Exhibit
      10.3

    


    SECURITY
      AGREEMENT

    


    THIS
      SECURITY AGREEMENT
      (the
“Security
      Agreement”)
      is
      dated as of November 19, 2008 by and among Manhattan Pharmaceuticals, Inc.,
      a
      Delaware corporation (the “Company”
or
      the
“Debtor”)
      and
      each of the persons named on Exhibit
      A-1
      and
Exhibit
      A-2
      of the
      SPA (as hereinafter defined) (each a “Secured
      Party”
and,
      collectively, the “Secured
      Parties”).

    


    WITNESSETH

    


    WHEREAS,
      pursuant
      to the Securities Purchase Agreement of even date herewith, as may be amended
      or
      supplemented from time to time (the “SPA”),
      the
      Debtor is selling to the Secured Parties up to $3,500,000 aggregate principal
      amount of units (the “Units”),
      each
      Unit consisting of (i) a $5,000 aggregate principal amount senior secured
      promissory note (each a “Note,”
and,
      collectively, the “Notes”)
      of the
      Company and (ii) a warrant (the “Warrants”)
      to
      purchase up to 166,667 shares of the Company’s common stock, par value $0.001
      per share (the “Common
      Stock”);
      and

    


    WHEREAS,
      Debtor
      has agreed, pursuant to the terms and conditions of the SPA, to secure the
      repayment of the Notes, as more specifically provided herein;

    


    NOW,
      THEREFORE,
      in
      consideration of the foregoing, Debtor and the Secured Parties agree as
      follows:

    


    SECTION
      1. Definitions.
      

    


    1.1 Certain
      Defined Terms.
      The
      following terms, as used herein, have the meanings set forth below:

    


    “Accounts”
means
      all “accounts” (as defined in the UCC) now owned or hereafter created or
      acquired by Debtor including all of the following now owned or hereafter created
      or acquired by Debtor: (a) accounts receivable, contracts, contract rights,
      book debts, notes, drafts and other obligations or indebtedness owing to Debtor
      arising from the sale, lease or exchange of goods or other property or the
      performance of services; (b) Debtor’s rights in, to and under all purchase
      orders for goods, services or other property; (c) Debtor’s rights to any
      goods, services or other property represented by any of the foregoing (including
      returned or repossessed goods and unpaid sellers’ rights of rescission,
      repletion, reclamation and rights to stoppage in transit); (d) monies due
      to or to become due to Debtor under all contracts for the sale, lease or
      exchange of goods or other property or the performance of services (whether
      or
      not yet earned by performance on the part of Debtor); and (e) Proceeds of
      any of the foregoing and all collateral security and guaranties of any kind
      given by any Person with respect to any of the foregoing.

    


    “Collateral”
has
      the
      meaning assigned to that term in Section 2.

    


    “Collateral
      Agent”
has
      the
      meaning assigned to that term in Section
      10.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    “Computer
      Software”
or
      “Software”
means
      a
      computer program and any supporting information provided in connection with
      a
      transaction relating to the program.

    


    “Contracts”
means
      all contracts and agreements (as defined in the UCC).

    


    “Debtor”
has
      the
      meaning assigned to that term in the introduction to this Security
      Agreement.

    


    “Default
      Agreement”
means
      the Default Agreement by and among the Company, the Collateral Agent and the
      persons listed on Schedule A thereto.

    


    “Documents”
means
      all “documents” (as defined in the UCC) or other receipts covering, evidencing
      or representing goods now owned or hereafter acquired by Debtor.

    


    “Equipment”
means
      all “equipment” (as defined in the UCC) now owned or hereafter acquired by
      Debtor including all machinery, motor vehicles, trucks, trailers, vessels,
      aircraft and rolling stock and all parts thereof and all additions and
      accessions thereto and replacements therefor.

    


    “Event
      of Default”
has
      the
      meaning assigned to that term in Section 8(a).

    


    “Fixtures”
means
      all of the following now owned or hereafter acquired by Debtor: plant fixtures;
      business fixtures; other fixtures and storage office facilities, wherever
      located; and all additions and accessions thereto and replacements therefor.
      

    


    “General
      Intangibles”
means
      all “general intangibles” (as defined in the UCC) now owned or hereafter
      acquired by Debtor including all right, title and interest of Debtor in and
      to:
      (a) all Software of the Debtor, including all source code and object code
      thereto; (b) all agreements, leases, licenses and contracts to which Debtor
      is or may become a party; (c) all obligations or indebtedness owing to
      Debtor (other than Accounts) from whatever source arising; (d) all tax
      refunds; (e) intellectual property; and (f) all trade secrets and
      other confidential information of the Debtor relating to the business of
      Debtor.

    


    “Instruments”
means
      all “instruments” “chattel paper” or “letters of credit” (each as defined in the
      UCC) including promissory notes, drafts, bills of exchange and trade
      acceptances, now owned or hereafter acquired by Debtor.

    


    “Inventory”
means
      all “inventory” (as defined in the UCC), now owned or hereafter acquired by
      Debtor, wherever located including finished goods, raw materials, work in
      process and other materials and supplies (including packaging and shipping
      materials) used or consumed in the manufacture or production thereof and goods
      which are returned to or repossessed by Debtor.

    


    “Note”
has
      the
      meaning assigned to that term in the introduction to this Security
      Agreement.

    


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    “Partnership
      Agreement”
means
      the Limited Partnership Agreement between Nordic Biotech Venture Fund II K/S,
      the Company and Hedrin Pharmaceuticals General Partner ApS regarding Hedrin
      Pharmaceuticals K/S.

    


    “Placement
      Agent”
means
      [l].

    


    “Proceeds”
means
      all proceeds of, and all other profits, rentals or receipts, in whatever form,
      arising from the collection, sale, lease, exchange, assignment, licensing or
      other disposition of, or realization upon, any Collateral including all claims
      of Debtor against third parties for loss of, damage to or destruction of, or
      for
      proceeds payable under, or unearned premiums with respect to, policies of
      insurance with respect to any Collateral, and any condemnation or requisition
      payments with respect to any Collateral, in each case whether now existing
      or
      hereafter arising.

    


    “Required
      Lenders”
means
      Secured Parties holding a majority of the then outstanding principal amount
      of
      the Notes.

    


    “Secured
      Obligations”
has
      the
      meaning assigned to that term in Section 3.
      

    


    “Security
      Agreement”
means
      this Security Agreement as it may be amended, supplemented or otherwise modified
      from time to time.

    


    “Security
      Interests”
means
      the security interest granted pursuant to Section 2,
      as well
      as all other security interests created or assigned as additional security
      for
      the Secured Obligations pursuant to the provisions of this Security
      Agreement.

    


    “Shareholders’
      Agreement”
means
      the Shareholders’ Agreement between Nordic Biotech Venture Fund II K/S and the
      Company. 

