each case with respect to the Company or any other
entity whose performance is relevant to the grant or vesting of an
Incentive, the Committee (or, if the Company is not the surviving
corporation in any such transaction, the board of directors of the
surviving corporation) may, without the consent of any affected
participant, amend or modify the vesting criteria of any outstanding
Incentive that is based in whole or in part on the financial performance
of the Company (or any subsidiary or division thereof) or such other
entity so as equitably to reflect such event, with the desired result that
the criteria for evaluating such financial performance of the Company or
such other entity will be substantially the same (in the sole discretion
of the Committee or the board of directors of the surviving corporation)
following such event as prior to such event; provided, however, that the
amended or modified terms are permitted by the Plan as then in effect.
3. Eligible Participants. Employees of the Company or its subsidiaries
(including officers and employees of the Company or its subsidiaries), directors
and consultants, advisors or other independent contractors who provide services
to the Company or its subsidiaries (including members of the Company's
scientific advisory board) shall become eligible to receive Incentives under the
Plan when designated by the Committee. Participants may be designated
individually or by groups or categories (for example, by pay grade) as the
Committee deems appropriate. Participation by officers of the Company or its
subsidiaries and any performance objectives relating to such officers must be
approved by the Committee; provided, however, that if the entire Board is
serving as the Committee, then any Incentive awarded to an officer shall be
approved by a majority of the "non-employee directors" (within the meaning of
Rule 16b-3 of the Exchange Act). Participation by others and any performance
objectives relating to others may be approved by groups or categories (for
example, by pay grade) and authority to designate participants who are not
officers and to set or modify such targets may be delegated.
4. Types of Incentives. Incentives under the Plan may be granted in any
one or a combination of the following forms: (a) incentive stock options and
non-statutory stock options (Section 6); (b) stock appreciation rights ("SARs")
(Section 7); (c) stock awards (Section 8); (d) restricted stock (Section 8); and
(e) performance shares (Section 9).
5. Shares Subject to the Plan.
5.1. Number of Shares. Subject to adjustment as provided in Section
11.6, the number of shares of Common Stock which may be issued under the
Plan shall not exceed 5,400,000 shares of Common Stock. Shares of Common
Stock that are issued under the Plan or that are subject to outstanding
Incentives will be applied to reduce the maximum number of shares of
Common Stock remaining available for issuance under the Plan.
5.2. Cancellation. To the extent that cash in lieu of shares of
Common Stock is delivered upon the exercise of an SAR pursuant to Section
7.4, the Company shall be deemed, for purposes of applying the limitation
on the number of shares, to have issued the greater of the number of
shares of Common Stock which it was entitled to issue upon such exercise
or on the exercise of any related option. In the event that a stock option
or SAR granted hereunder expires or is terminated or canceled unexercised
or unvested as to any shares of Common Stock, such shares may again be
issued under the Plan either pursuant to stock options, SARs or otherwise.
In the event that shares of Common Stock are issued as restricted stock or
pursuant to a stock award and thereafter are forfeited or reacquired by
the Company pursuant to rights reserved upon issuance thereof, such
forfeited and reacquired shares may again be issued under the Plan, either
as restricted stock, pursuant to stock awards or otherwise. The Committee
may also determine to cancel, and agree to the cancellation of, stock
options in order to make a participant eligible for the grant of a stock
option at a lower price than the option to be canceled.
6. Stock Options. A stock option is a right to purchase shares of Common
Stock from the Company. The Committee may designate whether an option is to be
considered an incentive stock option or a non-statutory stock option. To the
extent that any incentive stock option granted under the Plan ceases for any
reason to qualify as an "incentive stock option" for purposes of Section 422 of
the Code, such incentive stock option will continue to be outstanding for
purposes of the Plan but will thereafter be deemed to be a non-statutory stock
option. Each stock option granted by the Committee under this Plan shall be
subject to the following terms and conditions:
6.1. Price. The option price per share shall be determined by the
Committee, subject to adjustment under Section 11.6.
