Document:

Exhibit
10.35

    

    MANHATTAN
PHARMACEUTICALS, INC.

    

    Subscription
Agreement

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    SUBSCRIPTION
AGREEMENT

    

    Manhattan
Pharmaceuticals, Inc.

    48 Wall
Street, Suite 1100

    New York,
NY 10005

    

    Ladies
and Gentlemen:

    

    1.           Subscription.  The
undersigned (the “Purchaser”), intending to be legally bound, hereby irrevocably
agrees to purchase from Manhattan Pharmaceuticals, Inc., a Delaware corporation
(the “Company”), the number of units (the “Units”) of the Company set forth on
the signature page hereof at a purchase price of $25,000 per
Unit.  This subscription is submitted to you in accordance with and
subject to the terms and conditions described in this Subscription Agreement and
the Confidential Private Placement Memorandum, dated December 28, 2009, as may
amended or supplemented from time to time, including all attachments, schedules
and exhibits thereto (the “Memorandum,” and, together with this Subscription
Agreement, the “Offering Documents”) and relating to the offering (the
“Offering”) by the Company of a minimum of 100 Units ($2,500,000) and a maximum
of 160 Units ($4,000,000) with the right at the sole discretion of the Company
and the Placement Agent to increase the maximum by an additional 40 Units
($1,000,000) (the “Overallotment”).  Each Unit is being offered at a
price of $25,000 per Unit and consists of (i) 357,143 shares of common stock,
$0.001 par value per share (the “Common Stock” or “Shares”) of the Company and
(ii) 535,714 warrants (each a “Warrant” and collectively the “Warrants”), each
of which will entitle the holder to purchase one additional share of Common
Stock (each a “Warrant Share” and collectively the “Warrant
Shares”).  The Shares, the Warrants and the Warrant Shares may be
collectively referred to in this Subscription Agreement as the
"Securities".  The Units are being offered on an exclusive basis
through National Securities Corporation (the “Placement Agent”).  The
minimum subscription for a Purchaser in the Offering is one Unit ($25,000);
provided, however, that Placement Agent
and the Company, in their sole discretion, may waive such minimum subscription
requirement from time to time.

    

    2.           Payment.  The
Purchaser encloses herewith a check payable to, or will immediately make a wire
transfer payment to “Signature Bank, Escrow Agent for Manhattan
Pharmaceuticals, Inc.” in the full amount of the purchase price of the Units
being subscribed for.  Such funds will be held for the Purchaser's
benefit, and will be returned promptly, without interest or offset if this
Subscription Agreement is not accepted by the Company or the Offering is
terminated pursuant to its terms or by the Company or the Placement
Agent.  Together with a check for, or wire transfer of, the full
purchase price, the Purchaser is delivering (i) a completed and executed Omnibus
Signature Page to this Subscription Agreement and the Registration Rights
Agreement and (ii) an Investor Questionnaire and Investor Profile, which is
annexed hereto.

    

    3.           Deposit of
Funds.  All payments made as provided in Section 2 hereof shall
be deposited by the Company or the Placement Agent as soon as practicable with
the Escrow Agent, in a non-interest-bearing escrow account (the “Escrow
Account”) until the earliest to occur of (a) the occurrence of a closing, the
first of which shall not occur until $2,500,000 of Units are sold (the “First
Closing”), (b) the rejection of such subscription, or (c) the termination of the
Offering by the Company or the Placement Agent.  The Company and the
Placement Agent may continue to offer and sell the Units and conduct additional
closings (each, a “Closing”) for the sale of additional Units after the First
Closing and until the termination of the Offering. In the event that the Company
does not effect a Closing (as defined below), on or before February 28, 2010
(the “Initial Offering Period”), which period may be extended by the Company and
the Placement Agent, in their mutual discretion to a date no later than March
28, 2010 (the “Termination Date”, with this additional period, together with the
Initial Offering Period, being referred to herein as the “Offering Period”), the
Company will refund all subscription funds, without deduction and/or interest
accrued thereon, and will return the subscription documents to each
Purchaser.  If the Company and/or the Placement Agent rejects a
subscription, either in whole or in part (which decision is in their sole
discretion), the rejected subscription funds or the rejected portion thereof
will be returned promptly to such Purchaser without interest accrued
thereon.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    4.           Acceptance of
Subscription.  The Purchaser understands and agrees that the
Company and the Placement Agent, in their discretion reserve the right to accept
or reject this or any other subscription for Units, in whole or in part,
notwithstanding prior receipt by the Purchaser of notice of acceptance of this
or any other subscription.  The Company shall have no obligation
hereunder until the Company shall execute and deliver to the Purchaser an
executed copy of this Subscription Agreement.  If this subscription is
rejected in whole, or the Offering is terminated, all funds received from the
Purchaser will be returned without interest, penalty, expense or deduction, and
this Subscription Agreement shall thereafter be of no further force or
effect.  If this subscription is rejected in part, the funds for the
rejected portion of this subscription will be returned without interest,
penalty, expense or deduction, and this Subscription Agreement will continue in
full force and effect to the extent this subscription was accepted.

    

    5.           Representations and Warranties of the
Purchaser.  The Purchaser hereby acknowledges, represents,
warrants, and agrees as follows:

    

    (a)           None
of the Units or the Securities contained in the Units offered pursuant to the
Offering Documents are registered under the Securities Act of 1933, as amended
(the “Securities Act”), or any state securities laws.  The Purchaser
understands that the offering and sale of the Units contemplated hereby is
intended to be exempt from registration under the Securities Act, by virtue of
Section 4(2) thereof and the provisions of Regulation D promulgated thereunder,
based, in part, upon the truth and accuracy of, and compliance with,
representations, warranties and agreements of the Purchaser contained in this
Subscription Agreement;

    

    (b)           The
Purchaser and the Purchaser’s attorney, accountant, purchaser representative
and/or tax advisor, if any (collectively, the “Advisors”), acknowledges that it
has received the Offering Documents, either in hard copy or electronically, and
all other documents requested by the Purchaser, has carefully reviewed them and
understands the information contained therein, and the Purchaser and the
Advisors, if any, prior to the execution of this Subscription Agreement, have
had access to the same kind of information as would be available in a
registration statement filed by the Company under the Securities
Act.  Purchaser’s decision to enter into this Subscription Agreement
and the other Transaction Documents (as defined herein) has been made based
solely on the independent evaluation of the Purchaser and its Advisors, if
any;

    

    (c)           Neither
the Securities and Exchange Commission (the “SEC”) nor any state securities
commission or other regulatory body has approved the Units, Shares or Warrants
or passed upon or endorsed the merits of the Offering or confirmed the accuracy
or determined the adequacy of the Offering Documents.  Any
representation to the contrary is a criminal offense.  The Offering
Documents have not been reviewed by any federal, state or other regulatory
authority.  The Units, and the Securities are subject to restrictions
on transferability and resale and may not be transferred or resold except as
permitted under the Securities Act, and the applicable state securities laws,
pursuant to registration or exemption therefrom;

    
      
         

      

      
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    (d)           All
documents, records, and books pertaining to the investment in the Units
(including, without limitation, the Offering Documents) have been made
available, subject to certain confidentiality restrictions, for inspection by
the Purchaser and its Advisors, if any;

    

    (e)           The
Purchaser and its Advisors, if any, have had a reasonable opportunity to ask
questions of and receive answers from a person or persons acting on behalf of
the Company concerning the offering of the Units and the business, financial
condition, and results of operations of the Company, and all such questions have
been answered by representatives of the Company to the full satisfaction of the
Purchaser and its Advisors, if any, and the Purchaser and its Advisors have had
access, through the Memorandum and/or the EDGAR system, to true and complete
copies of the Company’s most recent Annual Report on Form 10-K for the fiscal
year ended December 31, 2008 (the “10-K”) and all other reports
filed by the Company pursuant to the Securities Exchange Act of 1934, as
amended, since the filing of the 10-K and prior to the date hereof
and  have reviewed such filings;

    

    (f)           In
evaluating the suitability of an investment in the Company, the Purchaser has
not relied upon any representation or other information (oral or written) other
than as stated in the Offering Documents or as contained in documents so
furnished to the Purchaser or its Advisors, if any, by the Company or the
Placement Agent;

    

    (g)           The
Purchaser is unaware of, is in no way relying on, and did not become aware of
the offering of the Units directly or indirectly through or as a result of, any
form of general solicitation or general advertising including, without
limitation, any press release, filing with the SEC, article, notice,
advertisement or other communication published in any newspaper, magazine or
similar media or broadcast over television, radio or the internet, in connection
with the offering and sale of the Units and is not subscribing for Units and did
not become aware of the offering of the Units through or as a result of any
seminar or meeting to which the Purchaser was invited by, or any solicitation of
a subscription by, a person not previously known to the Purchaser in connection
with investments in securities generally;

    

    (h)           The
Purchaser has taken no action which would give rise to any claim by any person
for brokerage commissions, finder’ fees or the like relating to this
Subscription Agreement or the transactions contemplated hereby (other than
commissions and other compensation to be paid by the Company to the Placement
Agent or as otherwise described in the Offering Documents);

    

    (i)           The
Purchaser's decision to enter into this Subscription Agreement and the
Registration Rights Agreement has been made based solely on the independent
evaluation of the Purchaser and its own Advisors, if any, and the Purchaser,
either alone or together with its Advisors, if any, has such knowledge and
experience in financial, tax, and business matters, and, in particular,
investments in securities, so as to enable it to utilize the information made
available to it in connection with the Offering to evaluate the merits and risks
of an investment in the Units and the Company and to make an informed investment
decision with respect thereto;

    

    (j)           The
Purchaser is not relying on the Company, the Placement Agent or any of their
respective employees or agents with respect to the legal, tax, economic and
related considerations of an investment in the Units, and the Purchaser has
relied on the advice of, or has consulted with, only its own Advisors, if
any;

    

    (k)           The Purchaser is neither a registered
representative under the Financial Industry Regulatory Authority (“FINRA”), a member of FINRA or
associated or affiliated with any member of FINRA, nor a broker-dealer
registered with the SEC under the Exchange Act or engaged in a business that
would require it to be so registered, nor is it an affiliate of a such a
broker-dealer or any person engaged in a business that would require it to be
registered as a broker-dealer. In the event such Purchaser is a member of FINRA,
or associated or affiliated with a member of FINRA, such Purchaser agrees, if
requested by FINRA, to sign a lock-up, the form of which shall be satisfactory
to FINRA with respect to the Shares, Warrants and the Warrant
Shares.  Furthermore, the Purchaser is not an underwriter of the
Common Stock, nor is it an affiliate of an underwriter of the Common
Stock.

    
      
         

      

      
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    (l)           The
Purchaser is acquiring the Units solely for such Purchaser's own account for
investment purposes only and not with a view to or intent of resale or
distribution thereof, in whole or in part.  The Purchaser has no
agreement or arrangement, formal or informal, with any person to sell or
transfer all or any part of the Units, the Shares, the Warrants or the Warrant
Shares, and the Purchaser has no plans to enter into any such agreement or
arrangement;

    

    (m)           The
purchase of the Units represents a high risk capital investment and the
Purchaser is able to afford an investment in a speculative venture having the
risks and objectives of the Company.  The Purchaser must bear the
substantial economic risks of the investment in the Units indefinitely because
none of the Units, the Shares, the Warrants or the Warrant Shares may be sold,
hypothecated or otherwise disposed of unless subsequently registered under the
Securities Act and applicable state securities laws or an exemption from such
registration is available.  Legends shall be placed on the Units, the
Shares, the Warrants and the Warrant Shares to the effect that they have not
been registered under the Securities Act or applicable state securities laws and
appropriate notations thereof will be made in the Company's
books.  Stop transfer instructions will be placed with the transfer
agent of the Shares, if any, or with the Company.  There can be no
assurance that there will be any market for resale of the Units, the Shares, the
Warrants or the Warrant Shares.  The Company has agreed that
purchasers of the Units will have, with respect to the Shares and the Warrant
Shares, the registration rights described in the Registration Rights Agreement
in the form annexed to the Memorandum;

    

    (n)           The
Purchaser has adequate means of providing for such Purchaser's current financial
needs and foreseeable contingencies and has no need for liquidity of its
investment in the Securities for an indefinite period of time;

    

    (o)           The
Purchaser is aware that an investment in the Units involves a number of very
significant risks and has carefully read and considered the matters set forth
under the caption “Risk Factors” in the Offering Documents, and, in particular,
acknowledges that the Company has a limited operating history and limited
assets, the Company has not had any revenues from product sales to date, the
Company has incurred loses since its inception in 1993, the Company is engaged
in a highly competitive business and the Company's independent registered public
accounting firm has included an explanatory paragraph in its opinion on the
Company’s financial statements for the fiscal years ended December 31, 2008,
expressing doubt as to the Company's ability to continue as a going
concern;

    

    (p)           The
Purchaser meets the requirements of at least one of the suitability standards
for an “accredited investor” as that term is defined in Regulation D under the
Securities Act, and has truthfully and accurately completed the Investor
Questionnaire attached hereto;

     

    
      
         

      

