Exhibit
10.2

    


    THIS
SENIOR SECURED PROMISSORY DEBENTURE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES
ONLY AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNTIL
(i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”)
SHALL HAVE BECOME EFFECTIVE WITH RESPECT THERETO OR (ii) RECEIPT BY THE
COMPANY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE
EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED IN CONNECTION WITH SUCH
PROPOSED TRANSFER NOR IS IN VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS.
THIS LEGEND SHALL BE ENDORSED UPON ANY DEBENTURE ISSUED IN EXCHANGE FOR THIS
DEBENTURE.

    


    MANHATTAN
PHARMACEUTICALS, INC.

    


    12% Original Issue Discount
Senior Subordinated Convertible Debenture

    


    
      
        	
                Debenture
      No.: 1

              	
                $400,000

              


      



    FOR VALUE
RECEIVED, Manhattan Pharmaceuticals, Inc., a Delaware corporation (the “Company”)
with its principal executive office at 48 Wall Street, Suite 1100, New York, New
York 10005, promises to pay to the order of Linden Growth Partners Master Fund
LP or its registered assigns (the “Holder”)
on the Maturity Date (as defined in Section 2 below), the
principal amount of Four Hundred Thousand Dollars ($400,000) (the “Stated
Value”), in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts. Interest on this Debenture shall accrue on the Stated Value outstanding
from time to time at a rate per annum computed in accordance with Section 3
hereof.

    


    The
Company (i) waives presentment, demand, protest or notice of any kind in
connection with this Debenture and (ii) agrees, in the event of an Event of
Default (as defined in Section 9 below), to
pay to the holder of this Debenture, on demand, all costs and expenses
(including reasonable legal fees and expenses as and when incurred), incurred in
connection with the enforcement and/or collection of this
Debenture.

    


    This
Debenture is issued pursuant to that certain Subscription Agreement, dated as of
the date hereof, by and between the Company and the Holder (the “Subscription
Agreement”).

    


    1.           Prepayment. This Debenture shall be
payable at any time and from time to time, in whole or in part, at the election
of the Company upon at least twenty (20) days prior written notice to the
Holder.  Any prepayments of this Debenture prior to the Maturity Date
shall be applied first to the payment of any fees and expenses then owed to the
Holder, second, to accrued and unpaid Interest (defined below) and third, to the
payment of the Stated Value then outstanding.



    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    2.          Maturity
Date. The entire
unpaid Stated Value of this Debenture, together with all fees and expenses (if
any), and accrued, but unpaid, Interest thereon, shall be immediately due and
payable at 12:01 a.m. on the earlier of (i) October 28, 2011 or
(ii)  the consummation by the Company of one or a series
of  debt or equity financings (excluding commercial bank debt
transactions) resulting in gross proceeds to the Company of Ten Million Dollars
($10,000,000) (such date, the “Maturity
Date”). In the event that the Maturity Date falls on a Saturday, Sunday
or a holiday on which banks in the State of New York are closed, the Maturity
Date shall be the first business day occurring immediately after such
date.

    


    3.          Interest;
Etc.

    


     
(a)  Interest
Rate. This
Debenture shall bear interest (the “Interest”)
on the outstanding Stated Value at the rate of twelve (12%) percent per annum.
Interest on this Debenture shall commence accruing on the date hereof and shall
be computed on the basis of a year of 360 days for the actual number of days
elapsed. Interest shall be compounded quarterly and shall be payable on the
Maturity Date as set forth in Section 4
below.   The Company may, in its sole discretion elect to pay
Interest quarterly in cash or in shares of its common stock, $.001 par value per
share, the resale of which is subject to an effective registration statement
under the Securities Act of 1933, as amended (“Registered
Common Stock”), if available.  In the event Interest is paid in
Registered Common Stock, the Registered Common Stock shall be valued at a twenty
percent (20%) discount to the volume weighted average price per share as quoted
on Bloomberg, LP for the twenty (20) day period prior to the payment date of
such Interest.