6.2. Number. The number of shares of Common Stock subject to the
option shall be determined by the Committee, subject to adjustment as
provided in Section 11.6. The number of shares of Common Stock subject to
a stock option shall be reduced in the same proportion that the holder
thereof exercises a SAR if any SAR is granted in conjunction with or
related to the stock option. No individual may receive options to purchase
more than 2,000,000 shares in any year.
6.3. Duration and Time for Exercise. Subject to earlier termination
as provided in Section 11.4, the term of each stock option shall be
determined by the Committee but in no event shall be more than ten years
from the date of grant. Each stock option, or portion thereof, shall
become exercisable at such time or times as may be designated by the
Committee at the time of the stock option grant. The Committee may
accelerate the vesting of any stock option.
6.4. Manner of Exercise. Subject to the conditions contained in this
Plan and in the agreement with the recipient evidencing such option, a
stock option may be exercised, in whole or in part, by giving written
notice to the Company, specifying the number of shares of Common Stock to
be purchased and accompanied by the full purchase price for such shares.
The exercise price shall be payable (a) in United States dollars upon
exercise of the option and may be paid by cash; uncertified or certified
check; bank draft; (b) by delivery of shares of Common Stock that are
already owned by the participant in payment of all or any part of the
exercise price, which shares shall be valued for this purpose at the Fair
Market Value on the date such option is exercised; or (c) at the
discretion of the Committee, by instructing the Company to withhold from
the shares of Common Stock issuable upon exercise of the stock option
shares of Common Stock in payment of all or any part of the exercise price
and/or any related withholding tax obligations, which shares shall be
valued for this purpose at the Fair Market Value. The shares of Common
Stock delivered by the participant pursuant to Section 6.4(b) must have
been held by the participant for a period of not less than six months
prior to the exercise of the option, unless otherwise determined by the
Committee. Prior to the issuance of shares of Common Stock upon the
exercise of a stock option, a participant shall have no rights as a
stockholder. Except as otherwise provided in the Plan, no adjustment will
be made for dividends or distributions with respect to such stock options
as to which there is a record date preceding the date the participant
becomes the holder of record of such shares, except as the Committee may
determine in its discretion.
6.5. Incentive Stock Options. Notwithstanding anything in the Plan
to the contrary, the following additional provisions shall apply to the
grant of stock options which are intended to qualify as Incentive Stock
Options (as such term is defined in Section 422 of the Code):
(a) The aggregate Fair Market Value (determined as of the time
the option is granted) of the shares of Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by
any participant during any calendar year (under the Plan and any
other incentive stock option plans of the Company or any subsidiary
or parent corporation of the Company) shall not exceed $100,000. The
determination will be made by taking incentive stock options into
account in the order in which they were granted.
(b) Any Incentive Stock Option certificate authorized under
the Plan shall contain such other provisions as the Committee shall
deem advisable, but shall in all events be consistent with and
contain all provisions required in order to qualify the options as
Incentive Stock Options.
(c) All Incentive Stock Options must be granted within ten
years from the earlier of the date on which this Plan was adopted by
board of directors or the date this Plan was approved by the
Company's stockholders.
(d) Unless sooner exercised, all Incentive Stock Options shall
expire no later than 10 years after the date of grant. No Incentive
Stock Option may be exercisable after ten (10) years from its date
of grant (five (5) years from its date of grant if, at the time the
Incentive Stock Option is granted, the Participant owns, directly or
indirectly, more than 10% of the total combined voting power of all
classes of stock of the Company or any parent or subsidiary
corporation of the Company).
(e) The exercise price for Incentive Stock Options shall be
not less than 100% of the Fair Market Value of one share of Common
Stock on the date of grant with respect to an Incentive Stock
Option; provided that the exercise price shall be 110% of the Fair
Market Value if, at the time the Incentive Stock Option is granted,
the participant owns, directly or indirectly, more than 10% of the
total combined voting power of all classes of stock of the Company
or any parent or subsidiary corporation of the Company.