      
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    (q)           The
Purchaser: (i) if a natural person, represents that the Purchaser has reached
the age of 21 and has full power and authority to execute and deliver this
Subscription Agreement and all other related agreements or certificates and to
carry out the provisions hereof and thereof; (ii) if a corporation, partnership,
or limited liability company or partnership, or association, joint stock
company, trust, unincorporated organization or other entity, represents that
such entity was not formed for the specific purpose of acquiring the Units, such
entity is duly organized, validly existing and in good standing under the laws
of the state of its organization, the consummation of the transactions
contemplated hereby is authorized by, and will not result in a violation of any
law applicable to it or its charter or other organizational documents, such
entity has full power and authority to execute and deliver this Subscription
Agreement and all other related agreements or certificates and to carry out the
provisions hereof and thereof and to purchase and hold the Units and the
Securities, the execution and delivery of this Subscription Agreement has been
duly authorized by all necessary action, this Subscription Agreement has been
duly executed and delivered on behalf of such entity and is a legal, valid and
binding obligation of such entity; or (iii) if executing this Subscription
Agreement in a representative or fiduciary capacity, represents that it has full
power and authority to execute and deliver this Subscription Agreement in such
capacity and on behalf of the subscribing individual, ward, partnership, trust,
estate, corporation, or limited liability company or partnership, or other
entity for whom the Purchaser is executing this Subscription Agreement, and such
individual, partnership, ward, trust, estate, corporation, or limited liability
company or partnership, or other entity has full right and power to perform
pursuant to this Subscription Agreement and make an investment in the Company,
and represents that this Subscription Agreement constitutes a legal, valid and
binding obligation of such entity.  The execution and delivery of this
Subscription Agreement will not violate or be in conflict with any order,
judgment, injunction, agreement or controlling document to which the Purchaser
is a party or by which it is bound;

    

    (r)           The
Purchaser and the Advisors, if any, have had the opportunity to obtain any
additional information, to the extent the Company had such information in its
possession or could acquire it without unreasonable effort or expense, necessary
to verify the accuracy of the information contained in the Offering Documents
and all documents received or reviewed in connection with the purchase of the
Units and have had the opportunity to have representatives of the Company
provide them with such additional information regarding the terms and conditions
of this particular investment and the financial condition, results of
operations, business and prospects of the Company deemed relevant by the
Purchaser or the Advisors, if any, and all such requested information, to the
extent the Company had such information in its possession or could acquire it
without unreasonable effort or expense, has been provided by the Company to the
full satisfaction of the Purchaser and the Advisors, if any;

    

    (s)           Any
information which the Purchaser has heretofore furnished or is furnishing
herewith to the Company or the Placement Agent is complete and accurate and may
be relied upon by the Company and the Placement Agent in determining the
availability of an exemption from registration under Federal and state
securities laws in connection with the Offering.  The Purchaser
further represents and warrants that it will notify and supply corrective
information to the Company and the Placement Agent immediately upon the
occurrence of any change therein occurring prior to the Company's issuance of
the securities underlying the Units;

    

    (t)           The
Purchaser has significant prior investment experience, including investments in
high risk securities.  The Purchaser is knowledgeable about
investments in small and thinly capitalized, development stage
companies.  The Purchaser has a sufficient net worth to sustain a loss
of its entire investment in the Company in the event such a loss should
occur.  The Purchaser's overall commitment to investments which are
not readily marketable is not excessive in view of the Purchaser’s net worth and
financial circumstances and the purchase of the Units will not cause such
commitment to become excessive.  The investment is a suitable one for
the Purchaser;

    

    (u)           The
Purchaser is satisfied that the it has received adequate information with
respect to all matters which it or the Advisors, if any, consider material to
its decision to make this investment;

    

    (v)           The
Purchaser acknowledges that any estimates or forward-looking statements or
projections included in the Offering Documents were prepared by the Company in
good faith but that the attainment of any such projections, estimates or
forward-looking statements cannot be guaranteed and will not be updated by the
Company and should not be relied upon;

    
      
         

      

      
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    (w)           No
oral or written representations have been made, or oral or written information
furnished, to the Purchaser or its Advisors, if any, in connection with the
Offering which are in any way inconsistent with the information contained in the
Offering Documents;

    

    (x)           Within
five (5) business days after receipt of a request from the Company or the
Placement Agent, the Purchaser will provide such information and deliver such
documents as may reasonably be necessary to comply with any and all laws and
ordinances to which the Company or the Placement Agent is subject;

    

    (y)           The
Purchaser’s substantive relationship with the Company, the Placement Agent or
subagent through which the Purchaser is subscribing for Units predates the
Company’s, Placement Agent’s or such subagent's contact with the Purchaser
regarding an investment in the Units;

    

    (z)           THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATES AND ARE BEING OFFERED AND
SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT
AND SUCH LAWS.  THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM.  THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY
OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED
UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE
OFFERING DOCUMENTS.  ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL;

    

    (aa)           Other
than with respect to the transactions contemplated herein, since the earlier to
occur of (i) the time that the Purchaser was first contacted by the Company, the
Placement Agent or any other person regarding an investment in the Company and
(ii) the thirtieth (30th) day
prior to the date hereof, neither the Purchaser nor any affiliate of the
Purchaser which (i) had knowledge of the transactions contemplated hereby, (ii)
has or shares discretion relating to the Purchaser’s investments or trading or
information concerning the Purchaser’s investments, including in respect of the
Securities, or (iii) is subject to the Purchaser’s review or input concerning
such affiliate’s investments or trading decisions (collectively, “Trading
Affiliates”) has, directly or indirectly, nor has any person acting on behalf
of, or pursuant to, any understanding with the Purchaser or Trading Affiliate
effected or agreed to effect any transactions in the securities of the Company
or involving the Company’s securities (a “Prohibited Transaction”).

    

    (bb)           The
Purchaser understands that affiliates and/or employees of the Placement Agent
(i) beneficially own in the aggregate approximately 7,883,085 shares of Common
Stock, (ii) will receive the compensation set forth elsewhere in the Offering
Documents in connection with the Offering, and (iii) may, but are not obligated
to, purchase Securities in the Offering and any and all such Securities
purchased shall be counted toward the Minimum Amount and the Maximum
Amount.

    

    (cc)           (For ERISA plans
only)    The fiduciary of the ERISA plan represents
that such fiduciary has been informed of and understands the Company’s
investment objectives, policies and strategies, and that the decision to invest
“plan assets” (as such term is defined in ERISA) in the Company is consistent
with the provisions of ERISA that require diversification of plan assets and
impose other fiduciary responsibilities.  The Purchaser fiduciary or
Plan (a) is responsible for the decision to invest in the Company; (b) is
independent of the Company or any of its affiliates; (c) is qualified to make
such investment decision; and (d) in making such decision, the Purchaser
fiduciary or Plan has not relied primarily on any advice or recommendation of
the Company or any of its affiliates;

    
      
         

      

      
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    (dd)           The Purchaser should check the Office
of Foreign Assets Control (“OFAC”) website at <http://www.treas.gov/ofac>
before making the following representations. The Purchaser represents
that the amounts invested by it in the Company in the Offering were not and are
not directly or indirectly derived from activities that contravene federal,
state or international laws and regulations, including anti-money laundering
laws and regulations. Federal regulations and Executive Orders administered by
OFAC prohibit, among other things, the engagement in transactions with, and the
provision of services to, certain foreign countries, territories, entities and
individuals.  The lists of OFAC prohibited countries, territories,
persons and entities can be found on the OFAC website at
<http://www.treas.gov/ofac>.  In addition, the programs
administered by OFAC (the “OFAC Programs”) prohibit dealing with
individuals1 or
entities in certain countries regardless of whether such individuals or entities
appear on the OFAC lists;

    

    (ee) To the best of the Purchaser’s
knowledge, none of: (1) the Purchaser; (2) any person controlling or controlled
by the Purchaser; (3) if the Purchaser is a privately-held entity, any person
having a beneficial interest in the Purchaser; or (4) any person for whom the
Purchaser is acting as agent or nominee in connection with this investment is a
country, territory, individual or entity named on an OFAC list, or a person or
entity prohibited under the OFAC Programs.  Please be advised that the
Company may not accept any amounts from a prospective investor if such
prospective investor cannot make the representation set forth in the preceding
paragraph.  The Purchaser agrees to promptly notify the Company and
the Placement Agent should the Purchaser become aware of any change in the
information set forth in these representations.  The Purchaser
understands and acknowledges that, by law, the Company may be obligated to
“freeze the account” of the Purchaser, either by prohibiting additional
subscriptions from the Purchaser, declining any redemption requests and/or
segregating the assets in the account in compliance with governmental
regulations, and the Placement Agent may also be required to report such action
and to disclose the Purchaser’s identity to OFAC.  The Purchaser
further acknowledges that the Company may, by written notice to the Purchaser,
suspend the redemption rights, if any, of the Purchaser if the Company
reasonably deems it necessary to do so to comply with anti-money laundering
regulations applicable to the Company and the Placement Agent or any of the
Company’s other service providers.  These individuals include
specially designated nationals, specially designated narcotics traffickers and
other parties subject to OFAC sanctions and embargo programs;

    

    (ff) To the best of the Purchaser’s
knowledge, none of: (1) the Purchaser; (2) any person controlling or controlled
by the Purchaser; (3) if the Purchaser is a privately-held entity, any person
having a beneficial interest in the Purchaser; or (4) any person for whom the
Purchaser is acting as agent or nominee in connection with this investment is a
senior foreign political figure2, or
any immediate family3
member or
close associate4 of a
senior foreign political figure, as such terms are defined in the footnotes
below; and

     

      
        

    

    
      1 These individuals include
specially designated nationals, specially designated narcotics traffickers and
other parties subject to OFAC sanctions and embargo
programs.

    

     

      2 A “senior foreign
political figure” is defined as a senior official in the executive, legislative,
administrative, military or judicial branches of a foreign government (whether
elected or not), a senior official of a major foreign political party, or a
senior executive of a foreign government-owned corporation. In addition, a
“senior foreign political figure” includes any corporation, business or other
entity that has been formed by, or for the benefit of, a senior foreign
political figure.

    

     

      3 “Immediate family” of a
senior foreign political figure typically includes the figure’s parents,
siblings, spouse, children and in-laws.

    

     

      4 A “close associate” of a senior foreign
political figure is a person who is widely and publicly known to maintain an
unusually close relationship with the senior foreign political figure, and
includes a person who is in a position to conduct substantial domestic and
international financial transactions on behalf of the senior foreign political
figure.

    

    
      
         

      

      
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    (gg)           If
the Purchaser is affiliated with a non-U.S. banking institution (a “Foreign
Bank”), or if the Purchaser receives deposits from, makes payments on behalf of,
or handles other financial transactions related to a Foreign Bank, the Purchaser
represents and warrants to the Company that: (1) the Foreign Bank has a fixed
address, other than solely an electronic address, in a country in which the
Foreign Bank is authorized to conduct banking activities; (2) the Foreign Bank
maintains operating records related to its banking activities; (3) the Foreign
Bank is subject to inspection by the banking authority that licensed the Foreign
Bank to conduct banking activities; and (4) the Foreign Bank does not provide
banking services to any other Foreign Bank that does not have a physical
presence in any country and that is not a regulated affiliate.

    

    6.           Representations, Warranties and
Covenants of the Company.  The Company hereby represents,
warrants, acknowledges and agrees as follows:

    

    (a)           The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.  The Company is not in
violation of any of the provisions of its certificate of incorporation, by-laws
or other organizational or charter documents (the “Internal
Documents”). Except as described in the Memorandum, the Company has no
subsidiaries and does not have an equity interest in any other firm,
partnership, association or other entity.  The Company is qualified to
transact business as a foreign corporation and is in good standing under the
laws of each jurisdiction where the location of its properties or the conduct of
its business makes such qualification necessary, except where the failure to be
so qualified would not have a Material Adverse Effect.

     

    (b)           The
Company has all power and authority to: (i) conduct its business as presently
conducted and as proposed to be conducted (as described in the Memorandum); (ii)
enter into and perform its obligations under this Subscription
Agreement, the Warrants and the Registration Rights Agreement
(collectively, the “Transaction Documents”); and (iii) issue, sell and deliver
the Units.  The execution and delivery of each of the Transaction
Documents has been duly authorized by the necessary corporate
action.  This Subscription Agreement has been duly executed and when
delivered will constitute, and each of the other Transaction Documents, upon due
execution and delivery, will constitute, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms (i) except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting creditors’ rights generally, including the
effect of statutory and other laws regarding fraudulent conveyances and
preferential transfers, and except that no representation is made herein
regarding the enforceability of the Company’s obligations to provide
indemnification and contribution remedies under the securities laws and (ii)
subject to the limitations imposed by general equitable principles (regardless
of whether such enforceability is considered in a proceeding at law or in
equity).

     

    8.          
Registration
Rights.  Purchaser shall have the registration rights described
in the Registration Rights Agreement in the form annexed to the Memorandum as
Exhibit C.

    

    9.           Indemnification.  The
Purchaser agrees to indemnify and hold harmless the Company, the Placement
Agent, and their respective officers, directors, employees, agents, attorneys,
control persons and affiliates from and against all losses, liabilities, claims,
damages, costs, fees and expenses whatsoever (including, but not limited to, any
and all expenses incurred in investigating, preparing or defending against any
litigation commenced or threatened) based upon or arising out of any actual or
alleged false acknowledgment, representation or warranty, or misrepresentation
or omission to state a material fact, or breach by the Purchaser of any covenant
or agreement made by the Purchaser herein or in any other document delivered in
connection with this Subscription Agreement.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    10.         Irrevocability; Binding
Effect.  The Purchaser hereby acknowledges and agrees that the
subscription hereunder is irrevocable by the Purchaser, except as required by
applicable law, and that this Subscription Agreement shall survive the death or
disability of the Purchaser and shall be binding upon and inure to the benefit
of the parties and their heirs, executors, administrators, successors, legal
representatives, and permitted assigns.  If the Purchaser is more than
one person, the obligations of the Purchaser hereunder shall be joint and
several and the agreements, representations, warranties, and acknowledgments
herein shall be deemed to be made by and be binding upon each such person and
such person's heirs, executors, administrators, successors, legal
representatives, and permitted assigns.