    


     
(b)  Maximum
Rate. In the event that under the laws relating to usury applicable to
the Company or the indebtedness evidenced by this Debenture (“Applicable
Usury Laws”), the interest charges and fees payable by the Company in
connection herewith or in connection with any other document or instrument
executed and delivered in connection herewith cause the effective interest rate
applicable to the indebtedness evidenced by this Debenture to exceed the maximum
rate allowed by law (the “Maximum
Rate”), then such interest shall be recalculated for the period in
question and any excess over the Maximum Rate paid with respect to such period
shall be credited, without further agreement or notice, to the Stated Value
outstanding hereunder to reduce said balance by such amount with the same force
and effect as though the Company had specifically designated such extra sums to
be so applied to principal and the Holder had agreed to accept such extra
payment(s) as a premium-free prepayment. All such deemed prepayments shall be
applied to the principal balance payable at maturity. In no event shall any
agreed-to or actual exaction as consideration for this Debenture exceed the
limits imposed or provided by Applicable Usury Laws in the jurisdiction in which
the Company is resident applicable to the use or detention of money or to
forbearance in seeking its collection in the jurisdiction in which the Company
is resident.

    


    4.          Manner of
Payment. Except
as otherwise provided in Section 3, the Stated
Value, Interest, and all other amounts due under this Debenture shall be due and
payable on the Maturity Date, in lawful money of the United States of America,
to the Holder at such address as designated from time to time by the Holder in
writing to the Company or by electronic wire funds transfer of immediately
available funds pursuant to written instructions provided to the Company by the
Holder. All amounts due from the Company to the Holder under this Debenture
shall be made without benefit of any setoff, counterclaim or other defense. All
payments on this Debenture shall be applied first to the payment of fees and
expenses, if any, then to accrued but unpaid Interest and then to the payment of
the Stated Value.


    
      
         


      

      
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    5.          Conversion.

     

     
(a)           Optional
Conversion.  The Holder shall have the right, at its option, to
convert all or a portion of this Debenture (including any accrued but unpaid
Interest) into shares of the Company’s common stock, $.001 par value per share
(“Common
Stock”) at a conversion price equal to $0.09 per share, subject to
adjustment as set forth in Section 6 (the “Conversion
Price”).  The Holder shall exercise its right to convert this
Debenture by delivering to the Company a written notice setting forth its
election to convert (a “Written
Election to Convert”) in the form attached hereto as Exhibit A and
surrendering this Debenture.  Upon receipt of the Written Election to
Convert and the surrender of this Debenture, the Company shall issue and cause
to be delivered with all reasonable dispatch to or upon the written order of the
Holder, and in such name or names as the Holder may designate, a certificate or
certificates for the full number of shares of Common Stock so purchased upon
conversion of this Debenture.  Such certificate or certificates shall
be deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such securities as of the
date of delivery of the Election to Convert, notwithstanding that the
certificate or certificates representing such securities shall not actually have
been delivered or that the stock transfer books of the Company shall then be
closed.  In the event that the Stated Value of this Debenture exceeds
the amount being converted, the Company shall, upon such conversion execute and
deliver to the Holder a new Debenture for the Stated Value of this Debenture
surrendered which is not to be converted.

    


      (b)          New Securities
Conversion.  In the event the Company proposes to issue new
securities  in connection with a financing (the “New Securities”), it shall
provide no less than thirty (30) days prior written notice to the Holder
describing the New Securities to be issued.  The Holder shall have the
right, at its option, to convert all or a portion of this Debenture (including
any accrued but unpaid Interest) into such New Securities at a conversion price
equal to the purchase price paid by the purchasers of such New
Securities.  The Holder shall exercise its right to convert this
Debenture by delivering to the Company a Written Election to Convert and
surrendering this Debenture.  Upon receipt of the Written Election to
Convert, the Company shall issue and cause to be delivered with all reasonable
dispatch to or upon the written order of the Holder, and in such name or names
as the Holder may designate, a certificate or certificates evidencing the New
Securities so purchased upon conversion of this Debenture at the closing of such
financing in which the New Securities are sold.  In the event that the
Stated Value of this Debenture exceeds the amount being converted, the Company
shall, upon such conversion execute and deliver to the Holder a new Debenture
for the Stated Value of this Debenture surrendered which is not to be
converted.


    
      
         


      

      
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    6.         Adjustments.

