Exhibit
      10.1

    


    SUBSCRIPTION
      AGREEMENT

    


    THIS
      SUBSCRIPTION AGREEMENT (this “Agreement”)
      made
      as of the date set forth on the signature page hereof between Manhattan
      Pharmaceuticals, Inc., a Delaware corporation having a place of business at
      810
      Seventh Avenue, 4th Floor, New York, New York 10019 (the “Company”),
      and
      the undersigned (the “Subscriber”).

    


    WITNESSETH:

    


    WHEREAS,
      the Company is offering (the “Offering”)
      to a
      limited number of “accredited investors,” as that term is defined by Rule 501(a)
      of Regulation D (“Regulation
      D”)
      of the
      Securities Act of 1933, as amended (the “Securities
      Act”),
      units
      of its securities each consisting of one share (each, a “Share”
and
      collectively, the “Shares”)
      of its
      common stock, par value $0.001 per share (“Common
      Stock”)
      and a
      warrant (each a “Warrant,”
and
      collectively, the “Warrants”
and
      together with the Shares, the “Securities”)
      to
      purchase 35% of a share of Common Stock (the “Warrant
      Shares”)
      on
      terms and conditions described in this Agreement; 

    


    WHEREAS,
      the Offering is contingent upon the Company making sales of a number of
      Securities which would provide
      the Company with aggregate gross proceeds of at least $2,000,000
      (the
“Minimum
      Offering”),
      and
      the
      Company
      will sell a maximum number
      of
      Securities which would result in aggregate gross proceeds of $7,500,000 (the
      “Maximum
      Offering”),
      although the Company, in its discretion, may increase the Maximum Offering
      by an
      additional $2,500,000 to cover over-allotments (the “Over-Allotment”);

    


    WHEREAS,
      Paramount BioCapital, Inc., is acting as exclusive placement agent (the
“Placement
      Agent”)
      for
      the Offering; and

    


    WHEREAS,
      on the terms and conditions hereinafter set forth, the Subscriber desires to
      purchase from the Company, and the Company desires to sell to the Subscriber,
      a
      number of Shares and Warrants.

    


    NOW,
      THEREFORE, in consideration of the promises and the mutual representations
      and
      covenants hereinafter set forth, the parties hereto do hereby agree as
      follows:

    


    
      	1.	
              PURCHASE
                AND SALE OF SECURITIES.

            


    

     

    1.1  Offering.
      The
      Company is offering to a limited number of persons who qualify as “accredited
      investors” as defined by Rule 501(a) of Regulation D, the Securities on terms
      and conditions described in this Agreement. The Minimum Offering will be offered
      on an “all or none, best efforts” basis. The Maximum Offering and the
      Over-Allotment, if exercised, will be offered on a “best efforts” basis. The
      Subscriber understands, however, that this purchase of the Securities is
      contingent upon the Company making aggregate sales of Securities equal to or
      exceeding the Minimum Offering. The Securities are being offered in units,
      with
      each unit consisting of one Share and a Warrant to purchase 35% of one Share
      (rounded down to the nearest whole share), at a purchase price per unit equal
      to
      the lesser of (i) $0.84 and (ii) the average closing sale price of the Common
      Stock as reported on the American Stock Exchange during the five business days
      immediately preceding the Closing Date, rounded to the nearest cent (the
“Market
      Price”).
      Each
      Warrant shall be exercisable during the period commencing on the six month
      anniversary of the Closing Date and ending on the five-year anniversary of
      the
      Closing Date. The Warrant shall be exercisable at a price per Warrant Share
      equal to 110% of the Market Price, but in no event less than the last closing
      sale price of the Common Stock on the trading day immediately preceding the
      Closing. Further, in the event that the closing sale price of the Common Stock
      for any 30 consecutive trading days is at least 300% of the Warrant exercise
      price, the Company shall be entitled to redeem not less than all of the Warrants
      at a per Warrant redemption price of $0.01, by providing 30 business days’
written notice to the holder. In
      the
      event that the Company decides to redeem the Warrants pursuant to this
Section
      1.1,
      such
      holders may
      exercise this Warrant
      during
such
      30-day period. The Warrant shall be in substantially the
      form
      attached as an
      exhibit
      to the
      Memorandum (as defined below).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    1.2  Closing.
      At each
      closing (each a “Closing,”
and
      the date thereof, the “Closing
      Date”),
      provided the Company has received subscriptions and proceeds for the amount
      of
      the Minimum Offering, the Company shall issue and sell to the Subscriber and
      the
      Subscriber shall purchase from the Company, (a) a number of Shares resulting
      from dividing the Subscriber’s “Aggregate
      Purchase Price”
set
      forth on the signature page hereof (and as further described below) by the
      Market Price (rounded down to the nearest whole Share) and (b) Warrants to
      purchase a number of Warrant Shares equal to 35% of the Shares purchased by
      the
      Subscriber; provided, however, that the Company and Placement Agent may, in
      their sole discretion, accept a lesser amount of Aggregate Purchase Price from
      the Subscriber. 

     

    1.3  Closing
      Mechanics.
      The
      Closing shall be held at a date and time designated by the Company and the
      Placement Agent prior to 11:59 p.m., New York City time, on February 28, 2007
      (subject to extension at the discretion of the Company and the Placement Agent
      without notice to the Subscriber of up to 60 days), which date shall be no
      later
      than five (5) Business Days (as defined in Article
      5)
      after
      satisfaction or waiver of the closing conditions set forth in Article
      4
      hereof.
      The Closing shall occur at the offices of the Placement Agent, located at 787
      Seventh Avenue, New York, New York 10019. Upon
      satisfaction or waiver of all conditions to the Closing, the Placement Agent
      and
      the Company shall instruct US Bank Trust National Association, as escrow agent
      (the “Escrow
      Agent”),
      to
      release the proceeds of the Offering to the Company, less fees and expenses
      due
      to the Placement Agent. Interest, if any, that has accrued with respect to
      the
      Aggregate Purchase Price while in escrow shall also be distributed to the
      Company at the Closing and the Subscriber will have no right to such interest,
      even if there is no Closing.

     

    1.4  Payment
      of Aggregate Purchase Price.
      Upon,
      or prior to, the execution of this Agreement by the Subscriber, the Subscriber
      shall deposit the amount of readily available funds equal to the Aggregate
      Purchase Price, as set forth on the signature page hereof, in a segregated
      escrow account with the Escrow Agent by check or wire transfer of immediately
      available funds pursuant to the instructions provided below. Subject to the
      terms and conditions of this Agreement (including, without limitation, the
      Company’s and the Placement Agent’s option, each at its sole discretion, to
      refuse to accept subscriptions, in whole or in part, from any Subscriber),
      the
      Subscriber hereby subscribes for and agrees to purchase from the Company such
      number of Shares and Warrants, as determined in accordance with Section
      1.2
      above,
      and the Company agrees to sell such number of Shares and Warrants as accepted
      by
      the Company and the Placement Agent.

     

    
      
        
        

      

      
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    US
      Bank Trust National Association

    ABA
      Routing Number: 091 000 022

    US
      Bank and Trust Corp. Account Number: 180121167365

    For:
      Manhattan/Paramount BioCapital

    SEI
      Number: 108950000

    Reference:
      [Investor Name]

    Attn:
      Andrea Friesen

    Tel:
      651-495-3725

    Fax:
      651-495-8087

    


    The
      Subscriber must complete and return a duly executed, unaltered copy of this
      Agreement (including the completed Confidential Investor Questionnaire included
      in Article
      7
      hereof
      (the “Confidential
      Investor Questionnaire”))
      to
      the Placement Agent at the Placement Agent’s address indicated in the Memorandum
      (as defined below) on or before the date indicated to the Subscriber by the
      Placement Agent to be eligible to participate in the Offering. The Company
      and
      the Placement Agent retain complete discretion to accept or reject any
      subscription unless and until the Company executes a counterpart to this
      Agreement that includes such Subscriber’s signature.

    


    1.5  Delivery
      of Certificates.
      The
      Company shall deliver, or cause to be delivered, the certificates representing
      the Securities purchased by the Subscriber hereunder as soon as practical after
      the Closing to the Subscriber’s residential or business address indicated on the
      signature page hereto.

     

    
      	2.	
              REPRESENTATIONS
                AND WARRANTIES OF SUBSCRIBER.

            


    

    


    The
      Subscriber hereby represents and warrants to the Company as of the date hereof
      and the Closing Date as follows:

    


    2.1 The
      Subscriber understands, acknowledges and agrees that the purchase of the
      Securities involves a high degree of risk including, but not limited to, the
      following: (i) an investment in the Company is highly speculative, and only
      investors who can afford the loss of their entire investment should consider
      investing in the Company and the Securities; (ii) the Subscriber may not be
      able
      to liquidate its investment; (iii) transferability of the Securities is
      extremely limited; (iv) in the event of a disposition of the Securities, the
      Subscriber could sustain the loss of its entire investment; and (v) since the
      Company has been a publicly-traded company, the Company has not paid any
      dividends on its Common Stock and does not anticipate the payment of dividends
      in the foreseeable future.

    


    2.2 The
      Subscriber is an “accredited investor” as such term is defined in Rule 501 of
      Regulation D promulgated under the Securities Act, as indicated by the
      Subscriber’s responses to the questions contained in the Confidential Investor
      Questionnaire, which are true and correct as of the date hereof and shall be
      true and correct as of the Closing Date, and that the Subscriber is able to
      bear
      the economic risk of an investment in the Company. If the Subscriber is a
      natural person, the Subscriber has reached the age of majority in the state
      or
      other jurisdiction in which the Subscriber resides, has adequate means of
      providing for the Subscriber’s current financial needs and contingencies, is
      able to bear the substantial economic risks of an investment in the Securities
      for an indefinite period of time, has no need for liquidity in such investment
      and, at the present time, could afford a complete loss of such
      investment.

     

    
      
        
        

      

      
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    2.3  The
      Subscriber understands, acknowledges and agrees that: (i) the Subscriber is
      knowledgeable, sophisticated and has experience in making, and is qualified
      to
      make, decisions with respect to investments representing an investment decision
      like that involved in the purchase of the Securities and has prior investment
      experience; (ii) the investment in the Securities is of a highly speculative
      nature and involves a significant degree of risk, that the market price of
      the
      Common Stock has been and continues to be volatile and that Subscriber has
      carefully evaluated the risks of an investment in the Securities; and (iii)
      the
      Subscriber is able to bear the economic risk of an investment in the Securities
      and the potential loss of such investment, which risk the Subscriber hereby
      assumes.

    


    2.4  The
      Subscriber has received and carefully reviewed this Agreement, the Company’s
      Confidential Offering Memorandum dated February 12, 2007 (together with all
      exhibits, appendices, supplements or amendments thereto, the “Memorandum”),
      including the following documents filed by the Company with the Securities
      and
      Exchange Commission (the “SEC”,
      and
      such documents, the “SEC
      Filings”)
      and
      included as exhibits to the Memorandum: Form 10-KSB for the year ended December
      31, 2005; Definitive Proxy Statement on Schedule 14-A filed on November 17,
      2006; Quarterly Reports on Form 10-QSB for the quarters ended March 31, 2006
      (as
      amended), June 30, 2006 and September 30, 2006; and Current Reports on Form
      8-K
      filed on August 14, 2006, January 12, 2007 and February 5, 2007. The Subscriber
      further represents that the Subscriber has been furnished by the Company during
      the course of this transaction with all information regarding the Company which
      the Subscriber, its investment advisor, attorney and/or accountant has requested
      or desired to know or which is otherwise relevant to an investment decision,
      has
      been afforded the opportunity to ask questions of and receive answers from
      duly
      authorized officers or other representatives of the Company concerning the
      terms
      and conditions of the Offering, and has received any additional information
      which the Subscriber or its advisors or agents has requested.