    

    11.         Modification.  Any
of the terms or provisions of this Subscription Agreement shall not be modified
or waived except by an instrument in writing signed by the party against whom
any such modification or waiver is sought.

    

     

    12.         Immaterial Modifications to the Transaction
Documents.  The Company may, at any time prior to the First
Closing, amend the Transaction Documents if necessary to clarify any provision
therein, without first providing notice or obtaining prior consent of the
Purchaser, if, and only if, such modification is not material in any
respect.

     

    13.         Notices.  Any notice
or other communication required or permitted to be given hereunder shall be in
writing and shall be mailed by certified mail, return receipt requested, or
delivered against receipt to the party to whom it is to be given (a) if to the
Company, at the address set forth above, or (b) if to the Purchaser, at the
address set forth on the signature page hereof (or, in either case, to such
other address as the party shall have furnished in writing in accordance with
the provisions of this Section 13).  Any notice or other communication
given by certified mail shall be deemed given at the time of certification
thereof, except for a notice changing a party's address which shall be deemed
given at the time of receipt thereof.

    

    14.         Assignability.  This
Subscription Agreement and the rights, interests and obligations hereunder are
not transferable or assignable by the Purchaser and the transfer or assignment
of the Units shall be made only in accordance with all applicable
laws.

    

    15.         Applicable
Law.  This Subscription Agreement shall be governed by and
construed under the laws of the State of New York as applied to agreements among
New York residents entered into and to be performed entirely within New
York.  Each of the parties hereto (1) agree that any legal suit,
action or proceeding arising out of or relating to this Agreement shall be
instituted exclusively in the state or federal courts located in New York
County, New York, (2) waive any objection which the Company may have now or
hereafter to the venue of any such suit, action or proceeding, and
(3) irrevocably consent to the jurisdiction of such courts in any such
suit, action or proceeding.  Each of the parties hereto further agrees
to accept and acknowledge service of any and all process which may be served in
any such suit, action or proceeding in such courts and agree that service of
process upon it mailed by certified mail to its address shall be deemed in every
respect effective service of process upon it, in any such suit, action or
proceeding.  THE PARTIES HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS SUBSCRIPTION AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED
HEREBY.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    

    16.         Blue Sky
Qualification.  The purchase of Units under this Subscription
Agreement is expressly conditioned upon the exemption from qualification of the
offer and sale of the Units from applicable federal and state securities
laws.  The Company shall not be required to qualify this transaction
under the securities laws of any jurisdiction and, should qualification be
necessary, the Company shall be released from any and all obligations to
maintain its offer, and may rescind any sale contracted, in the
jurisdiction.

    

    17.         Use of
Pronouns.  All pronouns and any variations thereof used herein
shall be deemed to refer to the masculine, feminine, neuter, singular or plural
as the identity of the person or persons referred to may require.

    

    18.         Confidentiality.  The
Purchaser acknowledges and agrees that any information or data the Purchaser has
acquired from or about the Company, not otherwise properly in the public domain,
was received in confidence (the “Confidential
Information”).  Any distribution of the Confidential
Information to any person other than the Purchaser named above, in whole or in
part, or the reproduction of the Confidential Information, or the divulgence of
any of its contents (other than to the Purchaser’s tax and financial advisers,
attorneys and accountants, who will likewise be required to maintain the
confidentiality of the Confidential Information) is unauthorized, except that
any Purchaser (and each employee, representative, or other agent of such
Purchaser) may disclose to any and all persons, without limitations of any kind
(except as provided in the next sentence) the tax treatment and tax structure of
the transaction and all materials of any kind (including opinions or other tax
analyses) that are provided to the Purchaser relating to such tax treatment and
tax structure.  Any such disclosure of the tax treatment, tax
structure and other tax-related materials shall not be made for the purpose of
offering to sell the Units offered hereby or soliciting an offer to purchase any
such securities.  Except as provided above with respect to tax
matters, the above named Purchaser agrees not to divulge, communicate or
disclose, except as may be required by law or for the performance of this
Subscription Agreement, or use to the detriment of the Company or for the
benefit of any other person or persons, or misuse in any way, any Confidential
Information of the Company, including any scientific, technical, trade or
business secrets of the Company and any scientific, technical, trade or business
materials that are treated by the Company as confidential or proprietary,
including, but not limited to, ideas, discoveries, inventions, developments and
improvements belonging to the Company and confidential information obtained by
or given to the Company about or belonging to third parties.

    

    19.         Miscellaneous.

    

    (a)           The
Offering Documents, together with the Transaction Documents, constitute the
entire agreement between the Purchaser and the Company with respect to the
subject matter hereof and supersede all prior oral or written agreements and
understandings, if any, relating to the subject matter hereof.

    

    (b)           The
representations and warranties of the Company made in this Subscription
Agreement shall survive the execution and delivery hereof and delivery of the
Units hereunder for a
period of twelve (12) months from the date of issuance. The representations and
warranties of the Purchaser made in this Subscription Agreement shall survive
the execution and delivery hereof and delivery of the Units hereunder
indefinitely.

    

    (c)           Each
of the parties hereto shall pay its own fees and expenses (including the fees of
any attorneys, accountants, appraisers or others engaged by such party) in
connection with this Subscription Agreement and the transactions contemplated
hereby whether or not the transactions contemplated hereby are
consummated.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

    (d)           This
Subscription Agreement may be executed in one or more counterparts each of which
shall be deemed an original, but all of which shall together constitute one and
the same instrument.

    

    (e)           Each
provision of this Subscription Agreement shall be considered separable and, if
for any reason any provision or provisions hereof are determined to be invalid
or contrary to applicable law, such invalidity or illegality shall not impair
the operation of or affect the remaining portions of this Subscription
Agreement.

    

    (f) 
          Paragraph titles are
for descriptive purposes only and shall not control or alter the meaning of this
Subscription Agreement as set forth in the text.

    

    (g)           The
Purchaser understands and acknowledges that there may be multiple Closings for
the Offering.

    

    20.         Omnibus Signature
Page.  This Subscription Agreement is intended to be read and
construed in conjunction with the Registration Rights Agreement pertaining to
the issuance by the Company of the Shares and Warrants to subscribers pursuant
to the Memorandum.  Accordingly, pursuant to the terms and conditions
of this Subscription Agreement and such related agreement it is hereby agreed
that the execution by the Purchaser of this Subscription Agreement, in the place
set forth herein, shall constitute agreement to be bound by the terms and
conditions hereof and the terms and conditions of the Registration Rights
Agreement, with the same effect as if each of such separate, but related
agreement, were separately signed.

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    To
subscribe for Units in the private offering of

    

    Manhattan
Pharmaceuticals, Inc.

    

    
      	
              1.

            	
              Date and Fill in the
      number of Units being purchased and Complete and Sign the
      Subscription Agreement.

            

    

    

    
      	
              2.

            	
              Initial the Accredited
      Investor Certification page attached to this Subscription
      Agreement.

            

    

    

    
      	
              3.

            	
              Complete and return the
      Investor Profile and, if applicable, Wire Transfer Authorization attached
      to this letter.

            

    

    

    
      	
              4.

            	
              Fax all forms to [_____]
      at [______] and then send all signed original documents with check
      to:

            

    

    

    National Securities
Corporation

    [__________________________]

    

    
      
        	
                5.

              	
                Please
      make your subscription payment payable to the order of "Signature Bank, Escrow Agent
      for Manhattan Pharmaceuticals,
Inc.”

              

      

    

    

    Questions
regarding completion of the subscription documents should be directed to
[______].

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    ANTI
MONEY LAUNDERING REQUIREMENTS

     

    
      
        
          	
                  The USA PATRIOT Act

                	 
      	
                  What is money

                  laundering?

                	 
      	
                  How big is the problem

                  and why is it important?

                
	 
      	 
      	 
      	 
      	 
      
	
                  The
      USA PATRIOT Act is designed to detect, deter, and punish terrorists in the
      United States and abroad.  The Act imposes new anti-money
      laundering requirements on brokerage firms and financial
      institutions.  Since April 24, 2002 all brokerage firms have
      been required to have new, comprehensive anti-money laundering
      programs.

                   

                  To
      help you understand these efforts, the Placement Agent wants to provide
      you with some information about money laundering and its steps to
      implement the USA PATRIOT Act.

                	
                    

                	
                  Money
      laundering is the process of disguising illegally obtained money so that
      the funds appear to come from legitimate sources or
      activities.  Money laundering occurs in connection with a wide
      variety of crimes, including illegal arms sales, drug trafficking,
      robbery, fraud, racketeering, and terrorism.

                	
                    

                	
                  The
      use of the U.S. financial system by criminals to facilitate terrorism or
      other crimes could well taint our financial markets.  According
      to the U.S. State Department, one recent estimate puts the amount of
      worldwide money laundering activity at $1 trillion a
  year.

                

        

      

    

    

    
      
        
          	
                  What
      is the Placement Agent required to do to eliminate money
      laundering?

                
	 
	
                  Under
      new rules required by the USA PATRIOT Act, the Placement Agent’s
      anti-money laundering program must designate a special compliance officer,
      set up employee training, conduct independent audits, and establish
      policies and procedures to detect and report suspicious transaction and
      ensure compliance with the new laws.

                	 	
                  As
      part of its required program, the Placement Agent may ask you to provide
      various identification documents or other information.  Until
      you provide the information or documents the Placement Agent needs, we may
      not be able to effect any transactions for
you.

                

        

      

    

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    MANHATTAN
PHARMACEUTICALS, INC.

    OMNIBUS
SIGNATURE PAGE TO THE

    SUBSCRIPTION
AGREEMENT AND

    REGISTRATION
RIGHTS AGREEMENT

     

    Subscriber
hereby elects to subscribe under the Subscription Agreement for a total of
______ Units at a price of $25,000 per Unit (NOTE: to be completed by
subscriber) and executes the Subscription Agreement and Registration Rights
Agreement.

    
      

      Date
(NOTE: To be completed by subscriber): ___________________________,
20__

       

           

      
        
If
the Purchaser is an INDIVIDUAL, and if purchased as JOINT TENANTS, as TENANTS IN
COMMON, or as COMMUNITY PROPERTY:

    

    

    
      
        
          
            
              
                
                  
                    	
                               

                          	 
      	
                               

                          
	
                            Print
      Name(s)

                          	 
      	
                            Social
      Security Number(s)

                          
	 
      	 
      	 
      
	
                                

                          	 
      	
                                 

                          
	
                            Signature(s)
      of Subscriber(s)

                          	 
      	
                            Signature

                          
	 
      	 
      	 
      
	
                                

                          	 
      	
                               
      

                          
	
                            Date

                          	 
      	
                            Address

                          

                  

                

              

            

          

        

      

    

    

    If the
Purchaser is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY COMPANY or
TRUST:

    

    
      
        
          
            
              	
                       
      

                    	  
      	
                       
      

                    
	
                      Name
      of Partnership,

                    	 
      	
                      Federal
      Taxpayer

                    
	
                      Corporation,
      Limited

                    	 
      	
                      Identification
      Number

                    
	
                      Liability
      Company or Trust

                    	 
      	 
      

            

          

        

      

    

     

    
      
        
          
            
              
                
                  	
                          By:

                        	
                             
      

                        	 
      	
                             
      

                        
	 
      	
                          Name:

                        	 
      	
                          State
      of Organization

                        
	 
      	
                          Title:

                        	 
      	 
      
	 
      	 
      	 
      	 
      
	
                            
      

                        	 
      	
                            
      

                        
	
                          Date

                        	 
      	
                          Address

                        

                

              

            

          

        

      

    

    

    
      
        
          
            
              	
                      MANHATTAN
      PHARMCEUTICALS, INC.

                    	 
      	
                      NATIONAL
      SECURITIES CORP.

                    
	 
      	 
      	 
      	 
      	 
      
	
                      By:

                    	
                         
      

                    	 
      	
                      By:

                    	
                        
      

                    
	
                      Authorized
      Officer

                    	 
      	
                      Authorized
      Officer

                    

            

          

        

      

    

    
      
         

      

      
        14Exhibit
10.36

     

    PLACEMENT AGENCY
AGREEMENT

     

    December
28, 2009

    
 

    National
Securities Corporation

    330
Madison Avenue, 18th
Floor

    New York,
New York 10017

    

    Ladies
and Gentlemen:

     

    Manhattan
Pharmaceuticals, Inc., a Delaware corporation (the “Company”), hereby confirms its
agreement (the “Agreement”) with National
Securities Corporation, a Washington corporation (the “Placement Agent”) as
follows:

     

    1.  Offering. (a) The
Company will offer (the “Offering”) for sale to certain
“accredited investors” (each, an “Investor” and, collectively,
the “Investors”) through
the Placement Agent, as exclusive agent for the Company, a minimum (the “Minimum Amount”) of
100  units ($2,500,000) (the “Units”) and a maximum (the “Maximum Amount”) of 160 Units
($4,000,000).  Each Unit shall be sold at a price of $25,000 per Unit
(the “Offering Price”)
and shall consist of (i) 357,143 shares of Company common stock, $.001 par value
per share (the “Common Stock”
or the "Shares")
and (ii) warrants (“Warrants”) to purchase
535,714 shares of Common Stock of the Company (each a "Warrant Share" and
collectively the "Warrant
Shares").  The Shares, Warrants and Warrant Shares (sometimes
collectively referred to herein as the "Securities") shall have the
rights and privileges described in the Memorandum (as defined
herein).  The Company and the Placement Agent (by mutual agreement)
reserve the right to increase the Maximum Amount by an additional forty (40)
Units ($1,000,000) (“Overallotment”).