     

      (a)         Stock Dividends and
Splits. If the Company, at any time while this Debenture is outstanding:
(A) pays a stock dividend or otherwise make a distribution or distributions on
shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock, (B) subdivides outstanding shares of Common
Stock into a larger number of shares, (C) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares,
or (D) issues by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Conversion Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common
Stock outstanding immediately after such event and the number of shares issuable
upon conversion of this Debenture shall be proportionately
adjusted.  Any adjustment made pursuant to this Section 6(a) shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification.

     

      (b)       Additional Issuances of
Equity Securities.  If the Company, at any time while this
Debenture is outstanding, shall issue or sell any Equity Securities (as defined
below) at an effective price per share less than the then effective Conversion
Price (such lower price, the “Base
Share Price” and such issuances collectively, a “Dilutive
Issuance”), as adjusted hereunder (if the holder of the Equity Securities
so issued shall at any time, whether by operation of purchase price adjustments,
reset provisions, floating conversion, exercise or exchange prices or otherwise,
or due to warrants, options or rights per share which is issued in connection
with such issuance, be entitled to receive shares of Common Stock at an
effective price per share which is less than the  then effective
Conversion Price, such issuance shall be deemed to have occurred for less than
the then effective Conversion Price on such date of the Dilutive Issuance),
then, the Conversion Price shall be reduced and only reduced to equal the Base
Share Price.  Notwithstanding the foregoing, no adjustments shall be
made, paid or issued under this Section 6(b) in
respect of Exempt Issuances (as defined below).  The Company shall
notify the Holder in writing as promptly as reasonably possible following the
issuance of any Equity Securities subject to this section, indicating therein
the applicable issuance price, or of applicable reset price, exchange price,
conversion price and other pricing terms (such notice the “Dilutive
Issuance Notice”).  For purposes of clarification, whether or
not the Company provides a Dilutive Issuance Notice pursuant to this Section 6(b), upon
the occurrence of any Dilutive Issuance while this Debenture is outstanding,
after the date of such Dilutive Issuance the Holder is entitled to the Base
Share Price regardless of whether the Holder accurately refers to the Base Share
Price in the Written Election to Convert.

     

    For purposes of this Section 6(b), the
following definitions shall apply:

     

    “Common
Stock Equivalents” means any securities of the Company or its
subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.

     

    “Equity
Securities” means (i) Common Stock and (ii) Common Stock
Equivalents.



    
      
         


      

      
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    “Exempt
Issuance” means (i) any Equity Securities issued or issuable pursuant to
options, warrants or other rights issued or issuable to employees, officers or
directors of, or consultants or advisors to the Company or any subsidiary,
pursuant to equity incentive plans or other employee benefit arrangements; (ii)
any Equity Securities issued or issuable pursuant to any rights or agreements,
options, warrants or convertible securities outstanding as of the issuance date
of this Debenture; (iii) any Equity Securities issued or issuable for
consideration other than cash pursuant to a merger, consolidation, strategic
alliance, acquisition or similar business combination; (iv) any Equity
Securities issued or issuable in connection with any stock split, stock
dividend, distribution or recapitalization by the Company; (v) any Equity
Securities issued or issuable pursuant to any equipment loan or leasing
arrangement, real property leasing arrangement, or debt financing from a bank or
similar financial or lending institution; (vi) any Equity Securities issued or
issuable to the Placement Agent or its affiliates in connection with this
Debenture issuance; and (v) any Equity Securities issued to the Holder pursuant
to the Subscription Agreement, dated as of the date hereof, between the Company
and the Holder.

    


     
(e)         Mergers, Consolidations,
Etc. In the event of any consolidation or merger of Company with or into
another corporation or the conveyance of all or substantially all of the assets
of Company to another corporation or entity, this Debenture shall thereafter be
convertible into the number of shares of capital stock or other securities or
property to which a holder of the number of Common Stock deliverable upon
conversion hereof would have been entitled upon such consolidation, merger or
conveyance; and, in any such case, appropriate adjustment shall be made in the
application of the provisions herein set forth with respect to the rights and
interest of Holder thereafter, to the end that the provisions set forth herein
(including provisions with respect to adjustments in the Conversion Price) shall
thereafter be applicable, as nearly as may be practicable, in relation to any
shares of stock or other property thereafter deliverable upon the conversion
hereof.