    


    2.5 (a) The
      Subscriber has relied solely upon the information provided by the Company in
      making the decision to invest in the Securities. The Subscriber is familiar
      with
      and understands the terms of the Offering, including the rights to which the
      Subscriber is entitled under this Agreement. In evaluating the suitability
      of an
      investment in the Company, the Subscriber has not relied upon any representation
      or other information (whether oral or written) from the Company, or any agent,
      employee or Affiliate of the Company other than as set forth in the Memorandum,
      in this Agreement or resulting from the results of the Subscriber’s own
      independent investigation. The Subscriber understands and acknowledges that
      nothing in this Agreement, the Memorandum or any other materials provided to
      the
      Subscriber in connection with the subscription for the Securities or sale of
      the
      Securities constitutes investment, tax or legal advice. To the extent deemed
      necessary or advisable by the Subscriber in its sole discretion, the Subscriber
      has retained, at its sole expense, and relied upon appropriate professional
      advice regarding the investment, tax and legal merits and consequences of this
      Agreement and its purchase of the Securities hereunder. 

    


    
      
        
        

      

      
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    (b) No
      Securities were offered or sold to the Subscriber by means of any form of
      general solicitation or general advertising, and in connection therewith the
      Subscriber did not: (A) receive or review any advertisement, article, notice
      or
      other communication published in a newspaper or magazine or similar media or
      broadcast over television or radio whether closed circuit, or generally
      available; or (B) attend any seminar meeting or industry investor conference
      whose attendees were invited by any general solicitation or general
      advertising.

    


    2.6 The
      Subscriber, either by reason of the Subscriber’s business or financial
      experience or the business or financial experience of the Subscriber’s
      professional advisors, has the capacity to protect the Subscriber’s own
      interests in connection with the transaction contemplated hereby. 

    


    2.7 The
      Subscriber understands, acknowledges and agrees that the Offering has not been
      reviewed, recommended or endorsed by the SEC or any state securities regulatory
      authority or other governmental body or agency, since the Offering is intended
      to be exempt from the registration requirements of Section 5 of the Securities
      Act pursuant to Regulation D. The Subscriber shall not sell or otherwise
      transfer the Securities unless such transfer is registered under the Securities
      Act or unless an exemption from such registration is available. The Subscriber
      understands that if required by the laws or regulations or any applicable
      jurisdictions, the Offering contemplated hereby will be submitted to the
      appropriate authorities of such state(s) for registration of exemption
      therefrom. 

    


    2.8 The
      Subscriber understands, acknowledges and agrees that the Securities have not
      been registered under the Securities Act in reliance upon a claimed exemption
      under the provisions of the Securities Act which depends, in part, upon the
      Subscriber’s investment intention and the truth and accuracy of, and
      Subscriber’s compliance with, the representations, warranties, acknowledgments
      and covenants of Subscriber set forth herein. In this connection, the Subscriber
      hereby represents that the representations, warranties, acknowledgments and
      covenants of Subscriber set forth herein are true and correct, Subscriber will
      comply with the covenants set forth herein, and the Subscriber is purchasing
      the
      Securities for the Subscriber’s own account for investment purposes only and not
      with a view toward the resale or distribution to others and has no contract,
      undertaking, agreement or other arrangement, in existence or contemplated,
      to
      sell, pledge, assign or otherwise transfer the Securities to any other Person
      (as defined in Article
      5).
      The
      Subscriber, if an entity, also represents that it was not formed for the purpose
      of purchasing the Securities. The Subscriber has no current plans to effect
      a
“change of control” of the Company, as such term is understood in Rule 13d of
      the Exchange Act.

    


    
      
        
        

      

      
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    2.9 The
      Subscriber understands that the Securities will not be registered or available
      for sale in the public markets except as specifically provided herein, and
      Rule
      144 promulgated under the Securities Act (“Rule
      144”)
      requires, among other conditions, a one-year holding period prior to the resale
      (in limited amounts) of securities acquired in a non-public offering (and a
      two-year holding period for unlimited sales by non-Affiliates of the Company)
      without having to satisfy the registration requirements under the Securities
      Act. The Subscriber understands and hereby acknowledges that the Company is
      under no obligation to register any of the Securities under the Securities
      Act
      or any state securities or “blue sky” laws or assist the Subscriber in obtaining
      an exemption from various registration requirements, other than as set forth
      in
Article
      5
      herein.


    


    2.10 The
      Subscriber consents to the placement of a legend on any certificate or other
      document evidencing the Securities substantially as set forth below, that such
      Securities have not been registered under the Securities Act or any state
      securities or “blue sky” laws and setting forth or referring to the restrictions
      on transferability and sale thereof contained in this Agreement. The Subscriber
      is aware that the Company will make a notation in its appropriate records with
      respect to the restrictions on the transferability of the Securities.


    


    THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF ANY
      STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
      RESALE AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
      EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
      AND
      APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
      AND SCOPE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT
      REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT AND APPLICABLE STATE
      SECURITIES LAWS.

     

    2.11 The
      Subscriber agrees to supply
      the Company, within five (5) days after the Subscriber receives the request
      therefor from the Company, with such additional information concerning the
      Subscriber as the Company deems necessary or advisable in order to establish
      or
      verify the Subscriber’s representations contained herein.

    


    2.12 The
      address of the Subscriber furnished by Subscriber on the signature page hereof
      is the Subscriber’s principal residence if Subscriber is an individual or its
      principal business address if it is a corporation or other entity.

    


    2.13 The
      Subscriber has full power and authority (corporate or otherwise) to execute,
      deliver, and perform this Agreement and to purchase the Securities and has
      taken
      all action necessary to authorize the execution, delivery and performance of
      this Agreement. This Agreement constitutes the legal, valid and binding
      obligation of the Subscriber, enforceable against the Subscriber in accordance
      with its terms, subject to laws of general application relating to bankruptcy,
      insolvency and the relief of debtors and rules of law governing specific
      performance, injunctive relief or other equitable remedies, and to limitations
      of public policy.

    


    
      
        
        

      

      
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    2.14 If
      the
      Subscriber is a corporation, partnership, limited liability company, trust,
      employee benefit plan, individual retirement account, Keogh Plan, or other
      entity (a) it is authorized and qualified to become an investor in the Company
      and the Person signing this Agreement on behalf of such entity has been duly
      authorized by such entity to do so and (b) it is duly organized, validly
      existing and in good standing under the laws of the jurisdiction of its
      organization.

    


    2.15 The
      Subscriber acknowledges that if he or she is a Registered Representative of
      an
      NASD member firm, he or she must give such firm the notice required by NASD
      Rule
      3050, receipt of which must be acknowledged by such firm in Section
      7.4
      below in
      accordance with such rules.

    


    2.16 The
      Subscriber understands, acknowledges and agrees that this subscription may
      be
      rejected, in whole or in part, by the Company or the Placement Agent, in each
      of
      their sole and absolute discretion, at any time before any Closing Date
      notwithstanding prior receipt by the Subscriber of notice of acceptance of
      the
      Subscriber’s subscription. The Subscriber hereby authorizes and directs the
      Company to return, without interest, any funds for unaccepted subscriptions
      to
      the same account from which the funds were drawn, including any customer account
      maintained by the Subscriber with the Placement Agent.

     

    2.17 The
      Subscriber understands, acknowledges and agrees with the Company that except
      as
      otherwise set forth herein, the subscription hereunder is irrevocable by the
      Subscriber, that, except as required by law, the Subscriber is not entitled
      to
      cancel, terminate or revoke this Agreement or any agreements of the Subscriber
      hereunder and that this Agreement and such other agreements shall survive the
      death or disability of the Subscriber and shall be binding upon and inure to
      the
      benefit of the parties and their heirs, executors, administrators, successors,
      legal representatives and permitted assigns. If the Subscriber is more than
      one
      Person, the obligations of the Subscriber hereunder shall be joint and several
      and the agreements, representations, warranties and acknowledgments herein
      contained shall be deemed to be made by and be binding upon each such Person
      and
      its heirs, executors, administrators, successors, legal representatives and
      permitted assigns.

    


    2.18  The
      Subscriber understands, acknowledges and agrees with the Company that, the
      Offering is intended to be exempt from registration under the Securities Act
      by
      virtue of Section 4(2) of the Securities Act and the provisions of Regulation
      D,
      and/or the provisions of Regulation S which is in part dependent upon the truth,
      completeness and accuracy of the statements made by the Subscriber.

    


    2.19  The
      Subscriber understands, acknowledges and agrees that there can be no assurance
      that the Subscriber will be able to sell or dispose of the Securities. It is
      understood than in order not to jeopardize the Offering’s exempt status under
      Section 4(2) of the Securities Act and Regulation D, in addition to any other
      restrictions on transfer set forth herein or in the Warrants, the Company may,
      at a minimum, require any transferee to fulfill the Subscriber suitability
      requirements thereunder and make the representations, warranties and covenants
      of Subscriber hereunder.

    


    
      
        
        

      

      
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    2.20  The
      Subscriber represents and warrants since the date that the Subscriber was first
      contacted with respect to the Offering (the “First
      Date”)
      the
      Subscriber has not, directly or indirectly, through related parties, Affiliates
      or otherwise, sold “short” or “short against the box” (as such terms are
      generally understood), and until the transactions contemplated by this Agreement
      are publicly announced, will not sell “short” or “short against the box” any
      equity security of the Company or take any action with respect to any equity
      security of the Company which would violate the Securities Act or the rules
      and
      regulations promulgated thereunder. 

    


    2.21 The
      Subscriber understands, acknowledges and agrees that the existence of and
      information contained in this Agreement, the Memorandum or otherwise made
      available to the Subscriber by the Company (collectively, the “Confidential
      Information”)
      is to
      be used solely for the purpose of evaluating a possible investment in the
      Securities and is confidential and non-public and agrees that all such
      Confidential Information shall be kept in confidence by the Subscriber and
      neither used by the Subscriber for the Subscriber’s personal benefit (other than
      in connection with evaluating a possible investment in the Securities) nor
      disclosed to any third party for any reason and in any manner, notwithstanding
      that a Subscriber’s subscription may not be accepted by the Company;
provided,
      however,
      that
      this obligation shall not apply to any such Confidential Information that (i)
      is
      part of the public knowledge or literature and readily accessible at the date
      hereof (except as a result of a breach of this provision by any party) or (ii)
      becomes part of the public knowledge or literature and readily accessible by
      publication (except as a result of a breach of this provision by any
      party).

    


    2.22 If
      the
      Subscriber is purchasing the Securities in a fiduciary capacity for another
      Person, including without limitation a corporation, partnership, trust or any
      other entity, the Subscriber has been duly authorized and empowered to execute
      this Agreement and all other subscription documents, and such other Person
      fulfills all the requirements for purchase of the Securities as such
      requirements are set forth herein, concurs in the purchase of the Securities
      and
      agrees to be bound by the obligations, representations, warranties and covenants
      contained herein. Upon request of the Company, the Subscriber will provide
      true,
      complete and correct copies of all relevant documents creating the Subscriber,
      authorizing its investment in the Company and/or evidencing the satisfaction
      of
      the foregoing.