7. Stock Appreciation Rights. An SAR is a right to receive, without
payment to the Company, a number of shares of Common Stock, cash or any
combination thereof, the amount of which is determined pursuant to the formula
set forth in Section 7.4. An SAR may be granted (a) with respect to any stock
option granted under this Plan, either concurrently with the grant of such stock
option or at such later time as determined by the Committee (as to all or any
portion of the shares of Common Stock subject to the stock option), or (b)
alone, without reference to any related stock option. Each SAR granted by the
Committee under this Plan shall be subject to the following terms and
conditions:
7.1. Number; Exercise Price. Each SAR granted to any participant
shall relate to such number of shares of Common Stock as shall be
determined by the Committee, subject to adjustment as provided in Section
11.6. In the case of an SAR granted with respect to a stock option, the
number of shares of Common Stock to which the SAR pertains shall be
reduced in the same proportion that the holder of the option exercises the
related stock option. The exercise price of an SAR will be determined by
the Committee, in its discretion, at the date of grant but may not be less
than 100% of the Fair Market Value of one share of Common Stock on the
date of grant.
7.2. Duration. Subject to earlier termination as provided in Section
11.4, the term of each SAR shall be determined by the Committee but shall
not exceed ten years and one day from the date of grant. Unless otherwise
provided by the Committee, each SAR shall become exercisable at such time
or times, to such extent and upon such conditions as the stock option, if
any, to which it relates is exercisable. The Committee may in its
discretion accelerate the exercisability of any SAR.
7.3. Exercise. An SAR may be exercised, in whole or in part, by
giving written notice to the Company, specifying the number of SARs which
the holder wishes to exercise. Upon receipt of such written notice, the
Company shall, within 90 days thereafter, deliver to the exercising holder
certificates for the shares of Common Stock or cash or both, as determined
by the Committee, to which the holder is entitled pursuant to Section 7.4.
7.4. Payment. Subject to the right of the Committee to deliver cash
in lieu of shares of Common Stock (which, as it pertains to officers and
directors of the Company, shall comply with all requirements of the
Exchange Act), the number of shares of Common Stock which shall be
issuable upon the exercise of an SAR shall be determined by dividing:
(a) the number of shares of Common Stock as to which the SAR
is exercised multiplied by the amount of the appreciation in such
shares (for this purpose, the "appreciation" shall be the amount by
which the Fair Market Value of the shares of Common Stock subject to
the SAR on the exercise date exceeds (1) in the case of an SAR
related to a stock option, the exercise price of the shares of
Common Stock under the stock option or (2) in the case of an SAR
granted alone, without reference to a related stock option, an
amount which shall be determined by the Committee at the time of
grant, subject to adjustment under Section 11.6); by
(b) the Fair Market Value of a share of Common Stock on the
exercise date.
In lieu of issuing shares of Common Stock upon the exercise of a
SAR, the Committee may elect to pay the holder of the SAR cash equal to
the Fair Market Value on the exercise date of any or all of the shares
which would otherwise be issuable. No fractional shares of Common Stock
shall be issued upon the exercise of an SAR; instead, the holder of the
SAR shall be entitled to receive a cash adjustment equal to the same
fraction of the Fair Market Value of a share of Common Stock on the
exercise date or to purchase the portion necessary to make a whole share
at its Fair Market Value on the date of exercise.
8. Stock Awards and Restricted Stock. A stock award consists of the
transfer by the Company to a participant of shares of Common Stock, without
other payment therefor, as additional compensation for services to the Company.
The participant receiving a stock award will have all voting, dividend,
liquidation and other rights with respect to the shares of Common Stock issued
to a participant as a stock award under this Section 8 upon the participant
becoming the holder of record of such shares. A share of restricted stock
consists of shares of Common Stock which are sold or transferred by the Company
to a participant at a price determined by the Committee (which price shall be at
least equal to the minimum price required by applicable law for the issuance of
a share of Common Stock) and subject to restrictions on their sale or other
transfer by the participant, which restrictions and conditions may be determined
by the Committee as long as such restrictions and conditions are not
inconsistent with the terms of the Plan. The transfer of Common Stock pursuant
to stock awards and the transfer and sale of restricted stock shall be subject
to the following terms and conditions:
8.1. Number of Shares. The number of shares to be transferred or
sold by the Company to a participant pursuant to a stock award or as
restricted stock shall be determined by the Committee.