     

    (b)  Placement of the Units
by the Placement Agent will be made on a “reasonable efforts, all-or-none” basis
with respect to the Minimum Amount and on a “reasonable efforts” basis
thereafter as to any amounts in excess of the Minimum Amount.  The
minimum subscription for Units shall be 1 Unit ($25,000) provided,
however,
that the Company and the Placement Agent may, in their discretion, accept
subscriptions for a lesser number of Units.  The Units will be offered
commencing on the date of the Memorandum (as defined below) until February 28,
2010 unless extended by the Company and the Placement Agent to March 28,
2010, or terminated
earlier as provided herein (the “Offering
Period”).  The date on which the Offering Period shall
terminate shall be referred to as the “Termination
Date.”

     

    (c)  The Placement Agent
shall not tender to the Company and the Company shall not accept subscriptions
for, or sell Units to, any persons or entities who do not qualify as “accredited
investors,” as such term is defined in Rule 501 of Regulation D promulgated
under Section 4(2) of the Securities Act of 1933, as amended (the “Act”).

     

    (d)  The offering of the
Units will be made by the Company solely pursuant to the Memorandum, which at
all times will be in form and substance acceptable to the Placement Agent and
its counsel and contain such legends and other information as the Placement
Agent and its counsel may, from time to time, deem necessary and desirable to be
set forth therein. “Memorandum” as used in this
Agreement means the Company’s Confidential Private Placement Memorandum dated
December 28, 2009, inclusive of all exhibits, and all amendments, supplements
and appendices thereto.  Unless otherwise defined, each term used in
this Agreement will have the same meaning as set forth in the
Memorandum.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2.           Representations, Warranties
and Covenants of the Placement Agent.  The Placement Agent
hereby represents, warrants and covenants to the Company that:

     

    (a)  The
Placement Agent is and will remain during the term of this Agreement, a duly
registered broker-dealer pursuant to the Securities Exchange Act of 1934, as
amended and the rules and regulations promulgated thereunder (the “1934 Act”) and a member in
good standing of the Financial Industry Regulatory Authority (“FINRA”).

     

    (b)  The Placement Agent
shall not engage in any form of general solicitation or general advertising that
is prohibited by Regulation D as promulgated under Section 4(2) of the Act
(“Regulation D”) in
connection with the Offering, or take any action that might reasonably be
expected to jeopardize the availability for the Offering of the exemption from
registration provided by Rule 506 under Regulation D and /or Section
4(6).  Neither the Placement Agent, its affiliates, nor any person
acting on its or their behalf has made or will make any offers or sales of any
security or solicitations of any offers to buy any security through means other
than the Memorandum.

     

    (c)  The Placement Agent will
offer Units for sale in such circumstances as is in compliance with securities
or "blue sky" laws of the states in which the potential investors are
located.

     

    3.  Representations, Warranties
and Covenants of the Company.  Except as set forth in the
Company’s disclosure schedule which is annexed hereto (the “Disclosure Schedule”), the
Company hereby represents and warrants to the Placement Agent as
follows:

     

    (a)         Organization; Execution, Delivery
and Performance.

     

    (i)           The
Company and each subsidiary of which the Company owns, directly or indirectly, a
controlling interest, if any, (a “Subsidiary”) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated or organized, with full power and
authority (corporate and other) to own, lease, use and operate its properties
and to carry on its business as and where now owned, leased, used, operated and
conducted.  The Company is duly qualified as a foreign corporation to
do business and is in good standing in every jurisdiction in which its ownership
or use of property or the nature of the business conducted by it makes such
qualification necessary except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect. For purposes of this
Agreement “Material Adverse
Effect” shall mean a material adverse effect on (1) the assets,
liabilities, results of operations, condition (financial or otherwise),
business, or prospects of the Company taken as a whole; or (2) the ability of
the Company to perform its obligations under the Transaction Documents (as
defined herein), but, to the extent applicable, shall exclude any circumstance,
change or effect to the extent resulting or arising from: (1) any change in
general economic conditions in the industries or markets in which the Company
and its Subsidiaries operates so long as the Company and its Subsidiaries are
not disproportionately (in a material manner) affected by such changes; (2)
national or international political conditions, including any engagement in
hostilities, whether or not pursuant to the declaration of a national emergency
or war, or the occurrence of any military or terrorist attack so long as the
Company and its Subsidiaries are not disproportionately (in a material manner)
affected by such changes; (3) changes in United States generally accepted
accounting principles, or the interpretation thereof; or (4) the entry into or
announcement of this Agreement, actions contemplated by this Agreement, or the
consummation of the transactions contemplated hereby.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (ii)         The
Company has no Subsidiaries other than those listed in Schedule 3(a) of the
Disclosure Schedule.  Except as disclosed in Schedule 3(a) of the
Disclosure Schedule or in the SEC Documents, the Company owns, directly or
indirectly, all of the capital stock or comparable equity interests of each
Subsidiary free and clear of any and all liens, security interests, charges,
pledges or similar encumbrances (“Liens”) and all of the issued
and outstanding shares of capital stock or comparable equity interest of each
Subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive rights of first refusal and other similar rights.  The
Company has the unrestricted right to vote, and (subject to limitations imposed
by applicable law) to receive dividends and distributions on, all capital stock
or other equity securities of its Subsidiaries that are owned by the
Company. As used
herein, “SEC Documents”
means all of the Company’s reports, schedules, financial statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act including without limitation, the Company’s
annual report on Form 10-K for the year ended December 31, 2008, the Company’s
quarterly reports on Form 10-Q for the quarters ended March 31, 2009, June 30,
2009 and September 30, 2009, the Company’s definitive proxy statement on
Schedule 14A  filed with the SEC on October 29, 2009 and the Company’s
current reports on Form 8-K, and all exhibits included therein and financial
statements and schedules thereto and documents incorporated by reference
therein.

     

    
      
        	
              	
                (iii)

              	
                (1)        
      The
      Company has all requisite corporate power and authority to enter into and
      perform this Agreement, the Subscription Agreements, the Registration
      Rights Agreement, the Warrants and the Agent’s Warrants (the “Transaction Documents”)
      and to consummate the transactions contemplated hereby and thereby and to
      issue the securities comprising the Units in accordance with the terms
      hereof and thereof;

              

      

    

     

    
      	
               
      

            	
              (2)

            	
              the
      execution and delivery of the Transaction Documents by the Company and the
      consummation by the Company of the transactions contemplated hereby and
      thereby have been duly authorized by the Company’s Board of Directors and
      no further consent or authorization of the Company, its Board of
      Directors, or its stockholders, is required except as expressly
      contemplated by this Agreement;

            

    

     

    
      	
               
      

            	
              (3)

            	
              each
      of the Transaction Documents has been, or will be, duly executed and
      delivered by the Company by its authorized representative, and such
      authorized representative is a true and official representative with
      authority to sign each such document and the other documents or
      certificates executed in connection herewith and bind the Company
      accordingly; and

            

    

     

    
      	
               
      

            	
              (4)

            	
              each
      of the Transaction Documents constitutes, and upon execution and delivery
      thereof by the Company will constitute, a legal, valid and binding
      obligation of the Company enforceable against the Company in accordance
      with its terms, except as such enforceability may be limited by general
      principals of equity, or to applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation and other similar laws relating
      to, or affecting generally, the enforcement of applicable creditors’
      rights and remedies.

            

    

     

    (b)        
Shares, Warrants Shares and
Agent Warrant Shares Duly Authorized. The shares of the
Company’s Common Stock issuable upon (i) the sale of the Units, (ii) exercise of
the Warrants (the “Warrant
Shares”) or (ii) exercise of the Agent’s Warrants (as defined herein)
(the “Agent Warrant
Shares”) will be duly authorized and reserved for future issuance and,
upon sale of the Units, exercise of the Warrants  or exercise of the
Agent Warrants, in each case in accordance with their terms, will be duly and
validly issued, fully paid and non-assessable, and free from all taxes or Liens
with respect to the issue thereof and shall not be subject to preemptive rights,
rights of first refusal and/or other similar rights of stockholders of the
Company and/or any other individual or entity.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (c)         Conflicts.

     

    (i)           The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the issuance and reservation for
issuance of the Common Stock, Warrant Shares and the Agent Warrants Shares) will
not:

     

    
      	
               
      

            	
              (1)

            	
              conflict
      with or result in a violation of any provision of the Certificate of
      Incorporation or By-laws or similar documents of the
    Company;

            

    

     

    
      	
               
      

            	
              (2)

            	
              violate
      or conflict with, or result in a breach of any provision of, or
      constitutes a default and/or an event of default (or an event which with
      notice or lapse of time or both could become a default and/or an event of
      default) under, or give to others any rights of termination, amendment,
      acceleration or cancellation of, any agreement, indenture, patent, patent
      license or instrument to which the Company is a party, except for possible
      violations, conflicts or defaults as would not, individually or in the
      aggregate, have a Material Adverse Effect on the Company;
    or

            

    

     

    
      	
               
      

            	
              (3)

            	
              result
      in a violation of any law, rule, regulation, order, judgment or decree
      (including federal and state securities laws and regulations and
      regulations of any self-regulatory organizations to which the Company or
      its securities are subject) applicable to the Company or by which any
      property or asset of the Company is bound or
  affected.

            

    

     

    (ii)           The
Company is not in violation of its Certificate of Incorporation, By-laws or
other organizational documents. The Company is not in default (and no event has
occurred which with notice or lapse of time or both could put the Company in
default), under, and the Company has not taken any action or failed to take any
action that would give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company is a party or by which any property or assets of the Company is
bound or affected, except for possible defaults, terminations, amendments,
accelerations or cancellations which would not, individually or in the
aggregate, have a Material Adverse Effect. The businesses of the Company are not
being conducted in violation of any law, rule ordinance or regulation of any
governmental entity, except for possible violations which would not,
individually or in the aggregate, have a Material Adverse
Effect.  Based in part on the truth and accuracy of the Investor’s
representations set forth herein, except as required under the Act, the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any applicable state
securities laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court,
governmental agency, regulatory agency, self regulatory organization or stock
market or any third party in order for it to execute, deliver or perform any of
its obligations under the Transaction Documents in accordance with the terms
hereof or thereof or to issue and sell the Units in accordance with the terms
hereof and to issue the Warrant Shares upon exercise of the Warrants or the
Agent Warrant Shares upon exercise of the Agent Warrants.  All
consents, authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof or will be obtained or effected in a
timely manner following the Closing Date.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (d)         Capitalization.

     

    (i)           As
of November 30, 2009, the authorized capital stock of the Company consists
solely of 10,000,000 share of preferred stock, of which no shares of preferred
stock are issued and outstanding and 500,000,000 shares of Common Stock, of
which 70,624,232 shares of Common Stock are
issued and outstanding, 7,459,936 shares of Common Stock are reserved for
issuance pursuant to options granted under the Company’s stock option plan, and
87,168,951 shares are reserved for issuance pursuant to securities (other than
the Units and the Agent Warrants) exercisable for, or convertible into or
exchangeable for shares of Common Stock.

     

    (ii)           Except
as described above, in the SEC Documents or Schedule 3(d) annexed
hereto, as of November 30, 2009:

     

    
      	
               
      

            	
              (1)

            	
              there
      are no outstanding options, warrants, scrip, rights to subscribe for,
      puts, calls, rights of first refusal, agreements, understandings, claims
      or other commitments or rights of any character whatsoever relating to, or
      securities or rights convertible into or exchangeable for any shares of
      capital stock of the Company, or arrangements by which the Company is or
      may become bound to issue additional shares of capital stock of the
      Company;

            

    

     

    
      	
               
      

            	
              (2)

            	
              other
      than as set forth on Schedule 3(d)
      of the Disclosure Schedule, there are no agreements or arrangements under
      which the Company is obligated to register the sale of any of its
      securities under the Act (except for the registration rights provisions
      contained herein); and

            

    

     

    
      	
               
      

            	
              (3)

            	
              there
      are no anti-dilution or price adjustment provisions contained in any
      security issued by the Company (or in any agreement providing rights to
      security holders) that will be triggered by the issuance of any of the
      Units, Common Stock, Warrants, the Warrant Shares, Agent’s Warrants and/or
      the Agent Warrant Shares.  All of such outstanding shares of
      capital stock are, or upon issuance will be, duly authorized, validly
      issued, fully paid and nonassessable.  No shares of capital
      stock and/or other securities of the Company are subject to preemptive
      rights, rights of first refusal and/or any other similar rights of the
      stockholders of the Company and/or any other Person or any Lien imposed
      through the actions or failure to act of the
  Company.

            

    

     

    (e)         SEC Information.