    


    2.23  No
      authorization, approval, consent or license of any Person is required to be
      obtained for the purchase of the Securities
      by the
      Subscriber, other than as have been obtained and are in full force and effect.
      The execution and delivery of this Agreement does not, and the consummation
      of
      the transactions contemplated hereby will not, result in any violation of or
      constitute a default under any material agreement or other instrument to which
      the Subscriber is a party or by which the Subscriber or any of its properties
      are bound, or to the best of the Subscriber’s knowledge, any permit, franchise,
      judgment, order, decree, statute, rule or regulation to which the Subscriber
      or
      any of its businesses or properties is subject.

    


    
      
        
        

      

      
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    2.24  The
      Subscriber understands, acknowledges and agrees that the representations,
      warranties and agreements of the Subscriber contained herein (including the
      Confidential Investor Questionnaire), in the Registration Questionnaire attached
      hereto as Appendix
      A
      (the
“Registration
      Questionnaire”)
      and in
      any other writing delivered in connection with the transactions contemplated
      hereby shall be true and correct on the date hereof and as of the Closing Date
      as if made on and as of such date (except for representations, warranties and
      agreements as of a specific date, which shall be true and correct as of such
      date) and shall survive the execution and delivery of this Agreement and the
      purchase of the Securities. The Subscriber agrees that the Placement Agent
      shall
      be entitled to rely on the representations, warranties and agreements of the
      Subscriber contained herein as if such representations, warranties and
      agreements were made or provided directly to the Placement Agent.

    


    2.25  The
      Subscriber hereby covenants with the Company not to make any sale of the
      Securities under the Registration Statement without effectively causing the
      prospectus delivery requirements under the Securities Act to be satisfied,
      and
      further agrees to comply with reasonable requests of the Company or its transfer
      agent to provide additional information and representations concerning such
      sale.

    


    2.26  (a)
      The
      Subscriber agrees, acknowledges and understands that the Placement Agent is
      acting as placement agent for the Securities being offered hereby and will
      be
      compensated by the Company for acting in such capacity, including, but not
      limited to, by: (i) placement fees in cash equal to up to seven percent (7%)
      of
      the proceeds received by the Company at the Closing; and (ii) warrants (the
      “Placement
      Warrants”)
      to
      purchase a number of shares of Common Stock (the “Placement
      Warrant Shares”)
      equal
      to five percent (5%) of the number of Shares actually sold by the Company in
      connection with the Offering (not including shares of Common Stock issuable
      upon
      exercise or conversion of warrants or other securities for which no cash
      consideration was received upon issuance); and (iv) reimbursement of its
      reasonable, documented expenses (including reasonable legal fees) incurred
      in
      connection with the Offering (which reimbursement shall not exceed $50,000).
      The
      Placement Warrants shall have an exercise price per share equal to 110% of
      the
      Purchase Price per share and will be in substantially the same form as the
      Warrants issued to the Subscriber, except the Placement Warrants will also
      provide for cashless exercise. The Subscriber shall not be entitled to
      reimbursement of any expenses incurred by the Subscriber in connection with
      the
      Offering. The Placement Agent will receive the commissions and Placement
      Warrants discussed above on all subsequent investments in Company securities
      made by investors introduced to the Company by the Placement Agent in connection
      with this Offering for a period of twelve (12) months from the Final Closing
      Date.

    


    (b) The
      Subscriber agrees, acknowledges and understands that the Placement Agent may
      engage other Persons, selected by it in its discretion, who are members of
      the
      NASD or who are located outside the United States, to assist the Placement
      Agent
      in connection with this Offering. 

    


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

       

    

    
      	
              
                3.

              

            	
              
                REPRESENTATIONS
                  BY AND COVENANTS OF THE COMPANY.

              

            


    

    


    The
      Company hereby represents and warrants to the Subscriber as of the date this
      Agreement is accepted by the Company hereof and, if later, the Closing Date
      that:

    


    3.1 Organization,
      Good Standing and Qualification.
      The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of the State of Delaware and has full corporate power and
      authority to conduct its business as currently conducted. The Company is duly
      qualified as a foreign corporation to do business and is in good standing in
      every jurisdiction in which the property owned or leased by it or the nature
      of
      the business conducted by it makes such qualification necessary, except to
      the
      extent that the failure to be so qualified or in good standing would not
      reasonably be expected to have, individually or in the aggregate, a material
      adverse effect on the business, operations, conditions (financial or otherwise),
      properties, assets, liabilities, or results of operations of that entity
      individually or of the Company and its Subsidiaries (as defined below) as a
      whole (a “Material
      Adverse Effect”).
      For
      purposes of this Section, “Subsidiary”
      means
      any corporation, partnership, limited liability company, association, or other
      business entity in which the Company owns or controls, directly or indirectly,
      any interest, including, without limitation, any joint venture, partnership,
      or
      similar arrangement.

    


    3.2 Capitalization.
      The
      authorized capital stock of the Company consists of 150,000,000 shares of Common
      Stock and 10,000,000 shares of preferred stock. As of January 31, 2007, there
      were 60,147,814 shares of Common Stock issued and outstanding, all of which
      are
      duly authorized, validly issued, fully paid and non-assessable, and no shares
      of
      preferred stock outstanding. In addition, as of such date, there are 13,839,895
      shares of Common Stock reserved for issuance pursuant to outstanding options
      and
      warrants. All of the securities issued by the Company have been issued in
      accordance with all applicable federal and state securities laws. Other than
      as
      set forth above, there are no other options, warrants, calls, rights,
      commitments or agreements of any character to which the Company is a party
      or by
      which the Company is bound or obligating the Company to issue, deliver, sell,
      repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
      redeemed, any shares of the capital stock of the Company or obligating the
      Company to grant, extend or enter into any such option, warrant, call, right,
      commitment or agreement. Except as set forth in the Memorandum, there are no
      preemptive rights or rights of first refusal or similar rights which are binding
      on the Company permitting any Person to subscribe for or purchase from the
      Company shares of its capital stock pursuant to any provision of law, the
      Company’s Certificate of Incorporation as in effect on the date hereof (the
“Certificate of Incorporation”) or the Company’s By-laws, as in effect on the
      date hereof (the “By-laws”) or by agreement or otherwise. Except as set forth in
      the Memorandum, there are no securities or instruments containing anti-dilution
      or similar provisions that will be triggered by the issuance of the Securities
      as described in this Agreement. The Company has made available to the Placement
      Agent true, correct and complete copies of the Company’s Certificate of
      Incorporation and By-laws.

    


    3.3 Authorization;
      Enforceability.
      The
      Company has all corporate right, power and authority to enter into this
      Agreement and to consummate the transactions contemplated hereby. All corporate
      action on the part of the Company, its directors and stockholders necessary
      for
      the (i) authorization execution, delivery and performance of this Agreement
      by
      the Company; and (ii) authorization, sale, issuance and delivery of the
      Securities contemplated hereby and the performance of the Company's obligations
      hereunder has been taken. This Agreement has been duly executed and delivered
      by
      the Company and constitutes a legal, valid and binding obligation of the
      Company, enforceable against the Company in accordance with its terms, subject
      to laws of general application relating to bankruptcy, insolvency and the relief
      of debtors and rules of law governing specific performance, injunctive relief
      or
      other equitable remedies, and to limitations of public policy. The Shares,
      when
      issued and fully paid for in accordance with the terms of this Agreement, will
      be validly issued, fully paid and non-assessable. The Warrant Shares, when
      issued in accordance with the terms of the Warrants, will be validly issued,
      full paid and non-assessable. The issuance and sale of the Securities
      contemplated hereby will not give rise to any preemptive rights or rights of
      first refusal on behalf of any person which have not been waived in connection
      with this Offering.

    


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

       

    

    3.4 No
      Conflict; Governmental Consents.

    


    (a) Except
      as
      would not reasonably be expected to have a Material Adverse Effect, the
      execution and delivery by the Company of this Agreement and the consummation
      of
      the transactions contemplated hereby will not result in the violation of any
      law, statute, rule, regulation, order, writ, injunction, judgment or decree
      of
      any court or governmental authority to or by which the Company is bound, or
      of
      any provision of the Certificate of Incorporation or By-Laws of the Company,
      and
      will not conflict with, or result in a breach or violation of, any of the terms
      or provisions of, or constitute (with due notice or lapse of time or both)
      a
      default under, any lease, loan agreement, mortgage, security agreement, trust
      indenture or other agreement or instrument to which the Company is a party
      or by
      which it is bound or to which any of its properties or assets is subject, nor
      result in the creation or imposition of any lien upon any of the properties
      or
      assets of the Company.

    


    (b) Other
      than the approval of the American Stock Exchange, no consent, approval,
      authorization or other order of any governmental authority or other third party
      is required to be obtained by the Company in connection with the authorization,
      execution and delivery of this Agreement or with the authorization, issue and
      sale of the Securities, except such filings as may be required to be made with
      the SEC and with any state or foreign blue sky or securities regulatory
      authority relating to an exemption from registration thereunder.

    


    3.5 Licenses.
      Except
      as otherwise set forth in the Memorandum or as would not reasonably be expected
      to have a Material Adverse Effect, the Company has sufficient licenses, permits
      and other governmental authorizations currently required for the conduct of
      its
      business or ownership of properties and is in all material respects complying
      therewith.

    


    3.6 Litigation.
      There
      is no pending, or to the Company’s knowledge, threatened legal or governmental
      proceedings against the Company which (i) adversely questions the validity
      of
      this Agreement or any agreements related to the transactions contemplated hereby
      or the right of the Company to enter into any of such agreements, or to
      consummate the transactions contemplated hereby or thereby or (ii) could, if
      there were an unfavorable decision, have a Material Adverse Effect. There is
      no
      action, suit, proceeding or investigation by the Company currently pending
      in
      any court or before any arbitrator or that the Company intends to
      initiate.

    


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

       

    

    3.7 Investment
      Company
      The
      Company is not an “investment company” within the meaning of such term under the
      Investment Company Act of 1940, as amended, and the rules and regulations of
      the
      SEC thereunder.

    


    3.8 Financial
      Statements.
      The
      financial statements of the Company included in the SEC Filings (as amended)
      (the “Financial
      Statements”)
      fairly
      present in all material respects the financial condition and position of the
      Company at the dates and for the periods indicated; and have been prepared
      in
      conformity with generally accepted accounting principles in the United States
      (“GAAP”)
      consistently applied throughout the periods covered thereby, except as may
      be
      otherwise specified in such Financial Statements or the notes thereto and except
      that unaudited financial statements may not contain all footnotes required
      by
      GAAP, and fairly present in all material respects the financial position of
      the
      Company as of and for the dates thereof and the results of operations and cash
      flows for the periods then ended, subject, in the case of unaudited statements,
      to normal, immaterial, year-end audit adjustments. Since the date of the most
      recent balance sheet included as part of the Financial Statements and except
      as
      disclosed in the SEC Filings, there has not been: (i) any change in the
      business, conditions (financial or otherwise), properties, assets, liabilities,
      or results of operations of the Company from that reflected in the Financial
      Statements, other than changes in the ordinary course of business, none of
      which
      individually or in the aggregate would reasonably be expected to have a Material
      Adverse Effect; or (ii) any other event or condition of any character that,
      either individually or cumulatively, would reasonably be expected to have a
      Material Adverse Effect, except for the expenses incurred in connection with
      the
      transactions contemplated by this Agreement.