8.2. Sale Price. The Committee shall determine the price, if any, at
which shares of restricted stock shall be sold or granted to a
participant, which may vary from time to time and among participants and
which may be below the Fair Market Value of such shares of Common Stock at
the date of sale.
8.3. Restrictions. All shares of restricted stock transferred or
sold hereunder shall be subject to such restrictions as the Committee may
determine, including, without limitation any or all of the following:
(a) a prohibition against the sale, transfer, pledge or other
encumbrance of the shares of restricted stock, such prohibition to
lapse at such time or times as the Committee shall determine
(whether in annual or more frequent installments, at the time of the
death, Disability or retirement of the holder of such shares, or
otherwise);
(b) a requirement that the holder of shares of restricted
stock forfeit, or (in the case of shares sold to a participant)
resell back to the Company at his or her cost, all or a part of such
shares in the event of termination of his or her employment or
consulting engagement during any period in which such shares are
subject to restrictions; or
(c) such other conditions or restrictions as the Committee may
deem advisable.
8.4. Escrow. In order to enforce the restrictions imposed by the
Committee pursuant to Section 8.3, the participant receiving restricted
stock shall enter into an agreement with the Company setting forth the
conditions of the grant. Shares of restricted stock shall be registered in
the name of the participant and deposited, together with a stock power
endorsed in blank, with the Company. Each such certificate shall bear a
legend in substantially the following form:
The transferability of this certificate and the shares of Common
Stock represented by it are subject to the terms and conditions
(including conditions of forfeiture) contained in the 2003 Stock
Option Plan of Manhattan Pharmaceuticals, Inc. (the "Company"), and
an agreement entered into between the registered owner and the
Company. A copy of the 2003 Stock Option Plan and the agreement is
on file in the office of the secretary of the Company.
8.5. End of Restrictions. Subject to Section 11.5, at the end of any
time period during which the shares of restricted stock are subject to
forfeiture and restrictions on transfer, such shares will be delivered
free of all restrictions to the participant or to the participant's legal
representative, beneficiary or heir.
8.6. Stockholder. Subject to the terms and conditions of the Plan,
each participant receiving restricted stock shall have all the rights of a
stockholder with respect to shares of stock during any period in which
such shares are subject to forfeiture and restrictions on transfer,
including without limitation, the right to vote such shares. Dividends
paid in cash or property other than Common Stock with respect to shares of
restricted stock shall be paid to the participant currently. Unless the
Committee determines otherwise in its sole discretion, any dividends or
distributions (including regular quarterly cash dividends) paid with
respect to shares of Common Stock subject to the restrictions set forth
above will be subject to the same restrictions as the shares to which such
dividends or distributions relate. In the event the Committee determines
not to pay dividends or distributions currently, the Committee will
determine in its sole discretion whether any interest will be paid on such
dividends or distributions. In addition, the Committee in its sole
discretion may require such dividends and distributions to be reinvested
(and in such case the participant consents to such reinvestment) in shares
of Common Stock that will be subject to the same restrictions as the
shares to which such dividends or distributions relate.
9. Performance Shares. A performance share consists of an award which
shall be paid in shares of Common Stock, as described below. The grant of a
performance share shall be subject to such terms and conditions as the Committee
deems appropriate, including the following:
9.1. Performance Objectives. Each performance share will be subject
to performance objectives for the Company or one of its operating units to
be achieved by the participant before the end of a specified period. The
number of performance shares granted shall be determined by the Committee
and may be subject to such terms and conditions, as the Committee shall
determine. If the performance objectives are achieved, each participant
will be paid in shares of Common Stock or cash as determined by the
Committee. If such objectives are not met, each grant of performance
shares may provide for lesser payments in accordance with formulas
established in the award.
9.2. Not Stockholder. The grant of performance shares to a
participant shall not create any rights in such participant as a
stockholder of the Company, until the payment of shares of Common Stock
with respect to an award.
9.3. No Adjustments. No adjustment shall be made in performance
shares granted on account of cash dividends which may be paid or other
rights which may be issued to the holders of Common Stock prior to the end
of any period for which performance objectives were established.