     

     
 (f)         Calculations. All
calculations under this Section 6 shall be
made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 6, the number
of shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding treasury
shares, if any) issued and outstanding.

     

     
(g)         Voluntary Adjustment By
Company. The provisions of this Section 6 shall
similarly apply to successive, stock dividends, stock spits or combinations,
reclassifications, exchanges, substitutions, Dilutive Issuances or other
events.

     

    7.         Redemption.  If
at any time prior to the Maturity Date, the resale of the Common Stock issuable
upon conversion of this Debenture is subject to an effective registration
statement under the Securities Act of 1933, as amended, the Company may, in it
sole discretion, upon at least thirty (30) days prior written notice to the
Holder, elect to redeem the Debenture in cash for an amount equal to 120% of the
Stated Value plus any accrued and unpaid Interest.



    
      
         


      

      
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    8.         
  Senior
Subordinated Instrument; Subordination.

    


      
(a)         The indebtedness
evidenced by this Debenture and the payment of the principal and interest
thereof shall be Senior (as hereinafter defined) to, and have priority in right
of payment over, all indebtedness of Company, now outstanding or hereinafter
incurred, except for the Senior Claim (as defined below).  “Senior” as
used herein shall be deemed to mean that, in the event of any default in the
payment of the obligations represented by this Debenture (after giving effect to
"cure" provisions, if any) or of any liquidation, insolvency, bankruptcy,
reorganization, or similar proceedings relating to the Company, all sums payable
on this Debenture shall first be paid in full, with interest, if any, before any
payment is made upon any other indebtedness, now outstanding or hereinafter
incurred, except for the Senior Claim, and, in any such event, any payment or
distribution of any character which shall be made in respect of any other
indebtedness of the Company, other than the Senior Claim, shall be paid over to
the Holder of this Debenture for application to the payment hereof, unless and
until the obligations under this Debenture (which shall mean the principal and
other obligations arising out of, premium, if any, interest on, and any costs
and expenses payable under, this Debenture) shall have been paid and satisfied
in full.

    


      
(b)         The Company covenants
that so long as any of its obligations under this Debenture are outstanding it
shall not create, incur, assume or suffer to exist any indebtedness for borrowed
money that is senior in right of payment to this Debenture other than any Senior
Claim.

    


       (c)        
The Holder and any subsequent holder of this Debenture, by his, her or its
acceptance of this Debenture, agrees, that the obligation of the Company to make
any payment hereunder is irrevocably subordinate, to the extent and in the
manner hereinafter set forth, in right of payment to the prior payment in full
of any Senior Claim.  “Senior Claim” shall mean all
liabilities, obligations and indebtedness of any and every kind and nature, of
the Company to the holders of the Company’s 12% Senior Secured Promissory Notes
in the aggregate principal amount of $1,725,000 issued pursuant to that certain
Securities Purchase Agreement, dated as of November 25, 2008, whether
heretofore, now or hereafter owing, arising, due or payable, and howsoever
evidenced, created, incurred, acquired or owing.  The Company will not
make any payment hereunder until the Senior Claim shall have been paid and
discharged in its entirety or at any time during which there shall have occurred
and be continuing a default with respect to the payment of any principal of, or
interest on, the Senior Claim, which has not been waived, in each case pursuant
to the terms of the Senior Claim.

     

       (d)         Upon
any distribution of the assets of the Company in connection with any
dissolution, winding up, liquidation or reorganization of the Company (whether
in bankruptcy, insolvency or receivership proceedings) or upon any assignment
for the benefit of creditors or any other marshalling of the assets and
liabilities of the Company or otherwise:

     

    (i)        the
holder of the Senior Claim shall be entitled to receive payment in full of the
Senior Claim (including interest accruing from and after the commencement of any
such proceeding at the rate specified in the Senior Claim except to the extent
prohibited by mandatory provisions of law) before the Holder shall be entitled
to receive any payment hereunder; and

     

    (ii)       in
the event that, notwithstanding the foregoing, any such payment or distribution
of assets shall be received by the Holder before the Senior Claim shall have
been paid in full, such payment or distribution shall be held in trust for the
benefit of and shall be paid over or delivered to the holder of the Senior
Claim, for application in payment thereof in accordance with the provisions of
subsection (b) of this Section
8.