     

    (i)           Except
as set forth in the SEC Documents, since January 1, 2009, the Company has timely
filed (subject to 12b-25 filings with respect to certain periodic filings) all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Exchange
Act.  The SEC Documents have been made available to the Investor via
the SEC’s EDGAR system.  As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. As of the date hereof, the SEC Documents when
taken in their entirety, shall not contain any untrue statements of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the date upon which they
were made and the circumstances under which they were made, not
misleading.  As of their respective dates, the financial statements of
the Company included in the SEC Documents (“Company Financial Statements”)
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto as in effect at the time of the filing.  The Company Financial
Statements have been prepared in accordance with United States generally
accepted accounting principles (“GAAP”), consistently applied,
during the periods involved except:

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (1)

            	
              as
      may be otherwise indicated in such financial statements or the notes
      thereto; or

            

    

     

    
      	
               
      

            	
              (2)

            	
              in
      the case of unaudited interim statements, to the extent they may not
      include footnotes or may be condensed or summary statements) and fairly
      present in all material respects the consolidated financial position of
      the Company and its consolidated Subsidiaries, if any, as of the dates
      thereof and the consolidated results of their operations and cash flows
      for the periods then ended (subject, in the case of unaudited statements,
      to normal year-end audit
adjustments).

            

    

     

    (ii)         Except
as expressly set forth in the Company Financial Statements or in the SEC
Documents, the Company has no liabilities, contingent or otherwise, other
than:

     

    
      	
               
      

            	
              (1)

            	
              liabilities
      incurred in the ordinary course of business subsequent to December 31,
      2008; and

            

    

     

    
      	
               
      

            	
              (2)

            	
              obligations
      under contracts and commitments incurred in the ordinary course of
      business and not required under GAAP to be reflected in such financial
      statements, which, individually or in the aggregate, are not material to
      the financial condition or operating results of the
    Company.

            

    

     

    (iii)         The
shares of Common Stock are quoted on the OTCBB under the symbol
“MHAN.”  The Company has not received notice (written or oral) from
the OTCBB to the effect that the Company is not in compliance with the
continuing requirements of the OTCBB.  The Company is, and it has no
reason to believe that it will not in the foreseeable future continue to be, in
compliance with all such maintenance requirements.

     

    (iv)         All
information relating to or concerning the Company and its officers, directors,
employees, customers or clients (including, without limitation, all information
regarding the Company’s internal financial accounting controls and procedures)
set forth in the Transaction Documents and the SEC Documents, when taken
together as a whole, does not contain an untrue statement of material fact or
omit to state any material fact necessary in order to make the statements made
herein or therein, in light of the circumstances under which they were made, not
misleading.

     

    (f)           Intellectual Property. Except
as set forth in Schedule 3(f) or in
the SEC Documents, the Company or its Subsidiaries owns valid title, free and
clear of any Liens, or possesses the requisite valid and current licenses or
rights, free and clear of any Liens, to use all intellectual property in
connection with the conduct its business as now operated.  There is no
pending claim or action by any person pertaining to, or proceeding pending, or
to the Company’s knowledge threatened, which challenges the right of the Company
or of a Subsidiary with respect to any intellectual property necessary to enable
it to conduct its business as now operated.  To the best of the
Company’s knowledge, the Company’s current products, services and processes do
not infringe on any intellectual property or other rights held by any person,
and the Company is unaware of any facts or circumstances which might give rise
to any of the foregoing.  The Company has not received any written
notice of infringement of, or conflict with, the asserted rights of others with
respect to its intellectual property. The Company has taken reasonable security
measures to protect the secrecy, confidentiality and value of its intellectual
property.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    (g)           Permits;Compliance. The
Company is in possession of all franchises, grants, authorizations, licenses,
permits, easements, variances, exemptions, consents, certificates, approvals and
orders necessary to own, lease and operate its properties and to carry on its
business as it is now being conducted (collectively, the “Company Permits”), except where such
failure to posses would not have a Material Adverse Effect, and there is no
action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits. The Company is not in
conflict with, or in default or violation of, any of the Company Permits, except
for any such conflicts, defaults or violations which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect.  Since December 31, 2008, the Company has received no
notification with respect to possible conflicts, defaults or violations of
applicable laws, except for notices relating to possible conflicts, defaults or
violations, which conflicts, defaults or violations would not have a Material
Adverse Effect.

     

    (h)           Absence of Litigation. Except
as set forth in Schedule 3(h) of the
Disclosure Schedule or in the SEC Documents, there is no action, suit, claim,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company, threatened against or affecting the Company, or its
businesses, properties or assets or their officers or directors in their
capacity as such, that would have a Material Adverse Effect.

     

    (i)           No Materially Adverse Contracts,
etc.  Except as set forth in Schedule 3(i) of the
Disclosure Schedule, the Company is not subject to any charter, corporate or
other legal restriction, or any judgment, decree, order, rule or regulation
which in the judgment of the Company’s officers has or is expected in the future
to have a Material Adverse Effect.  The Company is not a party to any
contract or agreement which has or is reasonably expected to have a Material
Adverse Effect.

     

    (j)           No Material
Changes.  Except as set forth in the SEC Documents, since
December 31, 2008, there has not been (i) any material adverse change in the
financial condition, operations or business of the Company from that shown on
the Company Financial Statements, or any material transaction or commitment
effected or entered into by the Company outside of the ordinary course of
business; (ii) to the Company’s knowledge, any effect, change or circumstance
which has had, or could reasonably be expected to have, a Material Adverse
Effect; or (iii) any incurrence of any material liability outside of the
ordinary course of business.

     

    (k)         Labor Matters.

     

    (i)           The Company is not a party to or bound by any collective
bargaining agreements or other agreements with labor
organizations.  The Company has not violated in any material respect
any laws, regulations, orders or contract terms, affecting the collective
bargaining rights of employees, labor organizations or any laws, regulations or
orders affecting employment discrimination, equal opportunity employment, or
employees’ health, safety, welfare, wages and hours.

     

    (ii)           The Company is, and at all times has been, in compliance
in all material respects with all applicable laws respecting employment
(including laws relating to classification of employees and independent
contractors) and employment practices, terms and conditions of employment, wages
and hours, and immigration and naturalization.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    (l)           Environmental
Matters.  To the Company’s knowledge, neither the Company nor
any Subsidiary is in violation of any statute, rule, regulation, decision or
order of any governmental agency or body or any court, domestic or foreign,
relating to the use, disposal or release of hazardous or toxic substances or
relating to the protection or restoration of the environment or human exposure
to hazardous or toxic substances (collectively, “Environmental Laws”), owns or
operates any real property contaminated with any substance that is subject to
any Environmental Laws, is liable for any off-site disposal or contamination
pursuant to any Environmental Laws, and is subject to any claim relating to any
Environmental Laws, which violation, contamination, liability or claim has had
or could reasonably be expected to have a Material Adverse Effect, individually
or in the aggregate; and there is no pending or, to the Company’s knowledge,
threatened investigation that might lead to such a claim.

     

    (m)           Tax Matters.  None
of the Company and its Subsidiaries has made or filed any federal, state and
foreign income or any other tax returns, reports and declarations required by
any jurisdiction to which it is subject and none of them has ever paid any taxes
or other governmental assessments or charges that are material in amount, nor is
it aware of any that have been assessed or are due.  There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim.  Neither the Company nor any of its Subsidiaries have executed
a waiver with respect to the statute of limitations relating to the assessment
or collection of any foreign, federal, state or local tax.

     

    (n)           Certain Transactions. Except
as set forth on Schedule 3(n) of the
Disclosure Schedule or in the SEC Documents, there are no loans, leases, royalty
agreements or other transactions between (i) the Company or any of its customers
or suppliers; and (ii) any officer, employee, consultant or director of the
Company or any person owning five (5%) percent or more of the capital stock of
the Company or five (5%) percent or more of the ownership interests of the
Company or any member of the immediate family of such officer, employee,
consultant, director, stockholder or owner or any corporation or other entity
controlled by such officer, employee, consultant, director, stockholder or
owner, or a member of the immediate family of such officer, employee,
consultant, director, stockholder or owner.

     

    (o)           Form D; Blue Sky Laws. The
Company shall file a Form D with respect to the Securities as required under
Regulation D promulgated under the Act and to provide a copy thereof to the
Placement Agent, promptly after such filing.  The Company shall assist
the legal counsel of the Placement Agent of the Units on or before the date of
the closing of the sale of the Securities (the “Closing Date”), in qualifying
the Units for sale to the Investors in the applicable closing pursuant to this
Agreement under applicable securities or “blue sky” laws of the states of the
United States (or to obtain an exemption from such qualification), and shall pay
all fees and expenses of such counsel in connection therewith, including, but
not limited to, all state filing fees and such counsel’s legal fees and expenses
as further provided in Section 6(h) hereto.

    

    (p)  Memorandum.  The
Memorandum has been diligently prepared by the Company, and, to the best of
Company’s knowledge, is in compliance with Regulation D, the Act and the
requirements of all other rules and regulations (the “Regulations”) of the
Securities and Exchange Commission (the “SEC”) relating to offerings of
the type contemplated by the Offering, and the applicable securities laws and
the rules and regulations of those jurisdictions wherein the Units are to be
offered and sold.  With respect to actions taken by the Company, the
Units will be offered and sold pursuant to the registration exemption provided
by Regulation D and Section 4(2) and/or Section 4(6) of the Act as a transaction
not involving a public offering and the requirements of any other applicable
state securities laws and the respective rules and regulations thereunder in
those jurisdictions in which the Placement Agent notifies the Company that the
Units are being offered for sale.  The Memorandum describes all
material aspects, including attendant risks, of an investment in the
Company.  The Company has not taken nor will it take any action which
conflicts with the conditions and requirements of, or which would make
unavailable with respect to the Offering, the exemption(s) from registration
available pursuant to Regulation D or Section 4(2) and/or Section 4(6) of the
Act, and knows of no reason why any such exemption would be otherwise
unavailable to it. Neither the Company, nor, to the Company’s knowledge, any
person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with the offer or sale of the Units.  The Company has not
been subject to any order, judgment or decree of any court of competent
jurisdiction temporarily, preliminarily or permanently enjoining it for failing
to comply with Section 503 of Regulation D.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    (q)  10b-5
Representation.  The Memorandum does not include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.  None of the
statements, documents, certificates or other items prepared or supplied by the
Company with respect to the transactions contemplated hereby contains an untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained therein not misleading in light of the circumstances in
which they were made.  There is no fact which the Company has not
disclosed in the Memorandum and which the Company is aware that is reasonably
likely to have a Material Adverse Effect.

    

    (r)  Property
Ownership.  Except as set forth in the Memorandum or in the SEC
Documents, the Company owns
its  property  and  assets  free
and  clear of all mortgages,
liens,  loans,  pledges,  security  interests,   claims,  equitable
interests,  charges, and encumbrances,  except such
encumbrances and liens which arise in the ordinary  course of business
and do not materially  impair its ownership  or use of
such  property or assets.  With respect to the property and
assets it leases, if any, the Company is in compliance in all material respects
with such leases and, to its knowledge, holds a valid leasehold interest free of
any liens, claims, or encumbrances.

     

    (s) Insurance.  Each of
the Company and its Subsidiaries is insured by recognized, financially sound and
reputable institutions with policies in such amounts and with such deductibles
and covering such risks as are prudent and customary in the business in which it
is engaged, including directors and officers liability. Neither the Company nor
any Subsidiary has any reason to believe that it will not be able: (i) to
renew its existing insurance coverage as and when such policies expire; or
(ii) to obtain comparable coverage from similar institutions as may be
necessary or appropriate to conduct its business as now conducted.

    

    (t)  Illegal
Payments.  Neither the Company, nor, to the Company's
knowledge, any director, officer, agent, employee or other Person acting on
behalf of the Company has, in the course of its actions for, or on behalf of,
the Company (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.

    

    (u) PATRIOT Act.  To
the best knowledge of the Company, neither the sale of the Units by the Company
nor its use of the proceeds thereof will violate the Trading with the Enemy Act,
as amended, or any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any
enabling legislation or executive order relating thereto.  Without
limiting the foregoing, the Company is not (a) a person whose property or
interests in property are blocked pursuant to Section 1 of Executive Order 13224
of September 23, 2001 Blocking Property and Prohibiting Transactions with
Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079
(2001)) or (b) a person who engages in any dealings or transactions, or be
otherwise associated, with any such person.  To the best knowledge of
the Company, the Company is in compliance, in all material respects, with the
USA Patriot Act of 2001 (signed into law October 26, 2001).

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    

    (v)  No Finders.  Except
for the compensation set forth in this Agreement or the Memorandum, the Company
is not obligated to pay, and has not obligated the Placement Agent to pay, a
finder’s or origination fee in connection with the Offering, and hereby agrees
to indemnify the Placement Agent from any such claim made by any other person as
more fully set forth in Section 9 hereof.  The Company has not offered
for sale or solicited offers to purchase the Units except for negotiations with
the Placement Agent.  Except as set forth in the Memorandum, no other
person has any right to participate in any offer, sale or distribution of the
Company’s securities to which the Placement Agent’s rights, described herein,
shall apply.

     

    (w)  No
Integration.  Neither the Company, its affiliates, nor any
person acting on its or their behalf has made any offers or sales of any
security or solicited any offers to buy any security under circumstances that
would cause the offer of the Units  pursuant to this Agreement to be
integrated with prior offerings by the Company for purposes of the Act, or any
applicable stockholder approval provisions, which would impair the exemptions
relied upon in this Offering or the Company’s ability to timely comply with its
obligations hereunder. Nor will the Company or its affiliates take any action or
steps that would knowingly cause the offer or issuance of the Units to be
integrated with other offerings which would impair the exemptions relied upon in
this Offering or the Company’s ability to timely comply with its obligations
hereunder. The Company will not conduct any offering other than the transactions
contemplated hereby that will be integrated with the offer or issuance of the
Units, which would impair the exemptions relied upon in this Offering or the
Company’s ability to timely comply with its obligations hereunder.