9.4. Expiration of Performance Share. If any participant's
employment or consulting engagement with the Company is terminated for any
reason other than normal retirement, death or Disability prior to the
achievement of the participant's stated performance objectives, all the
participant's rights on the performance shares shall expire and terminate
unless otherwise determined by the Committee. In the event of termination
of employment or consulting by reason of death, Disability, or normal
retirement, the Committee, in its own discretion may determine what
portions, if any, of the performance shares should be paid to the
participant.
10. Change of Control.
10.1 Change in Control. For purposes of this Section 10, a "Change
in Control" of the Company will mean the following:
(a) the sale, lease, exchange or other transfer, directly or
indirectly, of all or substantially all of the assets of the Company
(in one transaction or in a series of related transactions) to a
person or entity that is not controlled by the Company;
(b) the approval by the stockholders of the Company of any
plan or proposal for the liquidation or dissolution of the Company;
(c) any person becomes after the effective date of the Plan
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of (i) 20% or more, but not 50% or
more, of the combined voting power of the Company's outstanding
securities ordinarily having the right to vote at elections of
directors, unless the transaction resulting in such ownership has
been approved in advance by the Continuing Directors (as defined
below), or (ii) 50% or more of the combined voting power of the
Company's outstanding securities ordinarily having the right to vote
at elections of directors (regardless of any approval by the
Continuing Directors); provided that a traditional institution or
venture capital financing transaction shall be excluded from this
definition;
(d) a merger or consolidation to which the Company is a party
if the stockholders of the Company immediately prior to effective
date of such merger or consolidation have "beneficial ownership" (as
defined in Rule 13d-3 under the Exchange Act), immediately following
the effective date of such merger or consolidation, of securities of
the surviving corporation representing (i) 50% or more, but less
than 80%, of the combined voting power of the surviving
corporation's then outstanding securities ordinarily having the
right to vote at elections of directors, unless such merger or
consolidation has been approved in advance by the Continuing
Directors, or (ii) less than 50% of the combined voting power of the
surviving corporation's then outstanding securities ordinarily
having the right to vote at elections of directors (regardless of
any approval by the Continuing Directors).
10.2 Continuing Directors. For purposes of this Section 10,
"Continuing Directors" of the Company will mean any individuals who are
members of the Board on the effective date of the Plan and any individual
who subsequently becomes a member of the Board whose election, or
nomination for election by the Company's stockholders, was approved by a
vote of at least a majority of the Continuing Directors (either by
specific vote or by approval of the Company's proxy statement in which
such individual is named as a nominee for director without objection to
such nomination).
10.3 Acceleration of Incentives. Without limiting the authority of
the Committee under the Plan, if a Change of Control of the Company occurs
whereby the acquiring entity or successor to the Company does not assume
the Incentives or replace them with substantially equivalent incentive
awards, then upon the effective date of any such Change in Control (a) all
outstanding options and SARs will vest and will become immediately
exercisable in full and will remain exercisable for the remainder of their
terms, regardless of whether the participant to whom such options or SARs
have been granted remains in the employ or service of the Company or any
subsidiary of the Company or any acquiring entity or successor to the
Company; (b) the restrictions on all shares of restricted stock awards
shall lapse immediately; and (c) all performance shares shall be deemed to
be met and payment made immediately.
10.4 Cash Payment for Options. If a Change in Control of the Company
occurs, then the Committee, if approved by the Committee in its sole
discretion either in an agreement evidencing an option at the time of
grant or at any time after the grant of an option, and without the consent
of any participant affected thereby, may determine that:
(a) some or all participants holding outstanding options will
receive, with respect to some or all of the shares of Common Stock
subject to such options, as of the effective date of any such Change
in Control of the Company, cash in an amount equal to the excess of
the Fair Market Value of such shares immediately prior to the
effective date of such Change in Control of the Company over the
exercise price per share of such options; and
(b) any options as to which, as of the effective date of any
such Change in Control, the Fair Market Value of the shares of
Common Stock subject to such options is less than or equal to the
exercise price per share of such options, shall terminate as of the
effective date of any such Change in Control.