    


    “UCC”
means
      the Uniform Commercial Code as in effect on the date hereof in the State of
      New
      York, as amended from time to time, and any successor statute; provided
      that if
      by reason of mandatory provisions of law, the perfection or the effect of
      perfection or non-perfection of the Security Interest in any Collateral is
      governed by the Uniform Commercial Code as in effect on or after the date hereof
      in any other jurisdiction, “UCC”
shall
      also mean the Uniform Commercial Code as in effect in such other jurisdiction
      for purposes of the provision hereof relating to such perfection or effect
      of
      perfection or non-perfection.

    


    1.2 Other
      Definition Provisions.
      References to “Sections”
      “subsections,”
      “Exhibits”
and
      “Schedules”
shall
      be to Sections, subsections, Exhibits and Schedules, respectively, of this
      Security Agreement unless otherwise specifically provided. References to the
      words “including,” “includes” and “include” shall be deemed to be followed by
      the words “without limitation;” and the term “or” has, except where otherwise
      indicated, the inclusive meaning represented by the phrase “and/or.” Any of the
      terms defined in subsection 1.1 may, unless the context otherwise requires,
      be used in the singular or the plural depending on the reference. All references
      to statutes and related regulations shall include any amendments of same and
      any
      successor statutes and regulations.

    


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    


    SECTION
      2. Grant
      of Security Interest.
      

    


    In
      order
      to secure the payment and performance of the Secured Obligations in accordance
      with the terms thereof, except as otherwise specifically provided in this
      Security Agreement, the Debtor hereby grants to the Secured Parties a continuing
      first priority security interest and lien in and to all right, title and
      interest of Debtor in the following property, whether now owned or existing
      or
      hereafter acquired or arising and regardless of where located (all being
      collectively referred to as the “Collateral”).

    


    (a) Accounts;

    


    (b) Inventory;

    


    (c) Computer
      Software;

    


    (d) General
      Intangibles;

    


    (e) Documents;

    


    (f) Instruments;

    


    (g) Equipment;

    


    (h) Fixtures;

    


    (i) Contracts;

    


    (j) All
      deposit accounts of Debtor maintained with any bank or financial
      institution;

    


    (k) All
      books, records, ledger cards, files, correspondence, computer programs, tapes,
      disks and related data processing software that at any time evidence or contain
      information relating to any of the property described in subparts (a)
      - (j)
      above or
      are otherwise necessary or helpful in the collection thereof or realization
      thereon; 

    


    (l) any
      and
      all other assets of the Debtor, whether currently held or hereafter acquired;
      and

    


    (m) Proceeds
      of all or any of the property described in subparts (a)
      - (l)
      above.

    


    Notwithstanding
      anything herein to the contrary, neither the term “Collateral” nor any other
      defined term used herein (including “Instruments,” “Documents” or “General
      Intangibles”) shall include, and no security interest is created or granted
      hereunder in, Debtor’s interest in (1) Debtor’s joint venture with Nordic
      Biotech Venture Fund K/S, created pursuant to a Joint Venture Agreement, dated
      as of January 31, 2008, as amended (the “Joint
      Venture Agreement”),
      including, without limitation, (i) Debtor’s limited partnership interest in
      Hedrin Pharmaceuticals K/S, a Danish limited partnership (the “Partnership”)
      and
      Debtor’s shares of the Partnership and (ii) Debtor’s interest in Hedrin
      Pharmaceuticals General Partner ApS and its shares therein, or in any of the
      agreements relating thereto, including, without limitation, the Joint Venture
      Agreement and the Partnership Agreement and Shareholders’ Agreement referred to
      therein (2) the rent deposit held by Metropolitan 810 7th
      Avenue
      LLC pursuant to a lease for office space, (3) a refund of a prepayment in the
      amount of $10,000 from Dow Pharmaceutical Sciences, Inc. or (4) Debtor’s tax
      refund for the 2007 tax year from the State of New York and City of New York.
      

    


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    Notwithstanding
      Debtor’s grant of a security interest as set forth above, so long as no Event of
      Default has occurred and is continuing, Debtor shall have the exclusive,
      non-transferable right and license to use the Collateral and the exclusive
      right
      to sell, transfer, convey, rent, lease, and grant to third parties licenses
      and
      sublicenses with respect to the Collateral, provided that any such sale,
      transfer, conveyance, rental, lease, license or sublicense is effected in the
      Debtor’s ordinary course of business. In the event that the Debtor sells any of
      its inventory in the ordinary course of business, such shall be transferred
      without any liens under the terms of this Security Agreement. The parties
      acknowledge and agree that any security interest granted by Debtor to the
      Secured Parties with respect to the Debtor’s rights under any franchise, license
      or similar agreements are granted in accordance with Section 9-408 of Revised
      Article 9 of the Uniform Commercial Code as in effect in the State of New York
      and are subject to all limitations on enforcement and other restrictions
      contained therein. Further, the parties acknowledge and agree that any attempt
      by the borrower to waive the limitations on enforcement and other restrictions
      imposed on the Secured Parties by Section 9-408 of Revised Article 9 of the
      Uniform Commercial Code are void and deemed unless those limitations or
      restrictions are explicitly waived in writing by all parties to the affected
      agreement.

    


    SECTION
      3. Security
      for Obligations.
      

    


    This
      Security Agreement secures the payment and performance of all obligations of
      Debtor to the Secured Parties with respect to the Notes, including any and
      all
      accrued (and accruing) but unpaid interest on all such indebtedness (all such
      debts, obligations and liabilities of Debtor being collectively called the
      “Secured
      Obligations”).

    


    SECTION
      4. Debtor
      Remains Liable.
      

    


    Anything
      herein to the contrary notwithstanding: (a) Debtor shall remain liable
      under the contracts and agreements included in the Collateral to the extent
      set
      forth therein to perform all of its duties and obligations thereunder to the
      same extent as if this Security Agreement had not been executed; (b) the
      exercise by the Secured Parties of any of the rights hereunder shall not release
      Debtor from any of its duties or obligations under the contracts and agreements
      included in the Collateral; and (c) the Secured Parties shall not have any
      obligation or liability under the contracts and agreements included in the
      Collateral by reason of this Security Agreement, nor shall the Secured Parties
      be obligated to perform any of the obligations or duties of Debtor thereunder
      or
      to take any action to collect or enforce any claim for payment assigned
      hereunder.

    


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    SECTION
      5. Representations
      and Warranties.
      Debtor
      represents and warrants as follows:

    


    5.1. Binding
      Obligation; Authorization.
      This
      Security Agreement and the Notes are legally valid and binding obligations
      of
      Debtor, enforceable against it in accordance with their terms, except as limited
      by applicable bankruptcy, insolvency, reorganization, moratorium and other
      laws
      of general application affecting enforcement of creditors’ rights generally. The
      execution, delivery and performance of this Security Agreement and the Notes
      by
      the Debtor has been duly approved by the Board of Directors of the Debtor and
      all other actions required to authorize and effect the granting of the Security
      Interests and the issuance of the Notes have been duly taken and approved by
      the
      Debtor.