    


    3.9 Title
      to Properties and Assets; Liens, Etc.
      The
      Company has good and marketable title to its properties and assets, including
      the properties and assets reflected in the most recent balance sheet included
      in
      the Financial Statements, and good title to its leasehold estates, in each
      case
      subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than
      (a) those resulting from taxes which have not yet become delinquent; (b) liens
      and encumbrances which do not materially detract from the value of the property
      subject thereto or materially impair the operations of the Company; (c) those
      that have otherwise arisen in the ordinary course of business; and (d) those
      that would not reasonably be expected to have a Material Adverse Effect. The
      Company is in compliance with all material terms of each lease to which it
      is a
      party or is otherwise bound.

    


    3.10 Obligations
      to Related Parties.
      Except
      as disclosed in the Memorandum, there are no obligations of the Company to
      officers, directors, stockholders, or employees of the Company other than (a)
      for payment of salary or other compensation for services rendered, (b)
      reimbursement for reasonable expenses incurred on behalf of the Company, (c)
      standard indemnification provisions in the certificate of incorporation and
      by-laws, and (d) for other standard employee benefits made generally available
      to all employees (including stock option agreements outstanding under any stock
      option plan approved by the Board of Directors of the Company). Except as may
      be
      disclosed in the Financial Statements, the Company is not a guarantor or
      indemnitor of any indebtedness of any other person, firm or
      corporation.

    


    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

       

    

    3.11 Employee
      Relations; Employee Benefit Plans.
      The
      Company is not a party to any collective bargaining agreement or union contract.
      The Company believes that its relations with its employees are good. No
      executive officer (as defined in Rule 501(f) of the Securities Act) of the
      Company has notified the Company that such officer intends to leave the Company
      or otherwise terminate such officer's employment with the Company. The Company
      is in compliance with all federal, state, local and foreign laws and regulations
      respecting employment and employment practices, terms and conditions of
      employment and wages and hours, except where failure to be in compliance would
      not, either individually or in the aggregate, reasonably be expected to result
      in a Material Adverse Effect. Except as disclosed in the Memorandum, the Company
      does not maintain any compensation or benefit plan, agreement, arrangement
      or
      commitment (including, but not limited to, “employee benefit plans”, as defined
      in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
      amended (“ERISA”)
      for any
      present or former employees, officers or directors of the Company or with
      respect to which the Company has liability or makes or has an obligation to
      make
      contributions, other than any such plans, agreements, arrangements or
      commitments made generally available to the Company’s employees.

    


    3.12 Environmental
      Laws.
      The
      Company (i) is in compliance with any and all Environmental Laws (as hereinafter
      defined), (ii) has received all permits, licenses or other approvals required
      of
      it under applicable Environmental Laws to conduct its business and (iii) is
      in
      compliance with all terms and conditions of any such permit, license or approval
      where, in each of the foregoing clauses (i), (ii) and (iii), the failure to
      so
      comply would reasonably be expected to have, individually or in the aggregate,
      a
      Material Adverse Effect. The term “Environmental
      Laws”
      means
      all federal, state, local or foreign laws relating to pollution or protection
      of
      human health or the environment (including, without limitation, ambient air,
      surface water, groundwater, land surface or subsurface strata), including,
      without limitation, laws relating to emissions, discharges, releases or
      threatened releases of chemicals, pollutants, contaminants, or toxic or
      hazardous substances or wastes (collectively, “Hazardous
      Materials”)
      into
      the environment, or otherwise relating to the manufacture, processing,
      distribution, use, treatment, storage, disposal, transport or handling of
      Hazardous Materials, as well as all authorizations, codes, decrees, demands
      or
      demand letters, injunctions, judgments, licenses, notices or notice letters,
      orders, permits, plans or regulations issued, entered, promulgated or approved
      thereunder.

    


    3.13 Tax
      Status.
      The
      Company (i) has made or filed all federal and state income and all other tax
      returns, reports and declarations required by any jurisdiction to which it
      is
      subject, (ii) has paid all taxes and other governmental assessments and charges
      that are material in amount, shown or determined to be due on such returns,
      reports and declarations, except those being contested in good faith and (iii)
      has set aside on its books provision reasonably adequate for the payment of
      all
      taxes for periods subsequent to the periods to which such returns, reports
      or
      declarations apply. There are no unpaid taxes in any material amount claimed
      to
      be due by the taxing authority of any jurisdiction, and the officers of the
      Company know of no basis for any such claim.

    


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

       

    

    3.14 Proprietary
      Rights.
      The
      Company owns or possesses adequate and enforceable rights to use all patents,
      patent applications, trademarks, trade names, corporate names, copyrights,
      trade
      secrets, licenses, inventions, formulations, technology and know-how and other
      intangible property used in the conduct of its business as described in the
      Memorandum (the “Proprietary
      Rights”).
      The
      Company has not received any notice of, and there are no facts known to the
      Company that reasonably indicate the existence of (i) any infringement or
      misappropriation by any third party of any of the Proprietary Rights or (ii)
      any
      claim by a third party contesting the validity of any of the Proprietary Rights.
      The Company has not received any notice of any infringement, misappropriation
      or
      violation by the Company or any of its employees of any Proprietary Rights
      of
      third parties

     

    3.15 Absence
      of Certain Changes.
      Except
      as set forth in the Memorandum, since the date of the Memorandum, there has
      been
      no material adverse change in the business, operations, conditions (financial
      or
      otherwise), prospects, assets or results of operations of the Company or any
      of
      its Subsidiaries.

     

    3.16 Disclosure.
      The
      information set forth in the Memorandum as of the date hereof contains no untrue
      statement of a material fact nor omits to state a material fact necessary in
      order to make the statements contained therein, in light of the circumstances
      under which they were made, not misleading.

    


    
      	4.	
              CONDITIONS
                TO OBLIGATIONS OF EACH PARTY.

            


    

    


    4.1  Conditions
      to Obligations of the Company.
      The
      Company’s obligation to complete the sale and issuance of the Securities and
      deliver the Securities to the Subscriber at the Closing is subject to the
      fulfillment on or prior to the Closing of the following conditions, which
      conditions may be waived at the option of the Company to the extent permitted
      by
      law:

    


    (a) Representations
      and Warranties Correct.
      The
      representations and warranties made by the Subscriber in Article
      2
      hereof
      shall be true and correct when made, and shall be true and correct on and as
      of
      the Closing Date (except for any representation or warranty that speaks as
      of a
      specific date, which shall be true and correct as of such date).

    


    (b) Covenants.
      All
      covenants, agreements and conditions contained in this Agreement to be performed
      by the Subscriber on or prior to such sale and issuance shall have been
      performed or complied with in all material respects.

    


    (c) No
      Legal Order Pending.
      There
      shall not then be in effect any legal or other order enjoining or restraining
      the transactions contemplated by this Agreement.

    


    (d)  No
      Law
      Prohibiting or Restricting Such Sale.
      There
      shall not be in effect any law, rule or regulation prohibiting or restricting
      the issuance and sale of the Securities or requiring any consent or approval
      of
      any Person which shall not have been obtained to issue or sell the Securities,
      or in either case to otherwise consummate the transactions contemplated hereby
      (except as otherwise provided in this Agreement).

    


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

       

    

    (e)  Payment
      of Consideration.
      The
      Company shall have received the full amount of the Aggregate Purchase Price
      for
      the Units being purchased hereunder at the Closing.

    


    (f)  Questionnaires.
      The
      Subscriber shall have completed, executed and delivered to the Company the
      Confidential Investor Questionnaire and the Registration Questionnaire, which
      questionnaires shall be true and correct as of the Closing and shall be
      satisfactory to the Placement Agent and the Company, each in their sole
      discretion.

    


    (g)  Minimum
      Offering.
      The
      Company shall have received duly executed subscriptions and corresponding
      readily available funds shall have been deposited into the Escrow Account from
      Subscribers equal to or in excess of the Minimum Offering.

     

    (h)  AMEX
      Listing.
      The
      American Stock Exchange shall have approved the Shares and Warrant Shares for
      listing on such exchange.

    


    4.2 The
      Subscriber’s obligation to purchase the Securities at the Closing is subject to
      the fulfillment on or prior to the Closing of the following conditions, which
      conditions may be waived at the option of each Subscriber to the extent
      permitted by law:

    


    (a) Representations
      and Warranties Correct.
      The
      representations and warranties made by the Company in Article
      3
      hereof
      shall be true and correct when made, and shall be true and correct on and as
      of
      the Closing Date (except for any representation or warranty that speaks as
      of a
      specific date, which shall be true and correct as of such date).

    


    (b) Covenants.
      All
      covenants, agreements and conditions contained in this Agreement to be performed
      by the Company on or prior to such purchase shall have been performed or
      complied with in all material respects.

    


    (c) No
      Legal Order Pending.
      There
      shall not then be in effect any legal or other order enjoining or restraining
      the transactions contemplated by this Agreement.

    


    (d)  No
      Law
      Prohibiting or Restricting Such Sale.
      There
      shall not be in effect any law, rule or regulation prohibiting or restricting
      the issuance and sale of the Securities or requiring any consent or approval
      of
      any Person which shall not have been obtained to issue or sell the Securities,
      or in either case to otherwise consummate the transactions contemplated hereby
      (except as otherwise provided in this Agreement).

    


    (e)  Minimum
      Offering.
      The
      Company shall have received duly executed subscriptions and corresponding
      readily available funds in the Escrow Account from Subscribers equal to or
      in
      excess of the Minimum Offering Amount.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

       

    

    (f)  AMEX
      Listing.
      The
      American Stock Exchange shall have approved the Shares and Warrant Shares for
      listing on such exchange.

     

    (g)  Legal
      Opinion.
      The
      Subscribers shall have received an opinion of counsel to the Company (which
      the
      Placement Agent may be permitted to rely on as if it were addressed to it)
      substantially in the form attached hereto as Appendix
      B.

    


    
      	5.	
              REGISTRATION
                RIGHTS.

            


    

    


    5.1 As
      used
      in this Agreement, the following terms shall have the following
      meanings:

    


    (a) “Affiliate”
shall
      mean, with respect to any Person (as defined below), any other Person
      controlling, controlled by or under direct or indirect common control with
      such
      Person (for the purposes of this definition “control,” when used with respect to
      any specified Person, shall mean the power to direct the management and policies
      of such Person, directly or indirectly, whether through ownership of voting
      securities, by contract or otherwise; and the terms “controlling” and
“controlled” shall have meanings correlative to the foregoing).

    


    (b) “Business
      Day”
shall
      mean a day Monday through Friday on which banks are generally open for business
      in New York, New York and on which the SEC is open.

    


    (c) “Holders”
shall
      mean the Subscribers and any Person holding Registrable Securities or any Person
      to whom the rights under this Article
      5
      have
      been transferred in accordance with Section
      5.9
      hereof.

    


    (d) “Person”
shall
      mean any person, individual, corporation, limited liability company,
      partnership, trust or other nongovernmental entity or any governmental agency,
      court, authority or other body (whether foreign, federal, state, local or
      otherwise).

    


    (e) The
      terms
“register,”
      “registered”
and
      “registration”
refer
      to the registration effected by preparing and filing a registration statement
      in
      compliance with the Securities Act, and the declaration or ordering of the
      effectiveness of such registration statement.