If the Committee makes a determination as set forth in subparagraph (a) of
this Section 10.4, then as of the effective date of any such Change in
Control of the Company, such options will terminate as to such shares and
the participants formerly holding such options will only have the right to
receive such cash payment(s). If the Committee makes a determination as
set forth in subparagraph (b) of this Section 10.4, then as of the
effective date of any such Change in Control of the Company such options
will terminate, become void and expire as to all unexercised shares of
Common Stock subject to such options on such date, and the participants
formerly holding such options will have no further rights with respect to
such options.
11. General.
11.1. Effective Date. The Plan will become effective upon approval
by the Board.
11.2. Duration. The Plan shall remain in effect until all Incentives
granted under the Plan have either been satisfied by the issuance of
shares of Common Stock or the payment of cash or been terminated under the
terms of the Plan and all restrictions imposed on shares of Common Stock
in connection with their issuance under the Plan have lapsed. No
Incentives may be granted under the Plan after the tenth anniversary of
the date the Plan is approved by the stockholders of the Company.
11.3. Non-transferability of Incentives. Except, in the event of the
holder's death, by will or the laws of descent and distribution to the
limited extent provided in the Plan or the Incentive, unless approved by
the Committee, no stock option, SAR, restricted stock or performance award
may be transferred, pledged or assigned by the holder thereof, either
voluntarily or involuntarily, directly or indirectly, by operation of law
or otherwise, and the Company shall not be required to recognize any
attempted assignment of such rights by any participant. During a
participant's lifetime, an Incentive may be exercised only by him or her
or by his or her guardian or legal representative.
11.4. Effect of Termination, Death or Disability. In the event that
a participant ceases to be an employee of or consultant to the Company, or
the participants other service with the Company is terminated, for any
reason, including death, but excluding "Disability," any Incentives may be
exercised or shall expire at such times as may be determined by the
Committee in its sole discretion in the agreement evidencing an Incentive.
Notwithstanding any provision to the contrary contained in the Plan, in
the event that a participant ceases to be employed or engaged by the
Company, or is otherwise unable to render services to the Company, as a
result of a Disability, any portion of a stock option Incentive that has
vested as of the date of such Disability shall remain exercisable for the
remaining term of such stock option, or such lesser period as provided in
the agreement evidencing the terms of such stock option; provided,
however, that all portions of a stock option Incentive that have not yet
vested or are scheduled to vest in the future shall not vest and the
employee's rights to such portion of the stock option shall terminate.
Notwithstanding the other provisions of this Section 11.4, upon a
participant's termination of employment or other service with the Company
and all subsidiaries (other than as a result of a Disability), the
Committee may, in its sole discretion (which may be exercised at any time
on or after the date of grant, including following such termination),
cause options and SARs (or any part thereof) then held by such participant
to become or continue to become exercisable and/or remain exercisable
following such termination of employment or service and Restricted Stock
Awards, Performance Shares and Stock Awards then held by such participant
to vest and/or continue to vest or become free of transfer restrictions,
as the case may be, following such termination of employment or service,
in each case in the manner determined by the Committee; provided, however,
that no Incentive may remain exercisable or continue to vest beyond its
expiration date. Any Incentive Stock Option that remains unexercised more
than one (1) year following termination of employment by reason of death
or Disability or more than three (3) months following termination for any
reason other than death or Disability will thereafter be deemed to be a
Non-Statutory Stock Option. The term "Disability" shall mean, with respect
to a participant, that such participant is unable to perform a significant
part of his or her duties and responsibilities as an employee, director,
consultant or other advisor to the Company by reason of such participant's
physical or mental injury or illness, and such inability lasts for a
period of at least 180 consecutive days.