    
      
         


      

      
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    (c)        If
any payment is made to the holder of the Senior Claim which, but for the
provisions of this Section 8, would have
been made to the Holder, when the indebtedness to the holder of the Senior Claim
is paid in full, the Holder will be subrogated to the claim of the holder of the
Senior Claim against the Company to the extent of the amount of the Senior Claim
which was paid out of sums which otherwise would have been payable to the
Holder, and no such payment or distribution for the account of the holder of the
Senior Claim shall, for the purposes of this Section 8, be deemed
to be a payment or distribution by the Company on account of the Senior
Claim.

     

    (e)        Nothing
contained in this Section 8 or
elsewhere in this Debenture is intended to or shall impair, as between the
Company and the Holder, the obligation of the Company to pay to the Holder all
or a portion of the principal and interest of this Debenture as and when the
same shall become due and payable in accordance with the terms hereof, or is
intended to or shall affect the relative rights of the Holder and creditors of
the Company other than the holder of the Senior Claim.

     

    9.           Events of Defaults and
Remedies.

     

    9.1       Event of
Default.  An “Event of
Default” shall exist if any one or more of the following shall
occur:

     

    (a)       failure
by the Company to pay any of its obligations under this Debenture when due,
whether on the date fixed for payment or by acceleration or otherwise;
or

     

    (b)       if
any representation or warranty made by the Company in any of the Subscription
Agreement, this Debenture or in any certificate, financial or other statement
furnished at the time of closing or pursuant to the Subscription Agreement shall
prove to have been untrue or misleading in any material respect at the time made
which shall not have been cured within ten (10) days of the Company’s receipt of
the Holder’s written notice to the Company; or

     

    (c)       default
by the Company in the performance or observance of any covenant or agreement
contained in this Debenture and/or the Subscription Agreement which is not cured
within any applicable grace period for therein, if any; or

     

    (d)       a
final judgment for the payment of money in excess of $50,000 shall be rendered
against the Company, and such judgment shall remain undischarged for a period of
sixty (60) days from the date of entry thereof unless within such sixty (60) day
period such judgment shall be stayed, and appeal taken therefrom and the
execution thereon stayed during such appeal, other than the judgment confirming
the arbitration award in favor of Swiss Pharma Contract LTD (“Swiss
Pharma”) (as described in the Company’s Form 10-Q for the quarter and six
months ended June 30, 2009)  that was presented to the NYS Supreme Court
for entry on August 10, 2009; provided, however, that any
material breach of the Settlement Agreement and Mutual Release, dated October
27, 2009, between the Company and Swiss Pharma  which shall not have
been cured within the time period provided in the Settlement Agreement shall
constitute an Event of Default hereunder; or

     

    (e)        The
Company shall:


    
      
         


      

      
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              (i)

            	
              apply
      for, consent to, or acquiesce in, the appointment of a trustee, receiver,
      sequestrator or other custodian for the Company or any of  its
      properties, or make a general assignment for the benefit of
      creditors;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              in
      the absence of such application, consent or acquiesce in, permit or suffer
      to exist the appointment of a trustee, receiver, sequestrator or other
      custodian for the Company or for any part of its properties, and such
      trustee, receiver, sequestrator or other custodian shall not be discharged
      within thirty (30) days;

            


    

     

    
      	
               
      

            	
              (iii)

            	
              permit
      or suffer to exist the commencement of any bankruptcy, reorganization,
      debt arrangement or other case or proceeding under any bankruptcy or
      insolvency law, or any dissolution, winding up or liquidation proceeding,
      in respect of the Company, and, if such case or proceeding is not
      commenced by the Company or converted to a voluntary case, such case or
      proceeding shall be consented to or acquiesced in by the Company or shall
      result in the entry of an order for relief or shall remain for sixty (60)
      days undismissed; or

            


    

     

    
      	
               
      