    


    (f) “Registrable
      Securities”
shall
      mean the Shares, the Warrant Shares and the Placement Warrant Shares and any
      shares of Common Stock issued as a dividend or distribution with respect to
      or
      in replacement of the Common Stock issued, directly or indirectly, in connection
      with this Offering; provided,
      however,
      that
      securities shall only be treated as Registrable Securities if and only for
      so
      long as they (i) have not been sold (A) pursuant to a registration statement;
      (B) to or through a broker, dealer or underwriter in a public distribution
      or a
      public securities transaction; and/or (C) in a transaction exempt from the
      registration and prospectus delivery requirements of the Securities Act under
      Section 4(1) thereof so that all transfer restrictions and restrictive legends
      with respect thereto, if any, are removed upon the consummation of such sale;
      (ii) are not held by a Holder or a permitted transferee; and (iii) are not
      eligible for sale pursuant to Rule 144(k) (or any successor thereto) under
      the
      Securities Act. 

    


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

       

    

    (g)  “Registration
      Expenses”
shall
      mean all expenses incurred by the Company in complying with Section
      5.2
      hereof,
      including, without limitation, all registration, qualification and filing fees,
      printing expenses, escrow fees, fees and expenses of counsel for the Company,
      blue sky fees and expenses and the expense of any special audits incident to
      or
      required by any such registration (but excluding the fees of legal counsel
      for
      any Holder).

    


    (h)  “Selling
      Expenses”
shall
      mean all underwriting discounts and selling commissions applicable to the sale
      of Registrable Securities and, except to the extent set forth in the definition
      of Registration Expenses, all fees and expenses of legal counsel for any
      Holder.

    


    (i)  “Subsidiary”
shall
      mean, with respect to any Person, any other Person of which more than fifty
      percent (50%) of the shares of stock or other interests entitled to vote in
      the
      election of directors or comparable Persons performing similar functions
      (excluding shares or other interests entitled to vote only upon the failure
      to
      pay dividends thereon or other contingencies) are at the time owned or
      controlled, directly or indirectly through one or more Subsidiaries, by such
      Person.

    


    5.2 Subject
      to the terms, conditions and limitations set forth herein, the Company will
      use
      its reasonable best efforts to file a registration statement with the SEC on
      the
      appropriate form (the “Initial
      Registration Statement”)
      on or
      before the later of (A) forty-five (45) days following the final Closing Date,
      or (B) ten (10) days following the date on which the Company’s Annual Report on
      Form 10-KSB for the year ended December 31, 2006 is required to be filed with
      the SEC (the “Filing
      Deadline”),
      to
      allow the resale of the Registrable Securities under the Securities Act, and
      use
      its reasonable best efforts to have such Initial Registration Statement declared
      effective by the SEC on or before the date which is seventy-five (75) days
      after
      the Filing Deadline (the “Registration
      Effective Date”);
      provided,
      however,
      in the
      event the Filing Deadline or Registration Effective Date do not fall on a
      Business Day, then the Filing Deadline or Registration Effective Date shall
      be
      deemed to be the next Business Day thereafter. Notwithstanding the foregoing,
      in
      the event the SEC informs the Company that all of the Shares and Warrant Shares
      cannot, as a result of the application of Rule 415 under the Securities Act,
      be
      registered for resale on a single Registration Statement, the Company agrees
      to
      (i) promptly inform each of the holders thereof and use its best efforts to
      file
      amendments to the Initial Registration Statement as required by the SEC or
      to
      promptly withdraw the Initial Registration Statement and to file a registration
      statement covering the maximum number of Shares and Warrant Shares permitted
      to
      be registered by the SEC on Form S-3 or such other form available to register
      for resale the Shares and the Warrant Shares (the “Additional
      Registration Statement”)
      and
      (ii) in the event the Company files an Additional Registration Statement, to
      file with the SEC as promptly as allowed one or more registration statements
      on
      Form S-3 or such other form available to register for resale those Shares and
      Warrant Shares that were not registered for resale on the Additional
      Registration Statement (the “Remainder
      Registration Statements,”
and
      collectively with the Initial Registration Statement and Additional Registration
      Statement, the “Registration
      Statements”
and
      each, a “Registration
      Statement”).
      The
      Company shall cause such Registration Statements to remain effective (the
“Registration
      Period”)
      until
      the earlier of (i) the date on which such Registrable Securities are eligible
      for resale under Rule 144(k) of the Securities Act; or (ii) such time as all
      Securities held by the Subscriber and registered under the Registration
      Statements have been sold. To the extent permissible, such Registration
      Statements also shall include, or subsequently be amended to include, to the
      extent allowable under the Securities Act and the rules promulgated thereunder
      (including Rule 416 under the Securities Act), such indeterminate number of
      additional shares of Common Stock resulting from stock splits, stock dividends
      or similar transactions with respect to the Registrable Securities. In the
      event
      (x) the Company has not filed the Initial Registration Statements by the Filing
      Deadline, or (y) the Initial Registration Statement has not been declared
      effective by the Registration Effective Date, then in either case the Company
      shall make compensatory payments to the Holder in an amount equal to one percent
      (1%) of the Aggregate Purchase Price paid by the Subscriber for each monthly
      period (or prorated portion thereof) in which the Company is in default of
      its
      obligations under the first sentence of this Section
      5.2.
      Notwithstanding
      anything to the contrary contained herein, in no event shall the amount of
      compensatory payments payable by the Company pursuant to this Section
      5.2
      exceed
      ten percent (10%) of the Aggregate Purchase Price paid by each
      Subscriber.

    


    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

       

    

    5.3 All
      Registration Expenses incurred in connection with any registration,
      qualification, exemption or compliance pursuant to Section
      5.2
      shall be
      borne by the Company. All Selling Expenses relating to the sale of securities
      registered by or on behalf of Holders shall be borne by such
      Holders.

    


    5.4 In
      the
      case of the registration, qualification, exemption or compliance effected by
      the
      Company pursuant to this Agreement, the Company shall, upon reasonable request,
      inform each Holder as to the status of such registration, qualification,
      exemption and compliance. At its expense the Company shall: 

    


    (a) use
      reasonable best efforts to keep such registration, and any qualification,
      exemption or compliance under state or federal securities laws which the Company
      determines to obtain, continuously effective until the termination of the
      Registration Period; 

    


    (b) advise
      the Holders as soon as practicable:

    


    (i) when
      any
      Registration Statement or any post-effective amendment thereto has become
      effective;

    


    (ii) of
      any
      request by the SEC for amendments or supplements to the Registration Statements
      or the prospectus included therein or for additional information;

    


    (iii) of
      the
      issuance by the SEC of any stop order suspending the effectiveness of the
      Registration Statements or the initiation of any proceedings for such
      purpose;

    


    (iv) of
      the
      receipt by the Company of any notification with respect to the suspension of
      the
      qualification of the Registrable Securities included therein for sale in any
      jurisdiction or the initiation or threatening of any proceeding for such
      purpose; and

    


    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

       

    

    (v) of
      the
      happening of any event that requires the making of any changes in the
      Registration Statements or the prospectus so that, as of such date, the
      statements therein are not misleading and do not omit to state a material fact
      required to be stated therein or necessary to make the statements therein (in
      the case of the prospectus, in the light of the circumstances under which they
      were made) not misleading (which notice will be accompanied by an instruction
      to
      suspend the use of the prospectus until such changes have been
      made);

    


    (c) make
      every reasonable effort to obtain the withdrawal of any order suspending the
      effectiveness of any Registration Statement at the earliest possible
      time;

    


    (d) during
      the Registration Period, deliver to each Holder, without charge, as many copies
      of the prospectus included in such Registration Statements and any amendment
      or
      supplement thereto as such Holder may reasonably request; and the Company
      consents to the use, consistent with the provisions hereof, of the prospectus
      or
      any amendment or supplement thereto by each of the selling Holders of
      Registrable Securities in connection with the offering and sale of the
      Registrable Securities covered by the prospectus or any amendment or supplement
      thereto.

    


    (e) prior
      to
      any public offering of Registrable Securities pursuant to the Registration
      Statements, register or qualify or obtain an exemption for offer and sale under
      the securities or blue sky laws of such jurisdictions as any such Holders
      reasonably request in writing, provided that the Company shall not for any
      such
      purpose be required to qualify generally to transact business as a foreign
      corporation in any jurisdiction where it is not so qualified or to consent
      to
      general service of process in any such jurisdiction, and do any and all other
      acts or things reasonably necessary or advisable to enable the offer and sale
      in
      such jurisdictions of the Registrable Securities covered by such Registration
      Statements in the sole discretion of the Company;

    


    (f) upon
      the
      occurrence of any event contemplated by Section
      5.4(b)(v)
      above,
      the Company shall promptly prepare a post-effective amendment to the applicable
      Registration Statements or a supplement to the related prospectus, or file
      any
      other required document so that, as thereafter promptly delivered to purchasers
      of the Registrable Securities included therein, the prospectus will not include
      any untrue statement of a material fact or omit to state any material fact
      necessary to make the statements therein, in the light of the circumstances
      under which they were made, not misleading; and

    


    (g) use
      reasonable best efforts to comply with all applicable rules and regulations
      of
      the SEC, and use commercially reasonable efforts to make generally available
      to
      its security holders not later than 45 days (or 90 days if the fiscal quarter
      is
      the fourth fiscal quarter) after the end of its fiscal quarter in which the
      first anniversary date of the effective date of each Registration Statement
      occurs, an earnings statement satisfying the provisions of Section 11(a) of
      the
      Securities Act.

    


    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

       

    

    Notwithstanding
      the foregoing, it shall be a condition precedent to the obligations of the
      Company to take any action pursuant to paragraphs (a) through (h) of this
Section
      5.4,
      that
      the Holder shall furnish to the Company such information regarding itself,
      the
      Securities to be sold by the Holder and the intended method of disposition
      of
      such Securities as shall be required to effect the registration of the
      Securities, all of which information shall be furnished to the Company in
      writing specifically for use in the Registration Statements.

    


    5.5 The
      Holders shall have no right to take any action to restrain, enjoin or otherwise
      delay any registration pursuant to Section
      5.2
      hereof
      as a result of any controversy that may arise with respect to the interpretation
      or implementation of this Agreement. 

     

    5.6 (a) To
      the
      extent permitted by law, the Company shall indemnify each Holder with respect
      to
      which any registration, qualification or compliance has been effected pursuant
      to this Agreement, against all claims, losses, damages and liabilities (or
      actions in respect thereof), including any of the foregoing incurred in
      settlement of any litigation, commenced or threatened (subject to Section
      5.6(c)
      below),
      arising out of or based on any untrue statement (or alleged untrue statement)
      of
      a material fact contained in the Registration Statements, or any amendment
      or
      supplement thereof, incident to any such registration, qualification or
      compliance, or based on any omission (or alleged omission) to state therein
      a
      material fact required to be stated therein or necessary to make the statements
      therein not misleading, in light of the circumstances in which they were made,
      or (ii) any violation or alleged violation by the Company of the Securities
      Act,
      the Exchange Act, or any rule or regulation promulgated under the Securities
      Act, or the Exchange Act, and will reimburse each Holder for reasonable legal
      and other expenses reasonably incurred in connection with investigating or
      defending any such claim, loss, damage, liability or action as incurred;
provided,
      that
      the Company will not be liable in any such case to the extent that any such
      claim, loss, damage, liability or action arises out of, relates to or is based
      upon: (i) any untrue statement or omission or allegation thereof is made in
      reliance upon and in conformity with written information furnished to the
      Company by or on behalf of such Holder and stated to be specifically for use
      in
      preparation of such Registration Statement, prospectus or offering circular;
      or
      (ii) the failure of the Holder to comply with the covenants and agreements
      contained in this Agreement respecting sales of Registrable Securities.
      Notwithstanding the foregoing, and except that the foregoing indemnity agreement
      is subject to the condition that, insofar as it relates primarily to any such
      untrue statement or alleged untrue statement or omission or alleged omission
      made in the preliminary prospectus but eliminated or remedied in the amended
      prospectus on file with the SEC at the time any Registration Statement becomes
      effective or in the amended prospectus filed with the Commission pursuant to
      Rule 424(b) or in the prospectus subject to completion under Rule 434
      promulgated under the Securities Act, which together meet the requirements
      of
      Section 10(a) of the Securities Act (the “Final
      Prospectus”),
      such
      indemnity agreement shall not inure to the benefit of any such Holder, any
      such
      underwriter or any such controlling Person, if a copy of the Final Prospectus
      furnished by the Company to the Holder for delivery was not furnished by the
      Holder to the Person or entity asserting the loss, liability, claim, damage
      or
      at or prior to the time such furnishing is required by the Securities Act and
      the Final Prospectus would have cured the defect giving rise to such loss,
      liability, claim, damage or action.