    

    4. Placement Agent Appointment
and Compensation. (a)  The Company hereby appoints the
Placement Agent and its selected dealers, if any, as its exclusive agent(s) in
connection with the Offering.  The Company acknowledges that the
Placement Agent may use selected dealers to fulfill its agency hereunder
provided that such dealers are compensated solely by the Placement
Agent.  The Company has not and will not make, or permit to be made,
any offers or sales of the Units other than through the Placement Agent without
its prior written consent. The Placement Agent has
no obligation to purchase any of the Units.  The agency of the
Placement Agent hereunder shall continue until the later of the Termination Date
and the Final Closing.

    

    (b)  The Company will cause
to be delivered to the Placement Agent copies of the Memorandum and has
consented, and hereby consents, to the use of such copies for the purposes
permitted by the Act and applicable securities laws, and hereby authorizes the
Placement Agent and its agents, employees and selected dealers to use the
Memorandum in connection with the sale of the Units until the later of the Final
Closing and the Termination Date, and no other person or entity is or will be
authorized to give any information or make any representations other than those
contained in the Memorandum or to use any offering materials other than those
contained in the Memorandum in connection with the sale of the
Units.

     

    (c)  The Company will
cooperate with the Placement Agent by making available to its representatives
such information as may be requested in making a reasonable investigation of the
Company and its affairs and shall provide access to such employees as shall be
reasonably requested.

     

    (d)  The Company shall pay to
the Placement Agent at each Closing a cash placement fee equal to ten percent
(10%) of the aggregate gross proceeds from the sale of Units sold in the
Offering (the “Agent’s
Fee”).  Payment of the proportional amounts of the Agent’s Fee
will be made out of the proceeds of subscriptions for the Units sold at each
Closing.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    (e)  As additional
compensation hereunder, at each Closing the Company will issue to the Placement
Agent or its designees, for nominal consideration, warrants to purchase a number
of shares of Common Stock equal to 10% of the number of shares of Common Stock
included in the Units (the “Agent’s Warrants”) with an
initial exercise price of $0.11 per share.  The Agent’s Warrants and
the Agent’s Fee are sometimes collectively referred to herein as the “Agent’s
Compensation.”  The Agent’s Warrants shall provide the holder
thereof with a cashless exercise and “full ratchet” price protection right
consistent with the terms of the Warrants.  The Agent’s Warrants shall
be exercisable until the earlier of the date that is five (5) years after the
date of the initial Closing.

     

    (f)  The Placement Agent
shall also receive a non-accountable expense allowance equal to two percent (2%)
of the gross proceeds raised at each Closing (the “Agent’s Expense Allowance”),
which shall cover all of the costs and expenses of the Placement Agent
(including travel costs, due diligence costs, marketing expenses including
expenses related to Company presentations.  Payment of the Agent’s
Expense Allowance will be made out of the proceeds of subscriptions for Units at
each Closing. The Agent’s Expense Allowance shall not cover (i) up to $40,000 of
Placement Agent legal expenses that the Company shall be required to reimburse
at the First Closing and (ii) Blue Sky Expenses (as defined
below).  Placement Agent will not bear any of the Company’s legal,
accounting, printing or other expenses in connection with any transaction
contemplated hereby.

    

    (g)  The
Company shall also pay to the Placement Agent the Agent’s Fee and Agent’s
Warrants, calculated according to the percentage set forth in Sections 4(d) and
4(e), respectively, of this Agreement, in the event that the Company shall make
any sales of its securities for cash at any time prior to the date that is
twelve (12) months after Termination Date and the Final Closing with respect to
any person or entity to which the Placement Agent transmits the Memorandum
during the Offering Period, the names of which shall be provided in writing to
Company within ten (10) days after the Final Closing (the “Placement Agent Referral
List”), irrespective of whether such investors purchased Shares in the
Offering (collectively, the “Post-Closing Investors”). The
Company acknowledges and agrees that the Placement Agent Referral List is
proprietary to the Placement Agent, shall be maintained in strict confidence by
the Company and those persons/entities on such list hall not be contacted by the
Company without the Placement Agent’s prior written consent.

    

    5. Subscription and Closing
Procedures. (a) Each prospective purchaser will be required to complete
and execute original signature pages in the forms annexed to the Memorandum
(collectively, the “Subscription Documents”), which will be
forwarded or delivered to the Placement Agent at the Placement Agent’s offices
at the address set forth in Section 14 hereof, together with the subscriber’s
check or good funds in the full amount of the Offering Price for the number of
Units desired to be purchased.

     

    (b) All funds for subscriptions
received from the Offering will be promptly forwarded by the Placement Agent or
the Company, if received by it, to, and deposited into, a non-interest bearing
escrow account (the “Escrow
Account”) established for such purpose with Signature Bank (the “Escrow Agent”).  All
such funds for subscriptions will be held in the Escrow Account pursuant to the
terms of an escrow agreement among the Company, the Placement Agent and the
Escrow Agent.  The Company will pay all fees related to the
establishment and maintenance of the Escrow Account.  The Company will
either accept or reject, for any or no reason, the Subscription Documents in a
timely fashion and at each Closing will countersign the Subscription Documents
and provide duplicate copies of such documents to the Placement Agent for
distribution to the subscribers.  The Company will give notice to the
Placement Agent of its acceptance of each subscription.  The Company,
or the Placement Agent on the Company’s behalf, will promptly return to
subscribers incomplete, improperly completed, improperly executed and rejected
subscriptions and give written notice thereof to the Placement Agent upon such
return.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (c) If subscriptions for at least the
Minimum Amount have been accepted prior to the Termination Date, the funds
therefore have been collected by the Escrow Agent and all of the conditions set
forth elsewhere in this Agreement are fulfilled, a closing shall be held
promptly with respect to Units sold (the “First
Closing”).  Thereafter, the remaining Units will continue to be
offered and sold until the Termination Date. Additional closings (“Closings”) may from time to
time be conducted at times mutually agreed to between the Placement Agent and
the Company with respect to additional Units sold, with the final closing
(“Final Closing”) to
occur within 10 days after the earlier of the Termination Date and the date on
which the Maximum Amount has been subscribed for. Delivery of payment for the
accepted subscriptions for Units from the funds held in the Escrow Account will
be made at each Closing at the Placement Agent’s offices against delivery of the
Units by the Company at the address set forth in Section 14 hereof (or at
such other place as may be mutually agreed upon between the Company and the
Placement Agent), net of amounts due to the Placement Agent and its Blue Sky
counsel as of such Closing.  Executed instruments/certificates for the
Units and the Agent’s Warrants will be in such authorized denominations and
registered in such names as the Placement Agent may request on or before the
date of each Closing (“Closing
Date”), and will be made available to the Placement Agent for checking
and packaging at the Placement Agent’s office at each Closing.

    

    (d) If Subscription Documents for the
Minimum Amount have not been received and accepted by the Company on or before
the Termination Date (as may be extended as provided herein) for any reason, the
Offering will be terminated, no Units will be sold, and the Escrow Agent will,
at the request of the Placement Agent or the Company, cause all monies received
from subscribers for the Units to be promptly returned to such subscribers
without interest, penalty, expense or deduction.

    

    6. Further Covenants of the
Company. The Company hereby covenants and agrees that:

    

    (a)  If, at any time prior to
the Final Closing (i) any event shall occur which does or may materially affect
the Company or as a result of which it might become necessary to amend or
supplement the Memorandum so that the representations, warranties and covenants
herein remain true, or (ii) in case it shall, in the opinion of counsel to the
Placement Agent and the Company, be necessary to amend or supplement the
Memorandum to comply with Regulation D or any other applicable securities laws
or regulations, the Company shall, in the case of (i) above, promptly notify the
Placement Agent and, in the event of either (i) or (ii) above shall, at its sole
cost, prepare and furnish to the Placement Agent copies of appropriate
amendments and/or supplements to the Memorandum in such quantities as the
Placement Agent may request.  The Company shall not at any time,
whether before or after the Final Closing, prepare or use any amendment or
supplement to the Memorandum of which the Placement Agent shall not previously
have been advised and furnished with a copy, or to which the Placement Agent or
its counsel will have reasonably objected in writing or orally (confirmed in
writing within 24 hours), or which is not in compliance with the Act, the
regulations thereunder and other applicable securities laws. As soon as the
Company is advised thereof, the Company shall advise the Placement Agent and its
counsel, and confirm the advice in writing, of any order preventing or
suspending the use of the Memorandum, or the suspension of the qualification or
registration of the Units or the Securities for offering or the suspension of
any exemption for such qualification or registration of the Units or the
Securities for offering in any jurisdiction, or of the institution or threatened
institution of any proceedings for any of such purposes, and the Company shall
use its best efforts to prevent the issuance of any such order and, if issued,
to obtain as soon as reasonably possible the lifting thereof.

    
      
         

      

      
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    (b)  The
Company will use its commercially reasonable efforts to assist counsel to the
Placement Agent in qualifying the Units for sale under the securities laws of
such U.S. jurisdictions as may be mutually agreed to by the Company and the
Placement Agent; provided, that the
Company will not be required or obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to service of process in suits, other than those arising out of the
offering or sale of the Units.  Furthermore, the Company shall file a
copy of a Notice of Sale on Form D with the SEC within the prescribed time
period and shall file all amendments with the SEC as may be
required.  Copies of the Form D and all amendments thereto shall be
provided to the Placement Agent.  The Company or its counsel will
provide counsel for the Placement Agent with copies of all correspondence or
other documentation filed with or received from any jurisdiction where the Units
are to be registered or qualified or offered.  The Company will
promptly provide to the Placement Agent for delivery to all offerees and
investors and their representatives any additional information, documents and
instruments which the Placement Agent or the Company reasonably deem necessary
to comply with the rules, regulations and judicial and administrative
interpretations respecting compliance with such exemptions or qualifications and
registrations in those states where the Units are to be offered or
sold.

    

    (c) The Company shall place a legend on
the certificates representing the Units, if any, and the Shares, Warrants,
Warrant Shares, Agent's Warrants and Agent's Warrant Shares, issued to
subscribers stating that the securities evidenced thereby have not been
registered under the Act or applicable state securities laws, setting forth or
referring to the applicable restrictions on transferability and sale of such
securities under the Act and applicable state laws.

     

    (d) The Company shall apply the net
proceeds from the sale of the Units to fund its working capital requirements and
for such other purposes as are specifically described under “Use of Proceeds” in
the Memorandum.

     

    (e) During the Offering Period, the
Company shall make available for review by prospective Investors during normal
business hours at the Company’s offices, upon their request, copies of such
corporate documents, including, but not limited to, organizational materials and
material contracts, as such Investor shall reasonably request, to the extent
that such shall not violate any obligation on the part of the Company to
maintain the confidentiality thereof, and shall afford each prospective Investor
the opportunity to ask questions of and receive answers from an officer of the
Company concerning the terms and conditions of the Offering and the opportunity
to obtain such other additional information necessary to verify the accuracy of
the Memorandum to the extent it possesses such information or can acquire it
without unreasonable expense.

     

    (f) Until the earlier of (i) completion
of the Offering, and (ii) the Termination Date, neither the Company nor any
person or entity acting on its behalf shall negotiate with any other placement
agent or underwriter with respect to a private or public offering of the
Company’s debt or equity securities except for the transactions contemplated by
the Ariston Merger as contemplated in the Memorandum. Except as contemplated in
the Memorandum, neither the Company nor anyone acting on its behalf shall, until
the Termination Date, offer for sale to, or solicit offers to subscribe for
Units or other securities of the Company from, or otherwise approach or
negotiate in respect thereof with, any other person.

     

    (g)  Until the earlier of (i)
the Termination Date and (ii) the Final Closing, the Company will not issue any
press release, grant any media interview (including without limitation, internet
media outlets), or otherwise communicate with the media in any manner whatsoever
without the Placement Agent’s prior written consent, which consent will not
unreasonably be withheld or delayed.

     

     (h)  The
Company shall pay all expenses incurred in connection with the preparation and
printing of all necessary offering documents, amendments, and instruments
related to the Offering and the issuance of the Units, the Common Stock,
Warrants and the Agent’s Warrants, and shall also pay its own expenses for
accounting fees, legal fees, bound volumes of closing documents, and other costs
involved with the Offering. The Company shall provide at its own expense such
quantities of the Memorandum and other documents and instruments relating to the
Offering as the Placement Agent may reasonably request. The Blue Sky filings
shall be prepared by the Placement Agent’s counsel for the Company’s account,
with copies to Company’s counsel concurrently (or as soon as sent or received as
reasonable possible) of the filings, correspondence, orders, findings and all
related matters.  In addition, the Company shall pay all filing fees
and reasonable legal fees and expenses for Blue Sky services and related filings
and out-of-pocket expenses of the Placement Agent’s counsel with respect to Blue
Sky exemptions that are sought with respect to the Offering (the “Blue Sky Expenses”), $6,000 of
which shall be paid to the Placement Agent’s counsel upon the First Closing, and
additional reasonable amounts, if any, of which shall be paid at any subsequent
Closing, as applicable.  The Blue Sky filings shall be prepared by the
Placement Agent’s counsel for the Company’s account.