            	
              (iv)

            	
              take
      any corporate action authorizing, or in furtherance of, any of the
      foregoing;

            


    

     

    9.2         Remedies. Upon the
occurrence of an Event of Default, specified in Section 9.1(e) above,
the outstanding Stated Value of this Debenture and all other obligations
hereunder shall automatically be and become immediately due and payable, without
notice or demand.  Upon the occurrence of an Event of Default other
than those specified in Section 9.1(e), the
Holder may declare, at its option, so long as the Event of Default is continuing
at the time notice thereof is given, upon five (5) days’ notice or demand, this
Debenture to be immediately due and payable. In any case, this Debenture shall
become due and payable without presentment, demand or protest, all of which are
hereby expressly waived.  Upon the occurrence of an Event of Default
and after the expiration of any grace period therefor specified herein, the
Holder shall thereupon have, in addition to any rights it may have to proceed
directly against the Company as a result of such default, the rights, benefits,
and remedies afforded to it under any of this Debenture or the Subscription
Agreement. The Company agrees that the Holder may or may not proceed, as each
determines in its sole discretion, with any or all other rights, benefits, and
remedies which they may have against the Company. The rights afforded to the
Holder under all of the foregoing shall be cumulative.   The
Company shall give the Holder prompt written notice of any material breach of
the Settlement Agreement which shall not have been cured within the time period
provided in the Settlement Agreement.



    
      
         


      

      
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    10.         Piggyback
Registration Rights.  If at any time
the Company shall determine to file with the Securities and Exchange Commission
a registration statement (“Registration
Statement”) relating to an offering for its own account or the account of
others under the Securities Act of 1933 Act, as amended (other than on Form S-4
or Form S-8 or their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other bona fide, employee
benefit plans), the Company shall send to the Holder, written notice of such
determination and, if within thirty (30) days after the effective date of such
notice, such Holder shall so request in writing, the Company shall include in
such Registration Statement all or any part of the shares such Holder requests
to be registered which have been issued or are issuable pursuant to this
Debenture, which may include the Common Stock into which this Debenture is
convertible, the shares of Common Stock issuable as Interest payments and the
shares of Common Stock underlying any New Securities into which this Debenture
may be converted pursuant to Section 5(b) (“Registration
Shares”), except that if, in connection with any underwritten public
offering for the account of the Company the managing underwriter(s) thereof
shall impose a limitation on the number of shares of Common Stock which may be
included in the Registration Statement because, in such underwriter(s)’
judgment, marketing or other factors dictate such limitation is necessary to
facilitate public distribution, then the Company shall be obligated to include
in such Registration Statement only such limited portion of the Registration
Shares with respect to which such Holder has requested inclusion hereunder as
the underwriter shall permit and shall be subject to any senior registration
rights existing on the date hereof. Any exclusion of Registration Shares shall
be made pro rata among the Holder and its registered assigns, if any, seeking to
include shares in proportion to the number of equity securities sought to be
included by such Holder and its registered assigns.  Notwithstanding
the foregoing, this Section 10 shall not
apply to any registration statement filed pursuant to the Registration Rights
Agreement, dated February 25, 2008, by and among the Company and Nordic Biotech
Venture Fund II K/S, as amended from time to time.

    


    11.         Amendments and
Waivers.

    


    (a)     
    The provisions of this Debenture may from time to time
be amended, modified or waived, if such amendment, modification or waiver is in
writing and consented to in writing by the Company and the Holder.

    


    (b)         No
failure or delay on the part of the Holder to exercise any right, power or
privilege under this Debenture and no course of dealing between the Company and
the Holder shall impair such right, power or privilege or operate as a waiver of
any default or an acquiescence therein, nor shall any single or partial exercise
of any such right, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.  No
notice to or demand on the Company in any case shall entitle it to any notice or
demand in similar or other circumstances. No waiver or approval by the Holder
shall, except as may be otherwise stated in such waiver or approval, be
applicable to subsequent transactions. No waiver or approval hereunder shall
require any similar or dissimilar waiver or approval thereafter to be granted
hereunder.