    


    5.2. Location
      of Equipment and Inventory.
      All of
      the Equipment and Inventory is located at the places specified on Schedule I.

    


    5.3. Ownership
      of Collateral.
      Debtor
      owns the Collateral free and clear of any liens, security interests, charges
      or
      other encumbrances (collectively, “Liens”).
      No
      financing statement or other form of Lien notice covering all or any part of
      the
      Collateral is on file in any recording office, except for those in favor of
      the
      Secured Parties. 

    


    5.4. Office
      Locations; Fictitious Names. The
      chief
      place of business, the chief executive office and the office where Debtor keeps
      its books and records are located at the places specified on Schedule I.

    


    5.5. Deposit
      and Security Accounts.
      Set
      forth on Schedule
      II
      hereto
      are all of Debtor’s deposit accounts maintained with any bank or financial
      intermediary including, with respect to each such account, the names and
      addresses and telephone numbers of such banks or financial intermediaries,
      the
      names in which the accounts are held, a description of the purpose of the
      account and the respective account numbers.

    


    5.6. Perfection.
      This
      Security Agreement creates a valid security interest in the Collateral, securing
      the payment of the Secured Obligations. Upon the filing of the appropriate
      financing statements on Form UCC-1, this Security Agreement shall create a
      perfected security interest in all items of Collateral for which the security
      interest created by this Security Agreement may be perfected by filing a Form
      UCC-1 under the UCC. All filings and other actions necessary or desirable to
      perfect and protect such security interest will be taken immediately by the
      Debtor as provided in Section
      6.1
      or as
      may be requested by the Collateral Agent; provided,
      nothing
      herein constitutes a representation as to actions that must be taken, if any,
      to
      perfect a security interest in any item of Equipment, the ownership of which
      is
      evidenced by a certificate of title.

    


    5.7. Governmental
      Authorizations.
      No
      authorization, approval or other action by, and no notice to or filing with,
      any
      governmental authority or regulatory body is required either (a) for the
      grant by Debtor of the Security Interests granted hereby or for the execution,
      delivery or performance of this Security Agreement and/or the Notes by Debtor
      or
      (b) for the perfection of or the exercise by the Secured Parties of their
      rights and remedies hereunder except (i) for the filing under the Code of
      financing statements on Form UCC-1, (ii) for the filing in the United States
      Patent and Trademark Office of (1) patent collateral assignments and (2) the
      trademark security agreements with respect to Debtor’s patents and trademarks
      (and applications therefore) and (iii) as may be required in connection with
      the
      sale of any Collateral by laws affecting the offering and sale of securities
      generally.

    


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

       

    

    5.8. Accurate
      Information.
      All
      information heretofore, herein or hereafter supplied to the Secured Parties
      by
      or on behalf of Debtor with respect to the Collateral is and will be accurate
      and complete in all material respects.

    


    SECTION
      6. Further
      Assurances; Covenants.
      

    


    6.1. Other
      Documents and Actions.
      Debtor
      will, from time to time, at its expense, immediately execute and deliver all
      further instruments and documents and take all further action that may be
      necessary or desirable, or that the Collateral Agent may reasonably request,
      in
      order to perfect and protect any security interest granted or purported to
      be
      granted hereby or to enable the Secured Parties to exercise and enforce their
      rights and remedies hereunder with respect to any Collateral. Without limiting
      the generality of the foregoing, Debtor will: (a) on the date of the First
      Closing (as defined in the SPA), execute and file such financing statements
      on
      Form UCC-1 and such other instruments or notices as may be necessary or
      desirable in order to perfect (to the extent that such security interests may
      be
      perfected by filing a Form UCC-1 under the UCC) and preserve the security
      interests granted or purported to be granted hereby; (b) immediately upon
      request of the Collateral Agent, execute and file such other financing
      statements or continuation statements, or amendments thereto, and such other
      instruments or notices, as may be necessary or desirable, or as the Collateral
      Agent may request, in order to perfect and preserve the security interests
      granted or purported to be granted hereby (in such jurisdictions and with such
      officers as the Collateral Agent may request); (b) upon demand by the
      Collateral Agent exhibit the Collateral to allow inspection of the Collateral
      by
      the Collateral Agent or persons designated by the Collateral Agent; and
      (c) upon the Collateral Agents’ request, appear in and defend any action or
      proceeding that may affect Debtor’s title to or the Secured Parties’ security
      interest in the Collateral.

    


    6.2. Business
      Locations.
      Debtor
      will keep the Collateral at the locations specified on Schedule I & Schedule
      II hereto.

    


    6.3. Insurance.
      At
      its
      sole expense, the Debtor shall insure the Collateral at all times for the full
      insurable value thereof against casualty and theft and against such other risks,
      in such form and with such insurers, as may be satisfactory to the Collateral
      Agent from time to time. In addition, each such policy shall (i) name the
      Secured Parties as mortgagees and loss payees as their interest may appear
      and
      name the Secured Parties as additional insureds relating to liability risks,
      (ii) provide that no act of omission or commission or misrepresentation or
      breach of warranty by the Debtor shall affect the Secured Parties’ rights
      thereunder, (iii) provide that the Secured Parties shall not be liable for
      any premiums or other amounts and (iv) upon the agreement of the insurer,
      at the Debtor’s request, provide that the insurer shall give the Collateral
      Agent, on behalf of the Secured Parties not less than twenty (20) days’ prior
      written notice of cancellation or lapse. If the Debtor shall fail at any time
      to
      maintain such insurance, the Required Lenders may direct the Collateral Agent
      to
      obtain such insurance coverage, at the cost of the Required Lenders and the
      Debtor agrees to reimburse the Required Lenders therefor on demand with interest
      thereon at the rate specified in the Notes. The Debtor shall notify the
      Collateral Agent, on behalf of the Secured Parties promptly if any loss or
      casualty relating to the Collateral occurs.

    


    6.4. Taxes
      and Claims.
      Debtor
      will pay promptly when due all property and other taxes, assessments and
      governmental charges or levies imposed upon, and all claims against, the
      Collateral (including claims for labor, materials and supplies), except to
      the
      extent the validity thereof is being contested in good faith. 

    


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

       

    

    6.5. Use
      of Collateral.
      Debtor
      will not use or permit any Collateral to be used unlawfully or in violation
      of
      any provision of this Security Agreement or any applicable statute, regulation
      or ordinance or any policy of insurance covering any of the
      Collateral.

    


    6.6. Condition
      of Collateral.
      The
      Debtor shall maintain the Collateral in good condition and operate the
      Collateral with reasonable care and caution and the Debtor hereby indemnifies
      and holds the Secured Parties harmless from any and all loss, damage and
      liability suffered, incurred or asserted by or against the Secured Parties
      as a
      result of the use and operation of the Collateral.