11.5. Additional Conditions. Notwithstanding anything in this Plan
to the contrary: (a) the Company may, if it shall determine it necessary
or desirable for any reason, at the time of award of any Incentive or the
issuance of any shares of Common Stock pursuant to any Incentive, require
the recipient of the Incentive, as a condition to the receipt thereof or
to the receipt of shares of Common Stock issued pursuant thereto, to
deliver to the Company a written representation of present intention to
acquire the Incentive or the shares of Common Stock issued pursuant
thereto for his or her own account for investment and not for
distribution; and (b) if at any time the Company further determines, in
its sole discretion, that the listing, registration or qualification (or
any updating of any such document) of any Incentive or the shares of
Common Stock issuable pursuant thereto is necessary on any securities
exchange or under any federal or state securities or blue sky law, or that
the consent or approval of any governmental regulatory body is necessary
or desirable as a condition of, or in connection with the award of any
Incentive, the issuance of shares of Common Stock pursuant thereto, or the
removal of any restrictions imposed on such shares, such Incentive shall
not be awarded or such shares of Common Stock shall not be issued or such
restrictions shall not be removed, as the case may be, in whole or in
part, unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Company. Notwithstanding any other provision of the Plan
or any agreements entered into pursuant to the Plan, the Company will not
be required to issue any shares of Common Stock under this Plan, and a
participant may not sell, assign, transfer or otherwise dispose of shares
of Common Stock issued pursuant to any Incentives granted under the Plan,
unless (a) there is in effect with respect to such shares a registration
statement under the Securities Act of 1933, as amended (the "Securities
Act"), and any applicable state or foreign securities laws or an exemption
from such registration under the Securities Act and applicable state or
foreign securities laws, and (b) there has been obtained any other
consent, approval or permit from any other regulatory body which the
Committee, in its sole discretion, deems necessary or advisable. The
Company may condition such issuance, sale or transfer upon the receipt of
any representations or agreements from the parties involved, and the
placement of any legends on certificates representing shares of Common
Stock, as may be deemed necessary or advisable by the Company in order to
comply with such securities law or other restrictions.
11.6. Adjustment. In the event of any merger, consolidation or
reorganization of the Company with any other corporation or corporations,
there shall be substituted for each of the shares of Common Stock then
subject to the Plan, including shares subject to restrictions, options, or
achievement of performance share objectives, the number and kind of shares
of stock or other securities to which the holders of the shares of Common
Stock will be entitled pursuant to the transaction. In the event of any
recapitalization, reclassification, stock dividend, stock split,
combination of shares or other similar change in the corporate structure
of the Company or shares of the Company, the exercise price of an
outstanding Incentive and the number of shares of Common Stock then
subject to the Plan, including shares subject to restrictions, options or
achievements of performance shares, shall be adjusted in proportion to the
change in outstanding shares of Common Stock in order to prevent dilution
or enlargement of the rights of the participants. In the event of any such
adjustments, the purchase price of any option, the performance objectives
of any Incentive, and the shares of Common Stock issuable pursuant to any
Incentive shall be adjusted as and to the extent appropriate, in the
discretion of the Committee, to provide participants with the same
relative rights before and after such adjustment.
11.7. Incentive Plans and Agreements. Except in the case of stock
awards or cash awards, the terms of each Incentive shall be stated in a
plan or agreement approved by the Committee. The Committee may also
determine to enter into agreements with holders of options to reclassify
or convert certain outstanding options, within the terms of the Plan, as
Incentive Stock Options or as non-statutory stock options and in order to
eliminate SARs with respect to all or part of such options and any other
previously issued options.
11.8. Withholding.
(a) The Company shall have the right to (i) withhold and
deduct from any payments made under the Plan or from future wages of
the participant (or from other amounts that may be due and owing to
the participant from the Company or a subsidiary of the Company), or
make other arrangements for the collection of, all legally required
amounts necessary to satisfy any and all foreign, federal, state and
local withholding and employment-related tax requirements
attributable to an Incentive, or (ii) require the participant
promptly to remit the amount of such withholding to the Company
before taking any action, including issuing any shares of Common
Stock, with respect to an Incentive. At any time when a participant
is required to pay to the Company an amount required to be withheld
under applicable income tax laws in connection with a distribution
of Common Stock or upon exercise of an option or SAR, the
participant may satisfy this obligation in whole or in part by
electing (the "Election") to have the Company withhold from the
distribution shares of Common Stock having a value up to the amount
required to be withheld. The value of the shares to be withheld
shall be based on the Fair Market Value of the Common Stock on the
date that the amount of tax to be withheld shall be determined ("Tax
Date").