    


    (c)          To
the extent that the Company makes a payment or payments to the Holder, and such
payment or payments or any part thereof are subsequently for any reason
invalidated, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied, and all rights and remedies
therefor, shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not
occurred.


    
      
         


      

      
        -9-

        
          

        

      

      
         


      

    


    (d)         After
any waiver, amendment or supplement under this section becomes effective, the
Company shall mail to the Holder a copy thereof.

    


    12.         Miscellaneous.

    


    (a)         Parties in Interest.
All covenants, agreements and undertakings in this Debenture binding upon the
Company or the Holder shall bind and inure to the benefit of the successors and
permitted assigns of the Company and the Holder, respectively, whether so
expressed or not.

     

    (b)         Notices. Except as may be
otherwise provided herein, all notices, requests, waivers and other
communications made pursuant to this Debenture shall be in writing and shall be
conclusively deemed to have been duly given (a) when hand delivered to the other
party; (b) when received when sent by facsimile at the address and number set
forth below; (c) three (3) business days after deposit in the U.S. mail with
first class or certified mail, return receipt requested, postage prepaid, and
addressed to the other party as set forth below; or (d) the next business day
after deposit with a national overnight delivery service, postage prepaid,
addressed to the parties as set forth below with next-business-day delivery
guaranteed, provided that the sending party receives a confirmation of delivery
from the delivery service provider.

     

    
      	
              To
    Holder:

            	
              To the
      Company:

            
	 
      	 
      
	 
      	
              Manhattan
      Pharmaceuticals, Inc.

            
	 
      	
              48
      Wall Street, Suite 1100

              New
      York, New York 10005

            
	 
      	
              Attn:
      Douglas Abel

               
      Chief Executive Officer

            
	
              Fax
      Number:

            	
              Fax
      Number:  (212) 582-3957

            


    

    


    (c)        Notice of Certain
Transactions. In case at any time:

     

     
(i)          There shall be
any capital reorganization of the Company, or a sale of all or substantially all
of the assets of the Company, or a consolidation or merger of the Company with
another corporation (other than a merger with a wholly owned subsidiary of the
Company in which merger the Company is the continuing corporation and which does
not result in any reclassification); or

    


     
(ii)         There shall be a
voluntary or involuntary dissolution; liquidation or winding-up of the Company;
or

    


     
(iii)        The occurrence of an Event
of Default, a default and/or breach of any provision of this Debenture and/or
the Subscription Agreement and/or any event occurs that with the passage of time
or otherwise could result in an Event of Default;

    



    
      
         


      

      
        -10-

        
          

        

      

      
         


      

    


    then, in
any one or more of said cases, the Company shall cause to be mailed to the
Holder at the earliest practicable time (and, in any event not less than twenty
(20) days before any record date or other date set for definitive action, if any
need be taken), written notice of the date on which the books of the Company
shall close for such reorganization, reclassification, sale, consolidation,
merger or dissolution, liquidation or winding-up shall take place, as the case
may be. Such notice shall also set forth such facts as shall indicate the effect
of such action (to the extent such effect may be known at the date of such
notice) on this Debenture.

    


    Nothing
herein shall be construed as the consent of the Holder to any action otherwise
prohibited by the terms of this Debenture or as a waiver of any such
prohibition.

    


    (d)         Expenses. The Company agrees to
pay all costs and expenses, including, but not limited to, reasonable attorneys’
fees and costs of suit and preparation therefor (as and when incurred), incurred
in connection with the collection and enforcement of this
Debenture.

     

    (e)         Assignment.  The
rights, interests and obligations hereunder may not be assigned, by operation of
law or otherwise, in whole or in part, by the Company without the prior written
consent of the Holder.  The Holder is entitled to assign its rights
hereunder, subject to compliance with applicable securities laws.

     

    (f)       
  Partial
Invalidity.  In case any one or more of the provisions of this
Debenture shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Debenture shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Debenture.