    


    6.7. Records
      Relating to Collateral.
      The
      Debtor will keep its records concerning the Collateral at its address designated
      on Schedule
      I
      hereof
      or at such other place or places of which the Secured Parties shall have been
      notified in writing upon no less than ten (10) days’ advance written notice. The
      Debtor (a) will hold and preserve such records and will permit representatives
      of the Secured Parties at any time during normal business hours without
      disrupting the Debtor’s business to examine, inspect and to make abstracts from
      such records and (b) will furnish to the Secured Parties such information and
      reports regarding the Collateral as the Secured Parties may from time to time
      request.

    


    6.8. Other
      Information.
      Debtor
      will, promptly upon request of the Secured Parties, provide to the Secured
      Parties all information and evidence they may reasonably request concerning
      the
      Collateral, and in particular the Accounts, to enable the Secured Parties to
      enforce the provisions of this Security Agreement.

    


    SECTION
      7. Transfers
      and Other Liens.
      

    


    (a)     Except
      in
      the ordinary course of business, Debtor shall not:

    


    (i) Sell,
      assign (by operation of law or otherwise) or otherwise dispose of, or grant
      any
      option with respect to, any of the Collateral; or

    


    (ii) Create
      or
      suffer to exist any Liens with respect to any of the Collateral to secure
      indebtedness of any Person except for (1) the Security Interests created by
      this
      Security Agreement, (2) any Liens and/or security interests existing prior
      to
      the date of this Security Agreement; (3) any security interests that are junior
      and subordinate to the Security Interests created by this Security Agreement,
      and (4) any purchase money security interests required in connection with
      Debtor’s purchase or lease of Equipment.

    


    (b)     In
      the
      event that Debtor sells at least $1,000,000 of Units but less than $2,000,000
      of
      Units, Debtor shall not: (i) other than pursuant to the Default Agreement,
      and
      subject to the Joint Venture Agreement, Partnership Agreement and Shareholders’
Agreement, sell, assign (by operation of law or otherwise) or otherwise dispose
      of, or grant any option with respect to (1) the Joint Venture Agreement, (2)
      Debtor’s limited partnership interest in the Partnership or (3) Debtor’s shares
      of the Partnership or (4) Debtor’s interest in Hedrin Pharmaceuticals General
      Partner ApS (collectively, the “Joint
      Venture Assets”)
      or
      (ii) create or suffer to exist any Liens with respect to any of the Joint
      Venture Assets; except that Debtor shall be permitted to sell, assign (by
      operation of law or otherwise) or otherwise dispose of, or grant any option
      with
      respect to the percentage of the Joint Venture Assets determined by subtracting
      (x) the quotient obtained by dividing the dollar amount of Units sold by
      $2,000,000, from (y) one (1).

    


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

    

    (c)     In
      the
      event that Debtor sells at least $2,000,000 of Units, Debtor shall not: (i)
      other than pursuant to the Default Agreement, and subject to the Joint Venture
      Agreement, Partnership Agreement and Shareholders’ Agreement, sell, assign (by
      operation of law or otherwise) or otherwise dispose of, or grant any option
      with
      respect to the Joint Venture Assets or (ii) create or suffer to exist any Liens
      with respect to any of the Joint Venture Assets.

    


    SECTION
      8. Events
      of Default; Remedies

    


    (a)     An
      “Event
      of Default”
under
      this Security Agreement shall mean any Event of Default as that term is defined
      in the Notes. 

    


    (b)    If
      any
      Event of Default shall have occurred and be continuing, the Collateral Agent,
      on
      behalf of all Secured Parties, may exercise in respect of the Collateral, in
      addition to all other rights and remedies provided for herein or otherwise
      available to them, all the right and remedies of a secured party on default
      under the UCC (whether or not the UCC applies to the affected Collateral) and
      also may: (a) require Debtor to, and Debtor hereby agrees that it will, at
      its expense and upon request of the Collateral Agent, assemble all or part
      of
      the Collateral as directed by the Collateral Agent and make it available to
      the
      Collateral Agent, on behalf of all Secured Parties, at a place to be designated
      by the Collateral Agent which is reasonably convenient to the Debtor;
      (b) without notice or demand or legal process, enter upon any premises of
      Debtor and take possession of the Collateral; and (c) without notice except
      as specified below, sell the Collateral or any part thereof in one or more
      parcels at public or private sale, at such time or times, for cash, on credit
      or
      for future delivery, and at such price or prices and upon such other terms
      as
      the Collateral Agent may deem commercially reasonable. Debtor agrees that,
      to
      the extent notice of sale shall be required by law, at least two (2) days’
notice to Debtor of the time and place of any public sale or the time after
      which any private sale is to be made shall constitute reasonable notification.
      At any sale of the Collateral, if permitted by law, the Collateral Agent, on
      behalf of all Secured Parties, may bid (which bid may be, in whole or in part,
      in the form of cancellation of indebtedness) for the purchase of the Collateral
      or any portion thereof for the account of the Secured Parties. The Secured
      Parties shall not be obligated to make any sale of Collateral regardless of
      notice of sale having been given. The Collateral Agent, on behalf of all Secured
      Parties, may adjourn any public or private sale from time to time by
      announcement at the time and place fixed therefor, and such sale may, without
      further notice, be made at the time and place to which it was so adjourned.
      To
      the extent permitted by law, Debtor hereby specifically waives all rights of
      redemption, stay or appraisal which it has or may have under any law now
      existing or hereafter enacted. All cash proceeds received by the Secured Parties
      resulting from the disposition of or collection from the Collateral may be
      held
      by the Secured Parties as collateral for the Secured Obligations and/or then
      or
      at any time thereafter applied in payment of all or any of the Secured
      Obligations in such order as the Collateral Agent, on behalf of all Secured
      Parties, shall elect. The balance of such cash proceeds held by the Secured
      Parties and remaining after payment in full of the Secured Obligations shall
      be
      paid over to the Debtor or to the person who may be lawfully entitled to such
      balance. The remedies provided in this Security Agreement are cumulative and
      not
      exclusive of any other remedies provided by law including, without limitation,
      any rights of setoff available to the Secured Parties.

    


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    


    SECTION
      9. Limitation
      on Duty of the Secured Parties with Respect to
      Collateral.
      

    


    Beyond
      the safe custody thereof, the Secured Parties shall have no duty with respect
      to
      any Collateral in their possession or control (or in the possession or control
      of the Secured Parties or bailee) or with respect to any income thereon or
      the
      preservation of rights against prior parties or any other rights pertaining
      thereto. The Secured Parties shall be deemed to have exercised reasonable care
      in the custody and preservation of the Collateral in their possession if the
      Collateral is accorded treatment substantially equal to that which they accord
      their own property. The Secured Parties shall not be liable or responsible
      for
      any loss or damage to any of the Collateral, or for any diminution in the value
      thereof, by reason of the act or omission of any warehouseman, carrier,
      forwarding agency, consignee or other agent or bailee selected by the Collateral
      Agent, on behalf of the Secured Parties, in good faith.