    


    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

       

    

    (b) Each
      Holder will severally, if Registrable Securities held by such Holder are
      included in the securities as to which such registration, qualification or
      compliance is being effected, indemnify the Company, each of its directors
      and
      officers, each underwriter of the Registrable Securities and each Person who
      controls the Company within the meaning of Section 15 of the Securities Act,
      against all claims, losses, damages and liabilities (or actions in respect
      thereof), including any of the foregoing incurred in settlement of any
      litigation, commenced or threatened (subject to Section
      5.6(c)
      below),
      arising out of or based on any untrue statement (or alleged untrue statement)
      of
      a material fact contained in any registration statement, prospectus or offering
      circular, or any amendment or supplement thereof, incident to any such
      registration, qualification or compliance, or based on any omission (or alleged
      omission) to state therein a material fact required to be stated therein or
      necessary to make the statements therein not misleading, in light of the
      circumstances in which they were made, and will reimburse the Company, such
      directors and officers, each underwriter of the Registrable Securities and
      each
      Person controlling the Company for reasonable legal and any other expenses
      reasonably incurred in connection with investigating or defending any such
      claim, loss, damage, liability or action as incurred, in each case to the
      extent, but only to the extent, that such untrue statement or omission or
      allegation thereof is made in reliance upon and in conformity with written
      information furnished to the Company by or on behalf of the Holder and stated
      to
      be specifically for use in preparation of such registration statement,
      prospectus or offering circular. Notwithstanding the foregoing, in no event
      shall a Holder be liable for any such claims, losses, damages or liabilities
      in
      excess of the net proceeds received by such Holder in the offering, except
      in
      the event of fraud or intentional misrepresentation by such Holder.

    


    (c) Each
      party entitled to indemnification under this Section
      5.6
      (the
“Indemnified
      Party”)
      shall
      give notice to the party required to provide indemnification (the “Indemnifying
      Party”)
      promptly after such Indemnified Party has actual knowledge of any claim as
      to
      which indemnity may be sought, and shall permit the Indemnifying Party to assume
      the defense of any such claim or any litigation resulting therefrom, provided
      that counsel for the Indemnifying Party, who shall conduct the defense of such
      claim or litigation, shall be approved by the Indemnified Party (whose approval
      shall not unreasonably be withheld), and the Indemnified Party may participate
      in such defense at such Indemnified Party’s expense, and provided further that
      the failure of any Indemnified Party to give notice as provided herein shall
      not
      relieve the Indemnifying Party of its obligations under this Agreement, unless
      such failure is materially prejudicial to the Indemnifying Party in defending
      such claim or litigation. An Indemnifying Party shall not be liable for any
      settlement of an action or claim effected without its written consent (which
      consent will not be unreasonably withheld).

    


    (d) If
      the
      indemnification provided for in this Section
      5.6
      is held
      by a court of competent jurisdiction to be unavailable to an Indemnified Party
      with respect to any loss, liability, claim, damage or expense referred to
      therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
      Party thereunder, shall contribute to the amount paid or payable by such
      Indemnified Party as a result of such loss, liability, claim, damage or expense
      in such proportion as is appropriate to reflect the relative fault of the
      Indemnifying Party on the one hand and of the Indemnified Party on the other
      in
      connection with the statements or omissions which resulted in such loss,
      liability, claim, damage or expense as well as any other relevant equitable
      considerations. The relative fault of the Indemnifying Party and of the
      Indemnified Party shall be determined by reference to, among other things,
      whether the untrue or alleged untrue statement of a material fact or the
      omission to state a material fact relates to information supplied by the
      Indemnifying Party or by the Indemnified Party and the parties’ relative intent,
      knowledge, access to information and opportunity to correct or prevent such
      statement or omission. The Company and the Holders agree that it would not
      be
      just and equitable if contribution pursuant to this Section
      5.6(d)
      was
      based solely upon the number of entities from whom contribution was requested
      or
      by any other method of allocation which does not take account of the equitable
      considerations referred to above in this Section
      5.6(d).
      The
      amount paid or payable by an Indemnified Party as a result of the losses,
      claims, damages and liabilities (or actions in respect thereof) referred to
      above in this Section
      5.6(d)
      shall be
      deemed to include any legal or other expenses reasonably incurred by such
      Indemnified Party in connection with investigating or defending any such action
      or claim, subject to the provisions of Section
      5.6(d)
      hereof.
      The parties agree that it would not be just and equitable if contributions
      pursuant to this Section
      5.6
      were
      determined by pro rata allocation or by any other method of allocation which
      does not take account of the equitable considerations as set forth in this
      Section
      5.6.
      Notwithstanding the provisions of this Section
      5.6(d),
      in no
      event shall a Holder be required to contribute any amount or make any other
      payments under this Agreement which in the aggregate exceed the net proceeds
      received by such Holder from the sale of Registrable Securities covered by
      such
      Registration Statement. No Person guilty of fraudulent misrepresentation (within
      the meaning of the Securities Act) shall be entitled to contribution from any
      Person who was not guilty of such fraudulent misrepresentation. 

    


    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

       

    

    5.7 (a) Each
      Holder agrees that, upon receipt of any notice from the Company of (i)
the
      need
      for an amendment or supplement to the Registration Statement or the prospectus
      forming a part thereof, (ii) that the Board of Directors has determined in
      good
      faith that offers and sales pursuant to the prospectus forming part of a
      Registration Statement should not be made by reason of the presence of material
      undisclosed circumstances or developments with respect to which the disclosure
      that would be required in a Registration Statement would be premature or would
      have a Material Adverse Effect or (iii) in
      connection with a primary underwritten offering of equity securities of the
      Company,
      each
      Holder will forthwith discontinue disposition of Registrable Securities pursuant
      to a Registration Statement contemplated by Section
      5.2
      until
      its receipt of copies of the supplemented or amended prospectus from the Company
      or confirmation of the filing of such report with the SEC by the Company, any
      such prospectus to be forwarded promptly to the Holder by the Company, and,
      if
      so directed by the Company, each Holder shall deliver to the Company all copies,
      other than permanent file copies then in such Holder’s possession, of the
      prospectus covering such Registrable Securities current at the time of receipt
      of such notice; provided,
      that
      the Company, may suspend the disposition of Registrable Securities pursuant
      to
      the Registration Statements pursuant to clause (ii) above not more
      than
      one time (not to exceed 30 days) during any
      three
      month period, nor
      more
      than two times (not to exceed 30 days each) in any twelve-month period.


     

    (b) As
      a
      condition to the inclusion of its Registrable Securities, each Holder shall
      furnish to the Company such information regarding such Holder and the
      distribution proposed by such Holder as the Company may reasonably request
      in
      writing or as shall be required in connection with any registration,
      qualification or compliance referred to in this Article
      5,
      including the information required by the Registration Questionnaire attached
      hereto as Appendix
      A.

    


    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

       

    

    (c) Each
      Holder hereby covenants with the Company not to make any sale of the Registrable
      Securities without effectively causing the prospectus delivery requirements
      under the Securities Act to be satisfied.

    


    (d) Each
      Holder acknowledges and agrees that the Registrable Securities sold pursuant
      to
      the Registration Statements described in this Section are not transferable
      on
      the books of the Company unless the stock certificate submitted to the transfer
      agent evidencing such Registrable Securities is accompanied by a certificate
      reasonably satisfactory to the Company to the effect that (i) the
      Registrable Securities have been sold in accordance with such Registration
      Statement and (ii) the requirement of delivering a current prospectus has
      been satisfied.

    


    (e) Each
      Holder agrees not to take any action with respect to any distribution deemed
      to
      be made pursuant to such registration statement which would constitute a
      violation of Regulation M under the Exchange Act or any other applicable rule,
      regulation or law. 

    


    5.8 With
      a
      view to making available to the Holders the benefits of certain rules and
      regulations of the SEC which at any time permit the sale of the Registrable
      Securities to the public without registration, the Company shall use reasonable
      best efforts to:

    


    (a) make
      and
      keep public information available, as those terms are understood and defined
      in
      Rule 144 under the Securities Act, at all times;

    


    (b) file
      with
      the SEC in a timely manner all reports and other documents required of the
      Company under the Exchange Act; and 

    


    (c) so
      long
      as a Holder owns any unregistered Registrable Securities, furnish to such
      Holder, upon any reasonable request, a written statement by the Company as
      to
      its compliance with Rule 144 under the Securities Act, and of the Exchange
      Act, a copy of the most recent annual or quarterly report of the Company, and
      such other reports and documents of the Company as such Holder may reasonably
      request in availing itself of any rule or regulation of the SEC allowing a
      Holder to sell any such securities without registration.

    


    5.9 The
      right
      to cause the Company to register Registrable Securities granted to the Holders
      by the Company under Section 5.2
      may be
      assigned in full by a Holder in connection with a transfer by such Holder of
      its
      Registrable Securities, but only if: (i) such transfer may otherwise be effected
      in accordance with applicable securities laws; (ii) such Holder gives prior
      written notice of the proposed transfer to the Company including the name and
      address of such transferee and a copy of the transfer documents and agreements;
      (iii) such transferee agrees in writing with the Company to be bound by and
      comply with the terms and provisions of this Agreement; (iv) the transferee
      is
      an “accredited investor” as that term is defined in Rule 501 of Regulation D;
      and (v) such transfer is otherwise in compliance with this Agreement. Except
      as
      specifically permitted by this Section
      5.9,
      the
      rights of a Holder with respect to Registrable Securities as set out herein
      shall not be transferable to any other Person, the Company may impose stop
      transfer orders with respect to any such transfer or attempted transfer, and
      any
      such transfer or attempted transfer shall be null and void. 

    


    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

       

    

    5.10 The
      Company shall use reasonable best efforts to cause all Registrable Securities
      covered by a Registration Statement to be listed on each securities exchange,
      interdealer quotation system or other market on which similar securities issued
      by the Company are then listed.

    


    5.11 With
      the
      written consent of the Company and the Holders holding at least two-thirds
      of
      the Registrable Securities that are then outstanding, any provision of this
      Article
      5
      may be
      waived (either generally or in a particular instance, either retroactively
      or
      prospectively and either for a specified period of time or indefinitely) or
      amended. Upon the effectuation of each such waiver or amendment, the Company
      shall promptly give written notice thereof to the Holders, if any, who have
      not
      previously received notice thereof or consented thereto in writing.