     

    (g)         Governing Law; Venue; Waiver
Of Jury Trial. This Debenture shall be governed by and construed
exclusively in accordance with the internal laws of the State of New York
without regard to the conflicts of laws principles thereof. The parties hereto
hereby expressly and irrevocably agree that any suit or proceeding arising
directly and/or indirectly pursuant to, arising out of or under this Debenture,
shall be brought solely and exclusively in a federal or state court located in
the City, County and State of New York. By its execution hereof, the parties
hereby expressly covenant and irrevocably submit to the in personam jurisdiction
of the federal and state courts located in the City, County and State of New
York and agree that any process in any such action may be served upon any of
them personally, or by certified mail or registered mail upon them or their
agent, return receipt requested, with the same full force and effect as if
personally served upon them in New York City. The parties hereto expressly and
irrevocably waive any claim that any such jurisdiction is not a convenient forum
for any such suit or proceeding and any defense or lack of in personam
jurisdiction with respect thereto. In the event of any such action or proceeding
(including, but not limited to, any motions made), the party prevailing therein
shall be entitled to payment from the other party hereto of its reasonable
counsel fees and disbursements. The Company and Holder hereby waive all rights
to a trial by jury.

     

    (h)         Titles and
Subtitles.  The titles of the paragraphs and subparagraphs of
this Debenture are for convenience of reference only and are not to be
considered in construing this Debenture.


    
      
         


      

      
        -11-

        
          

        

      

      
         


      

    


    [Signature Page Follows]



    
      
         


      

      
        -12-

        
          

        

      

      
         


      

    


    IN WITNESS WHEREOF, this
Debenture has been executed and delivered on the date specified above by the
duly authorized representative of the Company.

    


    
      
        
          
            
              	 
      	
                      Manhattan
      Pharmaceuticals, Inc.

                    
	 
      	 
      
	 
      	
                      By:

                    	
                      /s/ Michael McGuinness

                    
	 
      	 	
                       
      Name: Michael McGuinness

                    
	 
      	 	
                       
      Title:   Chief Financial
Officer

                    


            

          

        

      

    


    
      
         


      

      
        -13-

        
          

        

      

      
         


      

    


    FORM OF WRITTEN ELECTION TO
CONVERT

    (To
be executed by the Holder to exercise the right to convert the foregoing
Debenture into

    shares
of Common Stock or New Securities)

     

    To:  MANHATTAN
PHARMACEUTICALS, INC.

     

    The
undersigned is the Holder of Debenture No. _______ (the “Debenture”) issued by
Manhattan Pharmaceuticals, Inc., a Delaware corporation (the “Company”).  Capitalized
terms used herein and not otherwise defined have the respective meanings set
forth in the Debenture.

     

    1.          The
undersigned Holder hereby exercises its right to convert $__________ of the
Stated Value of the Debenture and $___________ of accrued interest into
_________________  [shares of Common Stock/New Securities] of the
Company (the “Conversion
Shares”) pursuant to the Debenture.

     

    2.          Following
this conversion, the Stated Value of the Debenture shall be $__________ and the
interest accrued thereon shall be equal to $_______________.

     

    3.          The
Holder represents that, as of the date of exercise:

     

    
      	
               
      

            	
              (i)

            	
              the
      Debenture Shares being issued pursuant to this Written Election to Convert
      are being acquired solely for the Holder’s own account and not as a
      nominee for any other party, for investment, and not with a view toward
      distribution or resale; and

            


    

     

    
      	
               
      

            	
              (ii)

            	
              the
      Holder is an “accredited
      investor” as such term is defined in Rule 501(a)(1) of Regulation D
      promulgated by the Securities and Exchange Commission under the Securities
      Act.

            


    

     

    If the
Holder cannot make the representations required in Section 3(ii), above,
because it is factually incorrect, it shall be a condition to the conversion of
the Debenture that the Company receive such other representations as the Company
considers necessary, acting reasonably, to assure the Company that the issuance
of securities upon conversion of this Debenture shall not violate any United
States or other applicable securities laws.

     

    
      
        
          
            
              
                
                  	
                          Dated:                                      ,             
      

                        	
                          Name
      of Holder:

                        	 
      
	 
      	
                          (Print)

                        
	 
      	 
      
	 
      	
                          By:

                        	 
      
	 
      	
                          Name:

                        	 
      
	 
      	
                          Title:

                        	 
      
	 
      	
                          (Signature
      must conform in all respects to name of

                          holder
      as specified on the face of the
Debenture)