(b) Each Election must be made prior to the Tax Date. The
Committee may disapprove of any Election, may suspend or terminate
the right to make Elections, or may provide with respect to any
Incentive that the right to make Elections shall not apply to such
Incentive. An Election is irrevocable.
(c) If a participant is an officer or director of the Company
within the meaning of Section 16 of the Exchange Act, then an
Election is subject to the following additional restrictions:
(1) No Election shall be effective for a Tax Date which
occurs within six months of the grant or exercise of the
award, except that this limitation shall not apply in the
event death or Disability of the participant occurs prior to
the expiration of the six-month period.
(2) The Election must be made either six months prior to
the Tax Date or must be made during a period beginning on the
third business day following the date of release for
publication of the Company's quarterly or annual summary
statements of sales and earnings and ending on the twelfth
business day following such date.
11.9. No Continued Employment, Engagement or Right to Corporate
Assets. No participant under the Plan shall have any right, because of his
or her participation, to continue in the employ of the Company for any
period of time or to any right to continue his or her present or any other
rate of compensation. Nothing contained in the Plan shall be construed as
giving an employee, a consultant, such persons' beneficiaries or any other
person any equity or interests of any kind in the assets of the Company or
creating a trust of any kind or a fiduciary relationship of any kind
between the Company and any such person.
11.10. Deferral Permitted. Payment of cash or distribution of any
shares of Common Stock to which a participant is entitled under any
Incentive shall be made as provided in the Incentive. Payment may be
deferred at the option of the participant if provided in the Incentive.
11.11. Amendment of the Plan. The Board may amend, suspend or
discontinue the Plan at any time; provided, however, that no amendments to
the Plan will be effective without approval of the stockholders of the
Company if stockholder approval of the amendment is then required pursuant
to Section 422 of the Code or the rules of any stock exchange or Nasdaq or
similar regulatory body. No termination, suspension or amendment of the
Plan may adversely affect any outstanding Incentive without the consent of
the affected participant; provided, however, that this sentence will not
impair the right of the Committee to take whatever action it deems
appropriate under Section 11.6 of the Plan.
11.12. Definition of Fair Market Value. For purposes of this Plan,
the "Fair Market Value" of a share of Common Stock at a specified date
shall, unless otherwise expressly provided in this Plan, be the amount
which the Committee or the board of directors of the Company determines in
good faith in the exercise of its reasonable discretion to be 100% of the
fair market value of such a share as of the date in question; provided,
however, that notwithstanding the foregoing, if such shares are listed on
a U.S. securities exchange or are quoted on the Nasdaq National Market
System or Nasdaq SmallCap Stock Market (collectively, "Nasdaq"), then Fair
Market Value shall be determined by reference to the last sale price of a
share of Common Stock on such U.S. securities exchange or Nasdaq on the
applicable date. If such U.S. securities exchange or Nasdaq is closed for
trading on such date, or if the Common Stock does not trade on such date,
then the last sale price used shall be the one on the date the Common
Stock last traded on such U.S. securities exchange or Nasdaq.
11.13 Breach of Confidentiality, Assignment of Inventions, or
Non-Compete Agreements. Notwithstanding anything in the Plan to the
contrary, in the event that a participant materially breaches the terms of
any confidentiality, assignment of inventions, or non-compete agreement
entered into with the Company or any subsidiary of the Company, whether
such breach occurs before or after termination of such participant's
employment or other service with the Company or any subsidiary, the
Committee in its sole discretion may immediately terminate all rights of
the participant under the Plan and any agreements evidencing an Incentive
then held by the participant without notice of any kind.
11.14 Governing Law. The validity, construction, interpretation,
administration and effect of the Plan and any rules, regulations and
actions relating to the Plan will be governed by and construed exclusively
in accordance with the laws of the State of Delaware, notwithstanding the
conflicts of laws principles of any jurisdictions.
11.15 Successors and Assigns. The Plan will be binding upon and
inure to the benefit of the successors and permitted assigns of the
Company and the participants in the Plan.