    


    SECTION
      10. Appointment
      of Collateral Agent for Secured Parties

    


    (a) Each
      of
      the Secured Parties hereby agrees that at any time and from time to time, the
      Placement Agent shall have the right, but not the obligation, to appoint a
      collateral agent (the “Collateral
      Agent”)
      to act
      for and on behalf of all Secured Parties as collateral agent under this Security
      Agreement and the Default Agreement. If the Placement Agent has not appointed
      a
      Collateral Agent within ten (10) business days after the occurrence of an Event
      of Default, then the Secured Party holding the largest principal amount
      outstanding of Notes (the “Largest
      Holder”)
      shall
      have ten (10) business days to appoint a Collateral Agent. If the Largest Holder
      has not appointed a Collateral Agent within such ten (10) business day period,
      then the Secured Party holding the next largest principal amount outstanding
      of
      Notes (the “Next
      Largest Holder”)
      shall
      have ten (10) business days to a Collateral Agent. In the event that the Next
      Largest Holder has not appointed a Collateral Agent within such ten (10)
      business day period, then the Required Lenders may appoint a Collateral
      Agent.

    


    (b) Failure
      to Appoint a Collateral Agent.
      In the
      event that a Collateral Agent has not been appointed, as required herein, then
      references to the Collateral Agent in this Security Agreement shall be deemed
      to
      mean the Required Lenders and the Required Lenders shall have the right to
      take
      all actions which the Collateral Agent is entitled to take.

    


    (c) Notice
      of Appointment.
      Upon
      the appointment of a Collateral Agent pursuant hereto, the party appointing
      such
      Collateral Agent shall provide written notice to each of the Secured Parties,
      the Company and the Placement Agent of the appointment of the Collateral Agent
      and the terms pursuant to which such Collateral Agent has agreed to serve as
      Collateral Agent.

    


    (d) Exculpation.
      Notwithstanding anything to the contrary provided herein or elsewhere, each
      of
      the Secured Parties and the Company hereby expressly acknowledge and agree
      that
      neither the Placement Agent nor any Collateral Agent shall be liable for any
      action taken, suffered or omitted by it in connection with, arising out of
      and/or pursuant to the Security Agreement or Default Agreement, except for
      actions determined by a court of competent jurisdiction following the exhaustion
      of all appeals that such action was directly based upon the Placement Agent’s or
      Collateral Agent’s own bad faith or willful misconduct.

    


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

       

    

    (e) Indemnification.
      The
      Company and each Secured Party jointly and severally agree to indemnify and
      hold
      harmless to the fullest extent permitted by law, the Placement Agent and any
      Collateral Agent, from and against any and all liabilities, obligations, losses,
      damages, penalties, actions, judgments, suits, costs, expenses or disbursements
      of any kind or nature whatsoever that may be imposed on, incurred by, or
      asserted against Placement Agent and/or any Collateral Agent in any way relating
      to or arising out of this Security Agreement or the Default Agreement or any
      action taken or omitted to be taken by Placement Agent and/or any Collateral
      Agent in connection therewith; provided, that no Secured Party shall be liable
      for any portion of such liabilities, obligations, losses, damages, penalties,
      actions, judgments, suits, costs, expenses or disbursements resulting from
      Placement Agent’s and/or any Collateral Agent’s actions determined by a court of
      competent jurisdiction following the exhaustion of all appeals that such action
      was directly based upon the Placement Agent’s or Collateral Agent’s own bad
      faith willful misconduct.

    


    SECTION
      11. Collateral
      Agent Appointed Attorney-In-Fact.

    


    Debtor
      hereby irrevocably appoints the Collateral Agent, if and when a Collateral
      Agent
      is appointed (and if not appointed, the Required Lenders), as Debtor’s
      attorney-in-fact, with full authority in the place and stead of Debtor and
      in
      the name of Debtor to take any action and to execute any instrument that the
      Collateral Agent may deem necessary and/or advisable under this Security
      Agreement and the Default Agreement, as applicable, as follows: 

    


    (a) to
      obtain
      and adjust insurance required to be paid to the Secured Parties if Debtor has
      not done so in the ordinary course of its business;

    


    (b) to
      ask,
      demand, collect, sue for, recover, compound, receive and give receipts for
      moneys due and to become due under or in respect of any of the Collateral upon
      the occurrence of an Event of Default;

    


    (c) to
      receive, endorse, and collect any drafts or other instruments, documents and
      chattel paper, in connection with clauses (a) and (b) above upon the
      occurrence of an Event of Default;

    


    (d) to
      file
      any claims or take any action or institute any proceedings that the Secured
      Parties may deem necessary or desirable for the collection of any of the
      Collateral or otherwise to enforce the rights of the Secured Parties with
      respect to any of the Collateral if Debtor has not done so in the ordinary
      course of its business;

    


    (e) to
      pay or
      discharge taxes or liens, levied or placed upon or threatened against the
      Collateral, the legality or validity thereof and the amounts necessary to
      discharge the same to be determined by the Collateral Agent in its sole
      discretion, and such payments made by the Secured Parties to become obligations
      of Debtor to the Secured Parties, due and payable immediately without demand
      if
      Debtor has not done so in the ordinary course of its business;

    


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

       

    

    (f) to
      sign
      and endorse any invoices, freight or express bills, bills of lading, storage
      or
      warehouse receipts, assignments, verifications and notices in connection with
      Accounts and other documents relating to the Collateral upon the occurrence
      of
      an Event of Default;

    


    (g) generally
      to sell, transfer, pledge, make any agreement with respect to or otherwise
      deal
      with any of the Collateral as fully and completely as though the Secured Parties
      were the absolute owner thereof for all purposes, and to do, at the Collateral
      Agent’s option and Debtor’s expense, at any time or from time to time, all acts
      and things that the Collateral Agent’s deem necessary to protect, preserve or
      realize on the Collateral upon the occurrence of an Event of Default;
      and

    


    (h) to
      accomplish the purposes of this Security Agreement if Debtor has not done so
      in
      the ordinary course of its business.

    


    Neither
      the Secured Parties nor any person designated by the Secured Parties shall
      be
      liable for any acts or omissions or for any error of judgment or mistake of
      fact
      or law. This power, being coupled with an interest, is irrevocable so long
      as
      this Security Agreement shall remain in force.

    


    SECTION
      12. Expenses.
      