    
      
         

      

      
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    (i)  Effective upon the sale
of the Minimum Amount, the Placement Agent shall have a twelve (12) month right
of first refusal from such date to act as a lead placement agent on any future
private placement of the Company’s securities in which the Company seeks to
utilize a third party placement agent or as a lead managing underwriter on any
public offering of the Company’s securities in which the Company seeks to
utilize a third party underwriter.  It is understood that if a third
party broker-dealer provides the Company with written terms with respect to a
future securities offering that the Company wishes to accept during such twelve
month period (“Written Offering
Terms”), the Company shall promptly present same to the Placement
Agent.  The Placement Agent shall have ten (10) business days from its
receipt of the Written Offering Terms in which to determine whether or not to
accept such offer and, if the Placement Agent refuses, and provided that such
financing is consummated (a) with another placement agent or underwriter upon
substantially the same terms and conditions as the Written Offering Terms and
(b) within three months after the end of the aforesaid ten (10) business day
period, this right of first refusal shall thereafter be forfeited and
terminated; provided, however, if the financing is not consummated under the
conditions of clauses (a) and (b) above, then the right of first refusal shall
once again be reinstated under the same terms and conditions set forth in this
Section 6(i) during the remainder of such twelve (12) month period.

    

    7. Conditions of Placement
Agent’s Obligations. The obligations of the Placement Agent hereunder are
subject to the fulfillment, at or before each Closing, of the following
additional conditions:

     

    (a)  Each of the
representations and warranties of the Company qualified as to materiality shall
be true and correct at all times prior to and on each Closing Date, except to
the extent any such representation or warranty expressly speaks as of an earlier
date, in which case such representation or warranty shall be true and correct as
of such earlier date, and the representations and warranties of the Company not
qualified as to materiality shall be true and correct in all material respects
at all times prior to and on each Closing Date, except to the extent any such
representation or warranty expressly speaks as of an earlier date, in which case
such representation or warranty shall be true and correct in all material
respects as of such earlier date.

     

    (b)  The Company shall have
performed and complied in all material respects with all agreements, covenants
and conditions required to be performed by and complied with it under the
Transaction Documents at or before each Closing.

     

    (c)  No
order suspending the use of the Memorandum or enjoining the offering or sale of
the Units shall have been issued, and no proceedings for that purpose or a
similar purpose shall have been initiated or pending, or, to the best of the
Company’s knowledge, are contemplated or threatened.

    

    (d)  No
judgment, writ, order, injunction, award or decree of or by any court, or judge,
justice or magistrate, including any bankruptcy court or judge, or any order of
or by any governmental authority, shall have been issued, and no action or
proceeding shall have been instituted by any governmental authority, enjoining
or preventing the consummation of the transactions contemplated hereby or in the
other Transaction Documents.

    
      
         

      

      
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    (e)  The Placement Agent
shall have received certificates of the Chief Executive Officer and Chief
Financial Officer of the Company, dated as of each Closing Date, certifying, in
such detail as Placement Agent may reasonably request, as to the fulfillment of
the conditions set forth in paragraphs (a), (b), (c) and (d) above.

     

    (f) The Company shall have delivered to
the Placement Agent: (i) at each Closing a currently dated good standing
certificate from the secretary of state of its jurisdiction of incorporation and
each jurisdiction in which the Company is qualified to do business as a foreign
corporation, and (ii) at the First Closing, certified resolutions of the
Company’s Board of Directors approving this Agreement and the other Transaction
Documents, and the transactions and agreements contemplated by this Agreement
and the other Transaction Documents.

     

    (g) On or prior to the date hereof and
at each Closing, either the Chief Executive Officer or the Chief Financial
Officer of the Company shall have provided a certificate to the Placement Agent
confirming that, to the best of their knowledge, there have been no material
adverse changes in the condition (financial or otherwise) or prospects of the
Company from the date of the financial statements included in the Memorandum,
the absence of undisclosed liabilities and such other matters relating to the
financial condition and prospects of the Company that the Placement Agent may
reasonably request.

     

    (h) At each Closing, the Company shall
pay and deliver to the Placement Agent the Agent’s Fee, calculated in accordance
with Sections 4(d), the Agent’s Expense Allowance, calculated in accordance with
Sections 4(f) and the Blue Sky Expenses in accordance with Section 6(h)
hereof.

     

    (i) At each Closing the Company shall
have delivered to the Placement Agent and/or its designees, the appropriate
number of Agent’s Warrants, calculated in accordance with Section 4(e)
hereof.

     

    (j) There shall have been delivered to
the Placement Agent a signed opinion of Lowenstein Sandler PC, outside counsel
to the Company, dated as of each Closing Date, containing substantially the
opinions set forth as Annex A
hereto.

    

    (k) All proceedings taken at or prior
to each Closing in connection with the authorization, issuance and sale of the
Units and the Agent’s Warrants will be reasonably satisfactory in form and
substance to the Placement Agent and its counsel, and such counsel shall have
been furnished with all such documents, certificates and opinions as it may
reasonably request upon reasonable prior notice in connection with the
transactions contemplated hereby.

    

    8.          Covenants of the Placement
Agent.  The Placement
Agent covenants that:

    

    (a)  The
Placement Agent  shall limit its offering of the Units to persons for
whom the Placement Agent has reasonable grounds to believe and in fact believes
are "accredited investors".

    

    (b)  The
Placement Agent shall in connection with the offering of the Units offered
pursuant to the Memorandum, provide copies of the executed subscription
documentation to the Company prior to each Closing to enable the Company to
establish and determine that each such subscriber is an "accredited investor"
within the meaning of Rule 501(a) of the Rules and Regulations and shall
deliver.

    

    (c)  The
Placement Agent shall not sell the Units offered pursuant to the Memorandum by
any means of public solicitation or general advertising

    
      
         

      

      
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    (d)  To
the extent it is determined by the parties hereto and their respective legal
counsel that a supplement or amendment to the Memorandum is required based on
events that may materially affect the Company or otherwise,  the
Placement Agent shall distribute copies of any such supplement or amendment to
persons who have previously received a copy of the Memorandum from the Placement
Agent and who continue to be interested in the Offering and include such
supplement or amendment in all further deliveries of the
Memorandum.

    

    9. Indemnification.

    

    (a) The Company will: (i)
indemnify and hold harmless the Placement Agent, its selected dealers and their
respective affiliates, officers, directors, employees and each person, if any,
who controls the Placement Agent within the meaning of the Act (each an “Indemnitee”) against, and pay
or reimburse each Indemnitee for, any and all losses, claims, damages,
liabilities or expenses whatsoever (or actions or proceedings or investigations
in respect thereof), joint or several (which will, for all purposes of this
Agreement, include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys’ fees and disbursements, including
appeals), to which any Indemnitee may become subject (x) under the Act or
otherwise, in connection with the offer and sale of the Units, and (y) as a
result of the breach of any representation, warranty or covenant made by the
Company herein, regardless whether such losses, claims, damages, liabilities or
expenses shall result from any claim of any Indemnitee or any third party; and
(ii) reimburse each Indemnitee for any legal or other expenses reasonably
incurred in connection with investigating or defending against any such loss,
claim, action, damage or liability; provided, however, that the Company
will not be liable in any such case to the extent that any such claim, damage or
liability results from (A) an untrue statement or alleged untrue statement of a
material fact made in the Memorandum, or an omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, made solely in reliance upon and in
conformity with written information furnished to the Company by the Placement
Agent specifically for use in the preparation thereof, (B) any violations by the
Placement Agent of the Act or state securities laws which does not result from a
violation thereof by the Company or any of its affiliates or (C) fraud, willful
misconduct or gross negligence of the Placement Agent. In addition to the
foregoing agreement to indemnify and reimburse, the Company will indemnify and
hold harmless each Indemnitee from and against any and all losses, claims,
damages, liabilities or expenses whatsoever (or actions or proceedings or
investigations in respect thereof), joint or several (which shall for all
purposes of this Agreement, include, but not be limited to, all reasonable costs
of defense and investigation and all reasonable attorneys’ fees, including
appeals) to which any Indemnitee may become subject insofar as such costs,
expenses, losses, claims, damages or liabilities arise out of or are based upon
the claim of any person or entity that he or it is entitled to broker’s or
finder’s fees from any Indemnitee in connection with the Offering.

    

    (b)
   The Placement Agent will indemnify and hold harmless the Company,
its officers, directors, employees and each person, if any, who controls the
Company and such persons within the meaning of the Act against, and pay or
reimburse any such person for, any and all losses, claims, damages or
liabilities or expenses whatsoever (or actions, proceedings or investigations in
respect thereof), joint or several, to which the Company or any such person may
become subject under the Act or otherwise, in connection with the offer and sale
of the Units, whether such losses, claims, damages, liabilities or expenses (or
actions, proceedings or investigations in respect thereof) shall result from any
claim of the Company, any of its officers, directors, employees, agents, any
person who controls the Company and such persons within the meaning of the Act
or any third party, insofar as such losses, claims, damages or liabilities are
based upon (A) any untrue statement or alleged untrue statement of any material
fact contained in the Memorandum, but only with reference to information
contained in the Memorandum relating to the Placement Agent, or an omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, if made or omitted
in reliance upon and in conformity with information furnished to the Company by
the Placement Agent or any such controlling persons, specifically for use in the
preparation thereof, or (B) fraud, willful misconduct or gross negligence of the
Placement Agent.  The Placement Agent will reimburse the Company or
any such person for any legal or other expenses reasonably incurred in
connection with investigating or defending against any such loss, claim, damage,
liability or action, proceeding or investigation to which such indemnity
obligation applies, including appeals. Notwithstanding the foregoing, (i) in no
case shall the Placement Agent have any liability to any person under this
Section 9(b) for the gross negligence, fraud or willful misconduct of the
Company or any person entitled to indemnification hereunder and (ii) in no event
shall the Placement Agent’s indemnification obligation hereunder exceed the fees
payable to it hereunder.

    
      
         

      

      
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    (c)  Promptly after receipt
by an indemnified party under this Section 9 of notice of the commencement of
any action, claim, proceeding or investigation (the “Action”), such indemnified
party, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, will notify the indemnifying party of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
under this Section 9 unless the indemnifying party has been substantially
prejudiced by such omission. The indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party, to assume the defense thereof subject to the provisions
herein stated, with counsel reasonably satisfactory to such indemnified party.
The indemnified party will have the right to employ separate counsel in any such
Action and to participate in the defense thereof, but the fees and expenses of
such counsel will not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the Action with counsel reasonably
satisfactory to the indemnified party, provided, however, that if the
indemnified party shall be requested by the indemnifying party to participate in
the defense thereof or shall have concluded in good faith and specifically
notified the indemnifying party either that there may be specific defenses
available to it which are different from or additional to those available to the
indemnifying party or that such Action involves or could have a material adverse
effect upon it with respect to matters beyond the scope of the indemnity
agreements contained in this Agreement, then the counsel representing it, to the
extent made necessary by such defenses, shall have the right to direct such
defenses of such Action on its behalf and in such case the reasonable fees and
expenses of such counsel in connection with any such participation or defenses
shall be paid by the indemnifying party. No settlement of any Action against an
indemnified party will be made without the consent of the indemnifying party and
the indemnified party, which consent shall not be unreasonably withheld or
delayed in light of all factors of importance to such party and no indemnifying
party shall be liable to indemnify any person for any settlement of any such
claim effected without such indemnifying party’s consent.

     

    
      
         

      

      
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    10. Contribution.

    

    To
provide for just and equitable contribution, if (i) an indemnified party makes a
claim for indemnification pursuant to Section 9 hereof and it is finally
determined, by a judgment, order or decree not subject to further appeal that
such claims for indemnification may not be enforced, even though this Agreement
expressly provides for indemnification in such case; or (ii) any indemnified or
indemnifying party seeks contribution under the Act, the 1934 Act, or otherwise,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company on the one
hand and the Placement Agent on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Placement Agent on the other shall be deemed to be in the same
proportion as the total net proceeds from the Offering (before deducting
expenses) received by the Company bear to the total commissions and fees
actually received by the Placement Agent.  The relative fault, in the
case of an untrue statement, alleged untrue statement, omission or alleged
omission will be determined by, among other things, whether such statement,
alleged statement, omission or alleged omission relates to information supplied
by the Company or by the Placement Agent, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement, alleged statement, omission or alleged omission. The Company and the
Placement Agent agree that it would be unjust and inequitable if the respective
obligations of the Company and the Placement Agent for contribution were
determined by pro rata
allocation of the aggregate losses, liabilities, claims, damages and expenses or
by any other method or allocation that does not reflect the equitable
considerations referred to in this Section 10. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 10, each person, if any, who
controls the Placement Agent within the meaning of the Act will have the same
rights to contribution as the Placement Agent, and each person, if any, who
controls the Company within the meaning of the Act will have the same rights to
contribution as the Company, subject in each case to the provisions of this
Section 10. Anything in this Section 10 to the contrary notwithstanding, no
party will be liable for contribution with respect to the settlement of any
claim or action effected without its written consent. This Section10 is intended
to supersede, to the extent permitted by law, any right to contribution under
the Act, the 1934 Act or otherwise available.