    


    5.12 The
      legend set forth in Section 2.10 above shall be removed and the Company shall
      issue a certificate without such legend to the holder of the Securities upon
      which it is stamped or issue to such holder by electronic delivery at the
      applicable balance account at The Depository Trust Company (“DTC”),
      if
      (i) such Securities are registered for resale under the Securities Act, (ii)
      such Securities are sold or transferred pursuant to Rule 144 (assuming the
      transferor is not an Affiliate of the Company) or Rule 144A, or (iii) such
      Securities are eligible for sale under Rule 144(k). If any portion of a Warrant
      is exercised at a time when there is an effective registration statement to
      cover the resale of the Warrant Shares, or if such Warrant Shares may be sold
      under Rule 144(k), then such Warrant Shares shall be issued free of all legends.
      Following the effective date of the applicable Registration Statement covering
      the resale of Securities, or at such earlier time as a legend is no longer
      required for certain Securities, the Company will no later than three (3)
      Trading Days following the delivery by a Subscriber to the Company or the
      Transfer Agent (with notice to the Company) of (i) a legended certificate
      representing such Shares or Warrant Shares (endorsed or with stock powers
      attached, signatures guaranteed, and otherwise in form necessary to affect
      the
      reissuance and/or transfer) or (ii) an exercise notice in the manner stated
      in
      the Warrants to effect the exercise of such Warrant in accordance with its
      terms, deliver or cause to be delivered to such Subscriber a certificate
      representing such Securities that is free from all restrictive and other
      legends. 

    


    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

       

    

    
      	
              
                6.

              

            	
              
                MISCELLANEOUS.

              

            


    

    


    6.1 The
      Company reserves the right to reject the subscription made hereby in its sole
      discretion. Unless terminated earlier in the Placement Agent’s or the Company’s
      sole discretion, the Offering will expire on February 28, 2007, (as such date
      may be extended by agreement of the Placement and the Company in their sole
      discretion without notice to the Subscribers for an additional 60 days (the
      “Termination
      Date”),
      if
      the conditions to closing set forth in Article
      4
      have not
      been satisfied or waived by such time.

    


    6.2 The
      Company’s agreement with each Subscriber is a separate agreement and each sale
      of the Securities to each Subscriber is a separate sale.

    


    6.3 All
      notices, requests and other communications under this Agreement shall be in
      writing, and shall be sufficiently given if delivered to the addressees in
      person or by recognized overnight courier, mailed by certified or registered
      mail, return receipt requested, or by facsimile or e-mail transmission, as
      follows: 

    


    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    


    If
      to the
      Company:     Manhattan
      Pharmaceuticals, Inc.

    810
      Seventh Avenue, 4th
      Floor

    New
      York,
      NY 10019

    Facsimile:
      (212) 582-3957

    Attn:
      Chief Financial Officer

    Email:
      mgmcguinness@manhattanpharma.com 

    


    With
      a
      copy to:           Maslon
      Edelman Borman & Brand, LLP

    3300
      Wells Fargo Center

    90
      South
      7th Street

    Minneapolis,
      Minnesota 55402

    Facsimile:
      (612) 642-8343

    Attn:
      Christopher J. Melsha, Esq.

    Email:
      chris.melsha@maslon.com

    


    If
      to a
      Subscriber, at such address as such Subscriber shall have provided in writing
      to
      the Company or such other addresses as such Subscriber furnishes by notice
      given
      in accordance with this Section
      6.3 or
      such
      other address as may be designated in writing hereafter, in the same manner,
      by
      such Person. 

    


    6.4 Except
      as
      provided in Section
      5.11
      above,
      this Agreement shall not be changed, modified or amended except by a writing
      signed by the parties to be charged, and this Agreement may not be discharged
      except by performance in accordance with its terms or by a writing signed by
      the
      party to be charged.

    


    6.5 Subject
      to the provisions of Section
      5.9,
      this
      Agreement shall be binding upon and inure to the benefit of the parties hereto
      and to their respective heirs, legal representatives, successors and assigns.
      This Agreement sets forth the entire agreement and understanding between the
      parties as to the subject matter hereof and merges and supersedes all prior
      discussions, agreements and understandings of any and every nature among
      them.

    


    6.6 Upon
      the
      execution and delivery of this Agreement by the Subscriber, this Agreement
      shall
      become a binding obligation of the Subscriber with respect to the purchase
      of
      the Securities as herein provided; subject, however, to the right hereby
      reserved to the Company to reject this subscription in accordance with
Section
      2.16,
      enter
      into the same agreements with other subscribers and to add and/or delete other
      Persons as subscribers. 

    


    6.7 Notwithstanding
      the place where this Agreement may be executed by any of the parties hereto,
      the
      parties expressly agree that all the terms and provisions hereof shall be
      construed in accordance with and governed by the laws of the State of New York
      without regard to principles of conflicts of law.

    


    6.8 The
      holding of any provision of this Agreement to be invalid or unenforceable by
      a
      court of competent jurisdiction shall not affect any other provision of this
      Agreement, which shall remain in full force and effect. If any provision of
      this
      Agreement shall be declared by a court of competent jurisdiction to be invalid,
      illegal or incapable of being enforced in whole or in part, such provision
      shall
      be interpreted so as to remain enforceable to the maximum extent permissible
      consistent with applicable law and the remaining conditions and provisions
      or
      portions thereof shall nevertheless remain in full force and effect and
      enforceable to the extent they are valid, legal and enforceable, and no
      provisions shall be deemed dependent upon any other covenant or provision unless
      so expressed herein.

    


    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

       

    

    6.9 It
      is
      agreed that a waiver by either party of a breach of any provision of this
      Agreement shall not operate, or be construed, as a waiver of any subsequent
      breach by that same party.

    


    6.10 The
      parties agree to execute and deliver all such further documents, agreements
      and
      instruments and take such other and further action as may be necessary or
      appropriate to carry out the purposes and intent of this Agreement.

    


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

    


    6.12 (a) The
      Subscriber agrees not to issue any public statement with respect to the
      Subscriber’s investment or proposed investment in the Company or the terms of
      any agreement or covenant between them and the Company without the Company’s
      prior written consent, except such disclosures as may be required under
      applicable law or under any applicable order, rule or regulation.

    


    (b) The
      Company agrees not to disclose the names, addresses or any other information
      about the Subscriber, except as required by law or court order and to satisfy
      its obligations under Article
      5.

    


    6.13 The
      Subscriber represents and warrants that it has not engaged, consented to nor
      authorized any broker, finder or intermediary to act on its behalf, directly
      or
      indirectly, as a broker, finder or intermediary in connection with the
      transactions contemplated by this Agreement (other than the Placement Agent).
      The Subscriber hereby agrees to indemnify and hold harmless the Company from
      and
      against all fees, commissions or other payments owing to any such Person (other
      than the Placement Agent) acting on behalf of the Subscriber
      hereunder.

     

    6.14 This
      Agreement (including all exhibits, schedules and amendments hereto) (i)
      constitutes the entire Agreement and understandings of the parties hereto and
      supersedes all prior agreements and understandings, both written and oral,
      between the parties hereto with respect to the subject matter hereof and (ii)
      is
      not intended to confer upon any other Person other than the parties hereto
      any
      rights or remedies hereunder (except for the holders of Registrable Securities
      as set forth in Article
      5).

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    


    
      	
              7.

            	
              
                CONFIDENTIAL
                  INVESTOR QUESTIONNAIRE.

              

            


    

    


    7.1 The
      Subscriber represents and warrants that he, she or it comes within one category
      marked below, and that for any category marked, he, she or it has truthfully
      set
      forth, where applicable, the factual basis or reason the Subscriber comes within
      that category. ALL INFORMATION IN RESPONSE TO THIS SECTION WILL BE KEPT STRICTLY
      CONFIDENTIAL except as otherwise required by law or as necessary for inclusion
      in the Registration Statement. The undersigned agrees to furnish any additional
      information which the Company deems necessary in order to verify the answers
      set
      forth below.

    

      
        	
                Category
                  A___

              	
                The
                  undersigned is an individual (not a partnership, corporation, etc.)
                  whose
                  individual net worth, or joint net worth with his or her spouse,
                  presently
                  exceeds $1,000,000.

              
	 	 
	 	
                Explanation:
                  In calculating net worth you may include equity in personal property
                  and
                  real estate, including your principal residence, cash, short-term
                  investments, stock and securities. Equity in personal property
                  and real
                  estate should be based on the fair market value of such property
                  less debt
                  secured by such property.

              
	 	 
	
                Category
                  B___

              	
                The
                  undersigned is an individual (not a partnership, corporation, etc.)
                  who
                  had an income in excess of $200,000 in each of the two most recent
                  years,
                  or joint income with his or her spouse in excess of $300,000 in
                  each of
                  those years (in each case including foreign income, tax exempt
                  income and
                  full amount of capital gains and losses but excluding any income
                  of other
                  family members and any unrealized capital appreciation) and has
                  a
                  reasonable expectation of reaching the same income level in the
                  current
                  year.

              
	 	 
	
                Category
                  C___

              	
                The
                  undersigned is a director or executive officer of the Company which
                  is
                  issuing and selling the Securities.

              
	 	 
	
                Category
                  D___

              	
                The
                  undersigned is a bank; a savings and loan association; insurance
                  company;
                  registered investment company; registered business development
                  company;
                  licensed small business investment company (“SBIC”); or employee benefit
                  plan within the meaning of Title 1 of ERISA and (a) the investment
                  decision is made by a plan fiduciary which is either a bank, savings
                  and
                  loan association, insurance company or registered investment advisor,
                  or
                  (b) the plan has total assets in excess of $5,000,000 or (c) is
                  a self
                  directed plan with investment decisions made solely by persons
                  that are
                  accredited investors. (describe
                  entity)

              


      

      
        
           

          
            

          

        

        
          
            

          

        

      

       

    

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    


      
        	
                Category
                  E___

              	
                The
                  undersigned is a private business development company as defined
                  in
                  section 202(a)(22) of the Investment Advisors Act of 1940. (describe
                  entity)

              
	 	 
	 	 
	 	 
	
                Category
                  F___

              	
                The
                  undersigned is either a corporation, partnership, Massachusetts
                  business
                  trust, or non-profit organization within the meaning of Section
                  501(c)(3)
                  of the Internal Revenue Code, in each case not formed for the specific
                  purpose of acquiring the Securities and with total assets in excess
                  of
                  $5,000,000.(describe entity)

              
	 	 
	 	 
	 	 
	
                Category
                  G___

              	
                The
                  undersigned is a trust with total assets in excess of $5,000,000,
                  not
                  formed for the specific purpose of acquiring the Securities, where
                  the
                  purchase is directed by a “sophisticated investor” as defined in
                  Regulation 506(b)(2)(ii) under the Securities Act.

              
	 	 
	
                Category
                  H___

              	
                The
                  undersigned is an entity (other than a trust) in which all of the
                  equity
                  owners are “accredited investors” within one or more of the above
                  categories. If relying upon this Category alone, each equity owner
                  must
                  complete a separate copy of this Agreement. (describe
                  entity)

              
	 	 
	 	 
	
                Category
                  I___

              	
                The
                  undersigned is not within any of the categories above and is therefore
                  not
                  an accredited investor.

              


      

       

    

    The
      undersigned agrees that the undersigned will notify the Company at any time
      on
      or prior to the Closing Date in the event that the representations and
      warranties in this Agreement shall cease to be true, accurate and
      complete.