    


    Debtor
      shall pay all insurance expenses and all expenses of protecting, storing,
      warehousing, appraising, insuring, handling, maintaining and shipping the
      Collateral, all costs, fees and expenses of perfecting, and maintaining the
      Security Interest, any and all excise, property, sales and use taxes imposed
      by
      any state, federal or local authority on any of the Collateral, or with respect
      to periodic appraisals and inspections of the Collateral, or with respect to
      the
      sale or other disposition thereof. If Debtor fails to promptly pay any portion
      of the above expenses when due or to perform any other obligation of Debtor
      under this Security Agreement, the Secured Parties may, at the option of the
      Required Lenders, but shall not be required to, pay or perform the same and
      charge Debtor’s account for all costs and expenses incurred therefor, and Debtor
      agrees to reimburse the Secured Parties therefor on demand. All sums so paid
      or
      incurred by the Secured Parties (at the option of the Required Lenders) for
      any
      of the foregoing, any and all other sums for which Debtor may become liable
      hereunder and all costs and expenses (including reasonable and documented
      attorneys’ fees, legal expenses and court costs) incurred by the Secured Parties
      in enforcing or protecting the Security Interests or any of their rights or
      remedies under this Security Agreement, the SPA, or the Notes shall be payable
      on demand, shall constitute Secured Obligations and shall be secured by the
      Collateral.

    


    SECTION
      13. Termination
      of Security Interests; Release of Collateral.
      

    


    Upon
      payment in full of all Secured Obligations, including the aggregate principal
      amount of the Notes, including all Interest (as defined in the Notes), the
      Security Interests shall immediately terminate and all rights to the Collateral
      shall revert to Debtor automatically and without the need for further action
      to
      be taken on the part of the Debtor or the Secured Parties. Upon such termination
      of the Security Interests or release of any Collateral, the Secured Parties
      will, at the expense of Debtor, execute and deliver to Debtor such documents
      as
      Debtor shall reasonably request to evidence the termination of the Security
      Interests or the release of such Collateral, as the case may be; provided that,
      any such documents may be executed and delivered by the Collateral Agent on
      behalf of all the Secured Parties.

    


    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    


    SECTION
      14. Notices.
      

    


    All
      notices, requests, demands and other communications provided for hereunder
      shall
      be in writing and directed to the applicable party at the addresses set forth
      below, as to each party, at such other address as shall be designated by such
      party in a written notice to the other parties complying as to delivery with
      the
      terms of this Section
      14: 

    


    The
      Company:

    


    Manhattan
      Pharmaceuticals, Inc.

    48
      Wall
      Street, Suite 1100

    New
      York,
      NY 10005

    Facsimile:
      (212) 582-3957

    Attention:
      Doug Abel

    Chief
      Executive Officer

    


    With
      a
      copy to:

    


    Lowenstein
      Sandler PC

    65
      Livingston Avenue

    Roseland,
      NJ 07068-1791

    Facsimile:
      (973) 597-2445

    Attention:
      Anthony Pergola, Esq.

    


    The
      Secured Parties:

    


    As
      per
      the contact information provided on the signature page hereof.

    


    All
      such
      notices, requests, demands and other communication shall be deemed given upon
      the earlier to occur of (i) the third (3rd)
      day
      following deposit thereof with the United States Postal Service for mailing
      via
      certified or registered mail, return receipt requested, or (ii) the actual
      receipt by the party to whom such notice is directed.

    


    SECTION
      15. Waivers,
      Non-Exclusive Remedies. 

    


    No
      failure on the part of the Secured Parties to exercise, and no delay in
      exercising and no course of dealing with respect to, any right under the Notes
      or this Security Agreement shall operate as a waiver thereof; nor shall any
      single or partial exercise by the Secured Parties of any right under the Notes
      or this Security Agreement preclude any other or further exercise thereof or
      the
      exercise of any other right. The rights in this Security Agreement and/or the
      Notes are cumulative and are not exclusive of any other remedies provided by
      law.

    


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

       

    

    SECTION
      16. Successors
      and Assigns. 

    


    This
      Security Agreement is for the benefit of the Secured Parties and each of their
      respective successors and assigns, and in no event shall the Debtor without
      the
      prior express written consent of the Collateral Agent, on behalf of all Secured
      Parties, assign all or any portion of the Secured Obligations, the rights
      hereunder, or the Notes. This Security Agreement shall be binding on Debtor
      and
      its successors and all permitted assigns.

    


    SECTION
      17. Severability. 

    


    If
      any
      provisions hereof are invalid or unenforceable in any jurisdiction, the other
      provisions hereof shall remain in full force and effect in such jurisdiction
      and
      shall be liberally construed in favor of the Secured Parties.

    


    SECTION
      18. Changes
      in Writing.

    


    None
      of
      the terms or provisions of this Security Agreement may be waived, amended,
      supplemented or otherwise modified except by a written instrument executed
      by
      the Debtor, the Collateral Agent and the Required Lenders (which waiver,
      amendment, supplement or modification shall be binding on all Secured Parties).
      

    


    SECTION
      19. Governing
      Law; Venue; Waiver Of Jury Trial.

    


    This
      Security Agreement 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 Security Agreement, shall be brought solely
      and
      exclusively in a federal or state court located in the City, County and State
      of
      New York. By their 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 the Secured Parties hereby
      waive
      all rights to a trial by jury. 

    


    SECTION
      20. Distributions.
      

    


    Unless
      otherwise specifically provided herein, whenever the Secured Parties are
      entitled to the distribution of monies, Collateral or any other property,
      pursuant to the terms of this Security Agreement, such monies, Collateral and/or
      other property shall be distributed to the Secured Parties, on a pro-rata basis,
      based on the outstanding principal amounts under the Notes.

    


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

       

    

    SECTION
      21. Headings.
      

    


    Section and
      subsection headings in this Security Agreement are included herein for
      convenience of reference only and shall not constitute a part of this Security
      Agreement for any other purpose or be given any substantive effect.

    


    Signature
      Page Follows

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    


    IN
      WITNESS WHEREOF,
      the
      undersigned have executed this Security Agreement as of the day and year first
      above written.

    


    
      	
              DEBTOR:

            
	 	 
	
              MANHATTAN
                PHARMACEUTICALS, INC.

            
	 	 
	 	 
	
              By:

            	
              /s/
                Michael McGuinness

            	
            
	 	
              Name:
                Michael
                McGuinness

            
	 	
              Title:  
                Chief Financial Officer

            


    

    


    


    
      	
               

            	
              SECURED
                PARTIES:

               

              The
                Secured Parties executing the Signature Page in the form attached
                hereto
                as Annex
                A
                and delivering the same to the Company or its agents shall be deemed
                to
                have executed this Security Agreement and agreed to the terms
                hereof.

            


    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    ANNEX
      A

    


    Investor
      Counterpart Signature Page

    


    The
      undersigned, desiring to enter into this Security Agreement dated as of November
      19, 2008 (the “Security
      Agreement”),
      between the undersigned, Manhattan Pharmaceuticals, Inc., a Delaware corporation
      (the “Company”),
      and
      the other parties thereto, in or substantially in the form furnished to the
      undersigned, hereby agrees that execution by the Investor of this Investor
      Counterpart Signature Page shall constitute an agreement to join the Security
      Agreement as a party thereto, with all the rights and privileges appertaining
      thereto, and to be bound in all respects by the terms and conditions of the
      Security Agreement. 