    

    11. Termination. (a) The
Offering may be terminated by the Placement Agent at any time prior to the
expiration of the Offering Period in the event that: (i) any of the
representations, warranties or covenants of the Company contained herein, in the
Memorandum or in any other Transaction Document shall prove to have been false
or misleading in any material respect when actually made, (ii) the Company shall
have failed to perform any of its material obligations hereunder or under any
other Transaction Document; or (iii) there shall occur any event, within the
control of the Company, which could materially adversely affect the transactions
contemplated hereby or the other Transaction Documents or the ability of the
Company to perform thereunder.  In such event, the Placement Agent
shall be entitled to receive from the Company, within thirty (30) business days
of the Termination Date, in addition to other rights and remedies it may have
hereunder, at law or otherwise, an amount equal to the sum of: (A) any and all
Agent’s Fee which would have been earned through the Termination Date based on
amounts in the Escrow Account that, but for the termination would have been
available in normal course for release to the Company at a Closing and shall
retain any Agent’s Fee for any closings previously consummated; (B) the Agent’s
Expense Allowance based on amounts in the Escrow Account that, but for the
termination would have been available in normal course to be paid to the
Placement Agent at a Closing and shall retain any Agent’s Expense Allowance for
any closings previously consummated [(A) and (B) collectively, the “Termination Amount”] and (C)
all amounts which may become payable in respect of Post-Closing Investors
pursuant to Section 4(g) hereof.  In addition, in the event such
termination occurs prior to the time that a Closing has been consummated and
there are no funds in the Escrow Account, the Placement Agent will be entitled, upon
presentation of a written accounting therefor in reasonable detail (but without
the need to include the underlying statements or evidence of payment), to prompt
reimbursement of its actual, out-of-pocket expenses related to the Offering,
including but not limited to fees and expenses of legal counsel, travel expenses
and the fees and expenses of outside experts, if any, retained to assist the
Placement Agent with due diligence (the foregoing hereinafter referred to as the
“Expense
Reimbursement”).

    

    (b)  This
Offering may be terminated by the Company at any time prior to the expiration of
the Offering Period in the event that the Placement Agent shall have failed to
perform any of its material obligations hereunder (excluding failing to raise
the Minimum Amount hereunder). In the event of any such termination by the
Company, the Placement Agent shall not be entitled to any amounts whatsoever
except for the Expense Reimbursement.

     

    
      
         

      

      
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    (c)  This Offering may also
be terminated by the Company at any time prior to the expiration of the Offering
Period for any reason not covered in Section 11(b) above (the “Company 11(c)
Termination”).  In such event, the Placement Agent shall be
entitled to receive from the Company (i) the Termination Amount (or if at the
time of such termination, there are no funds in the Escrow Account that have or
are to be released to Company, the Expense Reimbursement) and (ii) all amounts
which may become payable in respect of Post-Closing Investors pursuant to
Section 4(g) hereof.  In addition, if
within twelve (12) months after the Company 11(c) Termination, the Company
conducts a public or private offering of its securities or enters into a letter
of intent with respect to the foregoing, then upon the closing of any such
transaction, the Placement Agent shall be entitled to receive from the Company
an amount equal to five (5%) of the gross proceeds raised in such transaction
(the “Company 11 (c)
Termination Amount”).  Notwithstanding the foregoing, in no
event shall any fees or Termination Amount be payable to the Placement Agent in
connection with any transactions contemplated by the Ariston
Merger.

    

    (d)  Upon any such
termination, the Placement Agent and the Company will cause, via written
instructions to the Escrow Agent, all monies received with respect to the
subscriptions for Units not accepted by the Company to be promptly returned to
such subscribers without interest, penalty, expense or deduction.

     

    (e)  Before any termination
by the Placement Agent under Section 11(a) or by the Company under Section 11(b)
or Section 11(c) shall become effective, the terminating party shall give
written notice to the other party of its intention to terminate the Offering
(the “Termination
Notice”).  The Termination Notice shall specify the grounds for
the proposed termination, except in the case of a Section 11(c) termination. If
the specified grounds for termination, or their resulting adverse effect on the
Transactions, are curable, then the other party shall have ten (10) days from
the Termination Notice within which to remove such grounds or to eliminate all
of their material adverse effects on the Transactions contemplated hereby;
otherwise, the Offering shall terminate.

     

    (f)  Subject
to section 12 below, this Agreement shall terminate upon the occurrence and
satisfactory completion of the Offering and sale of the Units, unless earlier
terminated as provided herein.

    

    12. Survival. The
obligations of the parties to pay any costs and expenses hereunder and to
provide indemnification pursuant to Section 9 and contribution pursuant to
Section 10 shall survive any termination or completion of the
Offering.  The respective indemnities, agreements, representations,
warranties and other statements of the Company or the Placement Agent set forth
in or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of, and regardless of any
access to information by, the Company or the Placement Agent, or any of their
officers or directors or any controlling person thereof, and will survive the
sale of the Units.  In addition, the provisions of Sections 4(g),
6(d), 6(i), 11 through 20 hereof shall also survive the termination or
expiration of this Offering.

     

    
      
         

      

      
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    13.  Governing
Law; Jurisdiction.  This
Agreement shall be deemed to have been made and delivered in New York City and
shall be governed as to validity, interpretation, construction, affect and in
all other respects by the internal laws of the State of New
York.   THE PARTIES HERETO AGREE TO SUBMIT
ALL CONTROVERSIES TO ARBITRATION IN ACCORDANCE WITH THE PROVISIONS SET FORTH
BELOW AND UNDERSTAND AND AGREE THAT (A) ARBITRATION IS FINAL AND BINDING ON THE
PARTIES, (B) THE PARTIES ARE WAIVING THEIR RIGHTS TO SEEK REMEDIES IN COURT,
INCLUDING THE RIGHT TO A JURY TRIAL, (C) PRE-ARBITRATION DISCOVERY IS GENERALLY
MORE LIMITED AND DIFFERENT FROM COURT PROCEEDINGS, (D) THE ARBITRATOR’S AWARD IS
NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING AND ANY PARTY’S
RIGHT TO APPEAL OR TO SEEK MODIFICATION OF RULINGS BY ARBITRATORS IS STRICTLY
LIMITED, (E) THE PANEL OF FINANCIAL INDUSTRY REGULATORY AUTHORITY (“FINRA”)
ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS WHO WERE OR ARE
AFFILIATED WITH THE SECURITIES INDUSTRY, AND (F) ALL CONTROVERSIES WHICH MAY
ARISE BETWEEN THE PARTIES CONCERNING THIS AGREEMENT SHALL BE DETERMINED BY
ARBITRATION PURSUANT TO THE RULES THEN PERTAINING TO FINRA IN THE CITY OF NEW
YORK, STATE OF NEW YORK.  JUDGMENT ON ANY AWARD OF ANY SUCH ARBITRATION MAY
BE ENTERED IN THE SUPREME COURT OF THE STATE OF NEW YORK OR IN ANY OTHER COURT
HAVING JURISDICTION OVER THE PERSON OR PERSONS AGAINST WHOM SUCH AWARD IS
RENDERED.  THE PARTIES AGREE THAT THE DETERMINATION OF THE ARBITRATORS
SHALL BE BINDING AND CONCLUSIVE UPON THEM.  ANY NOTICE OF SUCH
ARBITRATION OR FOR THE CONFIRMATION OF ANY AWARD IN ANY ARBITRATION SHALL BE
SUFFICIENT IF GIVEN IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT. 
THE PREVAILING PARTY, AS DETERMINED BY SUCH ARBITRATORS IN AN ARBITRATION
PROCEEDING SHALL BE ENTITLED TO COLLECT ANY COSTS, DISBURSEMENTS AND REASONABLE
ATTORNEY’S FEES FROM THE OTHER PARTY.

     

    14. Notices. All notices
and other communications given or made pursuant hereto shall be in writing and
shall be deemed to have been duly given or made as of the date delivered
personally, or the date mailed if mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address which shall be effective upon receipt) or sent by electronic
transmission, with confirmation received, if sent to the Placement Agent, will
be mailed, delivered or telefaxed and confirmed to: National Securities
Corporation, 330 Madison Avenue, 18th Floor,
New York, New York 10017, Attention: Jonathan Rich, telefax number (212)
380-2828, with a copy to: Littman Krooks LLP, 655 Third Avenue, 20th Floor,
New York, New York 10017, Attention: Steven D. Uslaner, Esq., telefax number
(212) 490-2990, and if sent to the Company, to: Manhattan Pharmaceuticals,
Inc.48 Wall Street, New York, NY 10005, Attention: Michael G. McGuinness, CFO
and COO, telefax number (___) ___-____, with a copy to: Lowenstein Sandler PC,
65 Livingston Avenue, Roseland, NJ 07068, Attn: Anthony
Pergola,  Esq., telefax number (973) 597-2400.

     

    15.           Limitation of Engagement to
the Company. The Company acknowledges that the Placement Agent has been
retained only by the Company, that the Placement Agent is providing services
hereunder as an independent contractor (and not in any fiduciary or agency
capacity) and that the Company’s engagement of the Placement Agent is not deemed
to be on behalf of, and is not intended to confer rights upon, any shareholder,
owner or partner of the Company or any other person not a party hereto as
against the Placement Agent or any of its affiliates, or any of its or their
officers, directors, controlling persons (within the meaning of Section 15 of
the Act or Section 20 of the 1934 Act), employees or agents, other than the
indemnification and contribution provisions set forth in Sections 9 and 10
hereof. Unless otherwise expressly agreed in writing by the Placement Agent or
as provided in Sections 9 or 10 hereof, no one other than the Company is
authorized to rely upon this Agreement or any other statements or conduct of the
Placement Agent, and no one other than the Company is intended to be a
beneficiary of this Agreement.

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    16.           Limitation of Liability to
the Company. Except as provided in Section 9 (Indemnification) and
Section 10 (Contribution), neither the Placement Agent nor any of its affiliates
or any of its or their officers, directors, controlling persons (within the
meaning of Section 15 of the Act or Section 20 of the 1934 Act ), employees or
agents shall have any liability to the Company, its security holders or
creditors, or any person asserting claims on behalf of or in the right of the
Company (whether direct or indirect, in contract, tort, for an act of negligence
or otherwise) for any losses, fees, damages, liabilities, costs, expenses or
equitable relief arising out of or relating to this Agreement or the services
rendered hereunder, except for losses, fees, damages, liabilities, costs or
expenses that arise out of or are based on any action of or failure to act by
the Placement Agent and that are finally determined (by a court of competent
jurisdiction and after exhausting all appeals) to have resulted from the fraud,
gross negligence, or willful misconduct of the Placement Agent.

    

    17.           Waiver of Right to Appoint
Placement Agent Director.  The Placement Agent hereby waives
its right pursuant to Section 6(l)(i) of the Placement Agency Agreement dated
November 19, 2008 to nominate, and to require the Company to use its best
efforts to effect the appointment of, a member of the Board of Directors of the
Company (the "Placement Agent
Director") and to require the Company to issue to the Placement Agent
Director 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.

     

    18. Modification; Performance;
Waiver. No provision of this Agreement may be changed or terminated
except by a writing signed by the party or parties to be charged
therewith.  Unless expressly so provided, no party to this Agreement
will be liable for the performance of any other party’s obligations hereunder.
Any party hereto may waive compliance by the other with any of the terms,
provisions and conditions set forth herein; provided, however that any such
waiver shall be in writing specifically setting forth those provisions waived
thereby. No such waiver shall be deemed to constitute or imply waiver of any
other term, provision or condition of this Agreement. This Agreement contains
the entire agreement between the parties hereto and is intended to supersede any
and all prior agreements between the parties relating to the same subject
matter.

     

    19.  Counterparts.  This
Agreement may be executed in counterparts, each of which shall be deemed to be
an original, and all of which taken together shall constitute one and the same
agreement (and all signatures need not appear on anyone
counterpart).  In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original
thereof.  This Agreement shall become effective when one or more
counterparts has been signed and delivered by each of the parties
hereto.

     

    20.  Severability.  If
any provision of this Agreement is held to be illegal, invalid or unenforceable
under any present or future laws, such provision shall be fully
severable.  This Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of this
Agreement, and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this
Agreement.  Furthermore, in lieu of each such illegal, invalid or
unenforceable provision there shall be deemed added automatically as a part of
this Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible to cause such provision to be legal,
valid and enforceable.

    

    21.  Headings.  The
captions and headings used in this Agreement are for convenience only and do not
in any way affect, limit, amplify or modify the terms and provisions of this
Agreement.

    

    22. Miscellaneous.  This
Agreement shall inure to the benefit of, and be binding upon, the successors of
the Placement Agent and of the Company.  Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, company or corporation, other than the parties hereto and their
successors, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision hereof.  The term "successors" shall
not include any purchaser of the Units merely by reason of such
purchase.

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    

    If the foregoing is in accordance with
your understanding of our agreement, kindly sign and return this Agreement,
whereupon it will become a binding agreement between the Company and the
Placement Agent in accordance with its terms.

     

    
      
        
          
            	
                    Very
      truly yours,

                  	 
      
	 
      	 
      
	
                    MANHATTAN
      PHARMACEUTICALS, INC

                  	 
      
	 
      	 
      	 
      
	
                    By:

                  	
                    /s/
      Michael  G. McGuinness

                  	 
      
	 
      	
                    Name:
      Michael G. McGuinness

                  	 
      
	 
      	
                    Title:
      CFO and COO

                  	 
      
	 
      	 
      	 
      
	
                    Accepted
      and agreed to this

                  	 
      
	
                    28th
      day of December, 2009.

                  	 
      
	 
      	 
      	 
      
	
                    NATIONAL
      SECURITIES CORPORATION

                  	 
      
	 
      	 
      	 
      
	
                    By:

                  	
                    /s/
      Jonathan C. Rich

                  	 
      
	 
      	
                    Name:
      Jonathan C. Rich

                  	 
      
	 
      	
                    Title:
      Head of Investment Banking

                  	 
      

          

        

      

    

     

    
      
         

      

      
        22

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