    


    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

               

            	 	
              Print
                Name: Neel B. Ackerman

            
	
              Signature:

               

            	
              Signature: /s/
                Neel B. Ackerman

            
	
              Date:

               

            	
              Date:
                October 27, 2008

            
	
              Print
                Name:

               

            	
              Co-Investor
                Print Name: Martha N. Ackerman

            
	
              Title:

               

            	
              Co-Investor
                Signature: /s/ Martha N. Ackerman

            
	 	 	
              Date:
                October 27, 2008

            


    

    


    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print Name of Entity:

            	 	
              Stephen M. Burnich

              Revocable Trust u/a 10/08/04

               

            	 	
              Print
                Name:

            
	
              Signature: /s/
                Stephen M. Burnich

               

            	
              Signature:

            
	
              Date:
                October 29, 2008

               

            	
              Date:

            
	
              Print
                Name: Stephen M. Burnich

               

            	
              Co-Investor
                Print Name:

            
	
              Title:Trustee

               

            	
              Co-Investor
                Signature:

            
	 	 	
              Date:

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

               

            	 	
              Print
                Name: Ennio De Pianto

            
	
              Signature:

               

            	
              Signature:
                /s/ Ennio De Pianto

            
	
              Date:

               

            	
              Date: October
                29, 2008

            
	
              Print
                Name:

               

            	
              Co-Investor
                Print Name:

            
	
              Title:

               

            	
              Co-Investor
                Signature:

            
	 	 	
              Date:

            


    

    


    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

               

            	 	
              Print
                Name: Matthew Ernst

            
	
              Signature:

               

            	
              Signature:
                /s/ Matthew Ernst

            
	
              Date:

               

            	
              Date: October
                29, 2008

            
	
              Print
                Name:

               

            	
              Co-Investor
                Print Name:

            
	
              Title:

               

            	
              Co-Investor
                Signature:

            
	 	 	
              Date:

            


    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity: John
                M. Goodman Living Trust

               

            	 	
              Print
                Name: 

            
	
              Signature: /s/
                John M. Goodman

               

            	
              Signature: 

            
	
              Date: November
                4, 2008

               

            	
              Date: 

            
	
              Print
                Name: John M. Goodman

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: Trustee

               

            	
              Co-Investor
                Signature: 

            
	 	 	
              Date:
                 

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity: 

               

            	 	
              Print
                Name: Leon Kanner 

            
	
              Signature: 

               

            	
              Signature: /s/
                Leon Kanner

            
	
              Date: 

               

            	
              Date:
                October 29, 2008 

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: Rosemary
                Kanner

            
	
              Title: 

               

            	
              Co-Investor
                Signature: /s/
                Rosemary Kanner

            
	 	 	
              Date:
                October 29, 2008

            


    

    


    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity: 

               

            	 	
              Print
                Name: Richard Kindt 

            
	
              Signature: 

               

            	
              Signature: /s/
                Ricahrd Kindt

            
	
              Date: 

               

            	
              Date:
                October 29, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	 	 	
              Date:
                 

            


    

    


    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity: 

               

            	 	
              Print
                Name: Douglas E. Pritchett 

            
	
              Signature: 

               

            	
              Signature: /s/
                Douglas E. Pritchett

            
	
              Date: 

               

            	
              Date:
                October 31, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	 	 	
              Date:
                 

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity: 

               

            	 	
              Print
                Name: Jerome A. Shinkay 

            
	
              Signature: 

               

            	
              Signature: /s/
                Jerome A. Shinkay

            
	
              Date: 

               

            	
              Date:
                October 31, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	 	 	
              Date:
                 

            


    

    


    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity: 

               

            	 	
              Print
                Name: Michael J. Spezia 

            
	
              Signature: 

               

            	
              Signature: /s/
                Michael J. Spezia

            
	
              Date: 

               

            	
              Date:
                November 3, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	 	 	
              Date:
                 

            


    

    


    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity: 

               

            	 	
              Print
                Name: George D. Wilson 

            
	
              Signature: 

               

            	
              Signature: /s/
                George D. Wilson

            
	
              Date: 

               

            	
              Date:
                October 27, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: Diane
                J. Wilson

            
	
              Title: 

               

            	
              Co-Investor
                Signature: /s/
                Diane J. Wilson

            
	 	 	
              Date:
                October 27, 2008

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity: 

               

            	 	
              Print
                Name: Joseph L. Jerger 

            
	
              Signature: 

               

            	
              Signature: /s/
                Joseph L. Jerger

            
	
              Date: 

               

            	
              Date:
                November 6, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	 	 	
              Date:
                 

            


    

    


    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity: 

               

            	 	
              Print
                Name: David Pudelsky 

            
	
              Signature: 

               

            	
              Signature: /s/
                David Pudelsky

            
	
              Date: 

               

            	
              Date: November
                6, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: Nancy
                Pudelsky

            
	
              Title: 

               

            	
              Co-Investor
                Signature: /s/
                Nancy Pudelsky

            
	
               

            	
               

            	
              Date:
                November 6, 2008

            


    

    


    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity: 

               

            	
               

            	
              Print
                Name: James R. Buck 

            
	
              Signature: 

               

            	
              Signature: /s/
                James R. Buck

            
	
              Date: 

               

            	
              Date:
                November 6, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: 

               

            	
               

            	
              Print
                Name: John O. Dunkin 

            
	
              Signature: 

               

            	
              Signature: /s/
                John O. Dunkin

            
	
              Date: 

               

            	
              Date:
                November 4, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: NFS/FMTC
                SEP IRA FBO

                
                 Jay Jennings 

               

            	
               

            	
              Print
                Name: 

            
	
              Signature: /s/
                Jay Jennings

               

            	
              Signature: 

            
	
              Date: October
                29, 2008

               

            	
              Date: 

            
	
              Print
                Name: Jay Jennings 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: IRA
                Owner

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

    


    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity: Landmark
                Community Bank

                 Collateral
                Account FBO

               
                 Estate of Catherine Nasser 

               

            	 	
              Print
                Name: 

            
	
              Signature: 
                /s/ William K. Nasser, Jr.

               

            	
              Signature: 

            
	
              Date: November
                4, 2008

               

            	
              Date: 

            
	
              Print
                Name: William K. Nasser, Jr. 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 
                Attorney-in-fact

               

            	
              Co-Investor
                Signature: 

            
	 	 	
              Date:
                 

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: Nasser
                Family Trust

               

            	
               

            	
              Print
                Name: 

            
	
              Signature: /s/
                William K. Nasser

               

            	
              Signature: 

            
	
              Date: November
                4, 2008

               

            	
              Date: 

            
	
              Print
                Name: William K. Nasser 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: Trustee

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: 

               

            	
               

            	
              Print
                Name: James R. Kahn 

            
	
              Signature: 

               

            	
              Signature: 
                /s/ James R. Kahn

            
	
              Date: 

               

            	
              Date:
                November 12, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: Debra
                A. Kahn

            
	
              Title: 

               

            	
              Co-Investor
                Signature: /s/
                Debra A. Kahn

            
	
               

            	
               

            	
              Date:
                November 12, 2008

            


    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: 

               

            	
               

            	
              Print
                Name: A. Starke Taylor, Jr. 

            
	
              Signature: 

               

            	
              Signature: 
                /s/ A. Starke Taylor, Jr.

            
	
              Date: 

               

            	
              Date:
                October 7, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: Carolyn Taylor 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: /s/
                Carolyn Taylor

            
	
               

            	
               

            	
              Date:
                October 7, 2008

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: 

               

            	
               

            	
              Print
                Name: Mark Vollmer 

            
	
              Signature: 

               

            	
              Signature: /s/
                Mark Vollmer

            
	
              Date: 

               

            	
              Date:
                November 11, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: 

               

            	
               

            	
              Print
                Name: Robert J. Guercio 

            
	
              Signature: 

               

            	
              Signature: 
                /s/ Robert J. Guercio

            
	
              Date: 

               

            	
              Date:
                November 6, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: 

               

            	
               

            	
              Print
                Name: Ralph Hanby 

            
	
              Signature: 

               

            	
              Signature: 
                /s/ Ralph Hanby

            
	
              Date: 

               

            	
              Date:
                November 13, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: 

               

            	
               

            	
              Print
                Name: Robert E. Jacobson 

            
	
              Signature: 

               

            	
              Signature: 
                /s/ Robert E. Jacobson

            
	
              Date: 

               

            	
              Date:
                November 10, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: Saralee
                Jacobson

            
	
              Title: 

               

            	
              Co-Investor
                Signature: /s/
                Saralee Jacobson

            
	
               

            	
               

            	
              Date:
                November 10, 2008

            


    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: 

               

            	
               

            	
              Print
                Name: Michael Cushing 

            
	
              Signature: 

               

            	
              Signature: 
                /s/ Michael Cushing

            
	
              Date: 

               

            	
              Date:
                November 13, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: 

               

            	
               

            	
              Print
                Name: Raymond Yarusi, Jr. 

            
	
              Signature: 

               

            	
              Signature: 
                /s/ Raymond Yarusi, Jr.

            
	
              Date: 

               

            	
              Date:
                November 12, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: 

               

            	
               

            	
              Print
                Name: James C. Orr 

            
	
              Signature: 

               

            	
              Signature: 
                /s/ James C. Orr

            
	
              Date: 

               

            	
              Date:
                November 9, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: 

               

            	
               

            	
              Print
                Name: Vernon L. Simpson 

            
	
              Signature: 

               

            	
              Signature: 
                /s/ Vernon L. Simpson

            
	
              Date: 

               

            	
              Date:
                November 17, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: Michael
                Yokoyama & Jaye

                 
                Ventui Family Trust 

               

            	
               

            	
              Print
                Name: 

            
	
              Signature: 
                /s/ Michael Yokoyama & /s/ Jaye Venuti

               

            	
              Signature: 

            
	
              Date: November
                12, 2008

               

            	
              Date: 

            
	
              Print
                Name: Michael Yokoyama & Jaye Ventui 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: Co-Trustees

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: 

               

            	
               

            	
              Print
                Name: Frederick Peet 

            
	
              Signature: 

               

            	
              Signature: 
                /s/ Frederick Peet

            
	
              Date: 

               

            	
              Date:
                November 7, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: 

               

            	
               

            	
              Print
                Name: Ronald Rasmussen 

            
	
              Signature: 

               

            	
              Signature: 
                /s/ Ronald Rasmussen

            
	
              Date: 

               

            	
              Date:
                November 12, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: 

               

            	
               

            	
              Print
                Name: Lewis R. Jacobson 

            
	
              Signature: 

               

            	
              Signature: 
                /s/ Lewis R. Jacobson

            
	
              Date: 

               

            	
              Date:
                November 17, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: 

               

            	
               

            	
              Print
                Name: Mark B. Ginsburg 

            
	
              Signature: 

               

            	
              Signature: /s/
                Mark B. Ginsburg

            
	
              Date: 

               

            	
              Date:
                November 18, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: 

               

            	
               

            	
              Print
                Name: Gregory Dovolis 

            
	
              Signature: 

               

            	
              Signature: /s/
                Greogory Dovolis

            
	
              Date: 

               

            	
              Date:
                November 3, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: 

               

            	
               

            	
              Print
                Name: William S. Silver 

            
	
              Signature: 

               

            	
              Signature: 
                /s/ William S. Silver

            
	
              Date: 

               

            	
              Date:
                November 5, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: 

               

            	
               

            	
              Print
                Name: Praful Desai 

            
	
              Signature: 

               

            	
              Signature: 
                /s/ Praful Desai

            
	
              Date: 

               

            	
              Date:
                November 5, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: 

               

            	
               

            	
              Print
                Name: Thomas Gemellaro 

            
	
              Signature: 

               

            	
              Signature: 
                /s/ Thomas Gemellaro

            
	
              Date: 

               

            	
              Date:
                November 13, 2008

            
	
              Print
                Name: 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

    


    
      	
              IF
                AN ENTITY:

            	
               

            	
              IF
                AN INDIVIDUAL:

            
	
               

            	
               

            	
               

            
	
              Print
                Name of Entity: Howard
                M. Tanning Rollover

                 
                IRA 

               

            	
               

            	
              Print
                Name: 

            
	
              Signature: 
                /s/ Howard M. Tanning

               

            	
              Signature:  

            
	
              Date: 
                November 3, 2008

               

            	
              Date:
                

            
	
              Print
                Name: Howard M. Tanning 

               

            	
              Co-Investor
                Print Name: 

            
	
              Title: 
                IRA Owner

               

            	
              Co-Investor
                Signature: 

            
	
               

            	
               

            	
              Date:
                 

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    SCHEDULE
      I TO SECURITY AGREEMENT

    


    Locations
      of Equipment, Inventory, Books and Records, Chief Executive Office

    


    Locations
      of Equipment and Inventory:

    


    48
      Wall
      Street


    New
      York,
      New York 10005

    


    Location
      of Books and Records and Chief Executive Office:

    


    48
      Wall
      Street


    New
      York,
      New York 10005


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    SCHEDULE
      II TO SECURITY AGREEMENT

    


    Deposit
      Accounts

    

      
        	
                Name, Address and

                Telephone Number  

              	 	
                Account Name

              	 	
                Description

              	 	
                Account Number

              
	 	 	 	 	 	 	 
	
                Chase

                45
                  Wall Street

                New
                  York, New York 10005

              	 	
                Manhattan
                  Pharmaceuticals, Inc.

              	 	
                Checking

              	 	
                904
                  807 479

              
	
                Signature
                  Bank

                261
                  Madison Avenue, New York, New York 10016

              	 	
                Manhattan
                  Pharmaceuticals, Inc.

              	 	
                Deposit

              	 	
                1501126434