    


    7.2 SUITABILITY
      (please
      answer each question)

    


    (a)
       For
      an
      individual Subscriber, please describe your current employment, including the
      company by which you are employed and its principal business:

     

    
      
        

      

    

    
      
        

      

      
        

      

      
        

      

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

         

      

    

    (b)
       For
      an
      individual Subscriber, please describe any college or graduate degrees held
      by
      you:

     

    
      
        

      

    

    
      
        

      

      
        

      

    

    


    (c)
      For
      all Subscribers, please state whether you have you participated in other
private
      placements
      before:

    


    YES_______   NO_______

    


    (d)
      If
      your answer to question (d) above was “YES”, please indicate frequency of such
      prior participation in private
      placements
      of:

    

      
        	 	 	
                Public

              	
                 

              	
                Private

              	
                 

              	
                Public
                  or Private

              	
                 

              
	
                 

              	
                 

              	
                Companies

              	
                 

              	
                Companies

              	
                 

              	
                Biopharmaceutical
                  Companies

              	 
	 	 	 	 	 	 	 	 
	
                Frequently

              	 	                                 
                	 	          
                	 	                              
                	 
	
                Occasionally

              	 	                         
                	 	                      
                	 	                          
                	 
	
                Never

              	 	                       
                	 	                  
                	 	                
                	 


      

    

     

     (e)
       For
      individual Subscribers, do you expect your current level of income to
      significantly decrease in the foreseeable future:

    


    YES_______   NO_______

    


    (f)
       For
      trust, corporate, partnership and other institutional Subscribers, do you expect
      your total assets to significantly decrease in the foreseeable future:


    


    YES_______   NO_______

    


    (g)
       For
      all
      Subscribers, do you have any other investments or contingent liabilities which
      you reasonably anticipate could cause you to need sudden cash requirements
      in
      excess of cash readily available to you: 

    


    YES_______   NO_______

    


    (h)
       For
      all
      Subscribers, are you familiar with the risk aspects and the non-liquidity of
      investments such as the securities for which you seek to subscribe?

    


    YES_______   NO_______

    


    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

       

    

    (i)  For
      all
      Subscribers, do you understand that there is no guarantee of financial return
      on
      this investment, that an investment in the Securities is highly speculative
      and
      risky and that you run the risk of losing your entire investment?

    


    YES_______   NO_______

    


    (j)
       For
      all
      Subscribers, will you have sufficient readily available cash to fund your
      obligation to purchase Securities at the Closing pursuant to your subscription
      if and when the Closing occurs?

    


    YES_______   NO_______

    


    7.3 MANNER
      IN WHICH TITLE IS TO BE HELD.
      (circle
      one)

    


    (a)   Individual
      Ownership

    (b)   Community
      Property

    (c)   Joint
      Tenant with Right of 

    Survivorship
      (both parties

    must
      sign)

    (d)   Partnership*

    (e)   Tenants
      in Common

    (f)    Corporation*

    (g)   Trust*

    (h)   Limited
      Liability Company*

    (i)    Other

    


    *If
      Securities are being subscribed for by an entity, the attached Certificate
      of
      Signatory must also be completed.

    


    7.4 NASD
      AFFILIATION.

    


    Are
      you
      affiliated or associated with an NASD member firm (please check
      one):

    


    Yes
      _________  No
      __________

    


    If
      Yes,
      please describe:

    _________________________________________________________

    _________________________________________________________

    _________________________________________________________

    


    *If
      Subscriber is a Registered Representative with an NASD member firm, have the
      following acknowledgment signed by the appropriate party:

    


    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    


    The
      undersigned NASD member firm acknowledges receipt of the notice required by
      NASD
      Rule 3050.

    


    
      
        

      

    

    Name
      of
      NASD Member Firm

    


    By:

    
      

    

    Authorized
      Officer

    


    Date:
      

    
      
 

    


    7.5 The
      undersigned is informed of the significance to the Company of the foregoing
      representations and answers contained in the Confidential Investor Questionnaire
      contained in this Article
      7
      and such
      answers have been provided under the assumption that the Company will rely
      on
      them.

    


    Signature:  

    
      

    

     

    
      

    

    (If
      purchased jointly)

    


    Print
      Name: 

    
      

    

    


    
      

    

    (If
      purchased jointly)

    


    Date:

    
      

    

    


    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGES TO FOLLOW]

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    


    [Subscriber
      Signature Page]

    


    Aggregate
      Purchase Price: $_________________ / Market Price =
       _________ Shares

    _________Warrant

                        
      Shares

    

      
        	 	 	 
	
                Signature

              	 	
                Signature
                  (if purchasing jointly)

              
	 	 	 
	
                Name
                  Typed or Printed

              	 	
                Name
                  Typed or Printed

              
	 	 	 
	
                Entity
                  Name

              	 	
                Entity
                  Name

              
	 	 	 
	
                Address

              	 	
                Address

              
	 	 	 
	
                City,
                  State and Zip Code

              	 	
                City,
                  State and Zip Code

              
	 	 	 
	
                Telephone-Business

              	 	
                Telephone--Business

              
	 	 	 
	
                Telephone-Residence

              	 	
                Telephone--Residence

              
	 	 	 
	
                Facsimile-Business

              	 	
                Facsimile--Business

              
	 	 	 
	
                Facsimile-Residence

              	 	
                Facsimile—Residence

              
	 	 	 
	
                Email
                  Address

              	 	
                Email
                  Address

              
	 	 	 
	
                Tax
                  ID # or Social Security # 

              	 	
                Tax
                  ID # or Social Security #

              


      

    

    


    Name
      in
      which securities should be issued:

    
      
        

      

    

    


    Dated:    __________________
      ,
      2007

    


    
      	INVESTORS:	
              PLEASE
                COMPLETE THE REGISTRATION QUESTIONNAIRE ATTACHED HERETO AS APPENDIX
                A.

            


    

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    [Company
      Signature Page]

    


    This
      Subscription Agreement is agreed to and accepted by the Company as of
      _____________, 2007.  

    
      	 	 	 
	 	
              MANHATTAN
                PHARMACEUTICALS, INC.

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
Name:
	 	Title:




    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    


    CERTIFICATE
      OF SIGNATORY

    


    (To
      be
      completed if Securities are

    being
      subscribed for by an entity)


    


    I,____________________________,
      am the____________________________ of __________________________________________
      (the “Entity”).

    


    I
      certify
      that I am empowered and duly authorized by the Entity to execute and carry
      out
      the terms of the Subscription Agreement and to purchase and hold the Securities,
      and certify further that the Subscription Agreement has been duly and validly
      executed on behalf of the Entity and constitutes a legal and binding obligation
      of the Entity.

    


    IN
      WITNESS WHEREOF, I have set my hand this ______ day of _________________,
      2007.

     

    
      	 	 	 
	 	
              

              (Signature)

            


    

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    


    APPENDIX
      A

    


    Manhattan
      Pharmaceuticals, Inc.

    


    REGISTRATION
      QUESTIONNAIRE 

    FOR

    SELLING
      STOCKHOLDERS

    


    


    Name:
      ________________________________

    (Please
      Print)

    


    This
      questionnaire is intended to provide information for a registration statement
      (the “Registration
      Statement”)
      to be
      filed by Manhattan Pharmaceuticals, Inc. (the “Company”)
      covering the resale of the Shares and Warrant Shares acquired by you as
      contemplated by the accompanying Subscription Agreement. Please complete
      (attaching separate sheets if additional space is needed), date and sign this
      questionnaire and return it together with your completed subscription agreement.
      

    


    PLEASE
      ANSWER EVERY QUESTION. If a question is inapplicable to you, please so state
      by
      inserting “N/A.” If you are in doubt whether a particular question requires an
      affirmative response from you, please furnish full particulars so that those
      persons responsible for preparing the Registration Statement and Prospectus
      can
      determine whether any disclosure based on your answer is required. Information
      requested in this questionnaire is as of the date you complete the
      questionnaire, unless otherwise indicated. Your furnishing such information
      does
      not necessarily mean that such information will be disclosed.

    


    DEFINITIONS

    


    Your
      answers to this questionnaire should be made upon the basis of the following
      definitions of terms used in this questionnaire:

    


    The
      term
“beneficial
      owner”
of
      a
      security includes any Person who, directly or indirectly, through any contract,
      arrangement, understanding, relationship or otherwise has or shares
      (1) voting
      power,
      which
      includes the power to vote, or direct the voting of, such security or
      (2) investment
      power,
      which
      includes the power to dispose or direct the disposition of such security. A
      Person may be regarded as having voting power of a security which is owned
      (i)
      by his spouse or minor children or by any of his relatives or his spouse’s
      relatives who share the same home with him, (ii) a partnership of
      which he is a partner or (iii) a corporation of which he is a substantial
      shareholder. A Person is also deemed to be the beneficial owner of shares which
      that Person has the right to acquire within 60 days, including but not limited
      to any right to acquire through the exercise of an option, through conversion
      of
      a security, pursuant to the power to revoke a trust or pursuant to the automatic
      termination of a trust. Please also disclose any other rights, which you have
      to
      acquire securities of the Company on or before June 30, 2007.

    


    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

       

    

    The
      term
“material,”
when
      used to qualify a requirement for the furnishings of information as to any
      subject, limits the information required to those matters about which the
      average prudent investor should reasonably be informed before buying or selling
      the securities of the Company. If you are in doubt as to the materiality of
      certain information, you should relate sufficient facts to enable the Company
      and its advisors to reach a conclusion as to its materiality.

    


    The
      term
“Person”
means
      any person, individual, corporation, limited liability company, partnership,
      trust or other governmental agency, court, authority or other body (whether
      foreign, federal, state, local or otherwise.

    


    QUESTIONS

    


    QUESTION
      1:

    


    State
      your present position or positions with the Company (if any), including
      membership on any audit, personnel, compensation or similar committee or
      committees; any positions with the Company held by you during the previous
      three
      years; and any positions with the Company to which you have been elected or
      appointed but the duties of which you have not yet assumed. For each position,
      list the term or expected term of office.

    


    ANSWER:

    


    QUESTION
      2:

    


    Other
      than Shares and Warrant Shares that you will acquire in connection with the
      Offering,
      provide
      below information regarding the equity securities of the Company of which you
      are the “beneficial owner.” Please
      refer to the definition of “beneficial owner,” above.
      Under
      the column “Nature of Ownership,” please indicate amounts of securities for
      which you have (a) sole voting power, (b) shared voting power, (c) sole
      investment power, or (d) shared investment power. If your response covers any
      securities included because you have the right to acquire them on or before
      June
      30, 2007, please separately indicate the amount of such securities. Also, if
      you
      hold more than 5% of the Company’s securities pursuant to a voting trust or
      similar agreement, please separately state the amount of such securities held
      or
      to be held pursuant to the trust or agreement, the duration of the agreement
      and
      the names and addresses of the voting trustees, outlining briefly their voting
      rights and other powers under the trust or agreement. 

    


    ANSWER
      (attach additional pages if necessary):

    


    
      	
              Number
                of

            	 	
              Nature
                of

            	 	 
	
              Shares

            	 	
              Ownership

            	 	
              Title
                of
                Securities

            


    

    
QUESTION
      3:

    


    If
      you
      plan to offer your shares of Common Stock through the selling efforts of brokers
      or dealers, describe the terms (and attach copies) of any agreement,
      arrangement, or understanding entered into with broker(s) or dealer(s),
      including volume limitations on sales, parties to the agreement and the
      conditions under which the agreement may be terminated. If known, identify
      the
      broker(s) or dealer(s), which will participate in the offering and state the
      amount to be offered through each.

    


    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

       

    

    ANSWER:

    


    QUESTION
      4:

    


    Describe
      below any information known to you, and if none state “none,” pertaining to
      underwriting compensation and arrangements or any dealings between any
      underwriter or related person, member of the NASD or a person associated with
      a
      member of the NASD, and the Company or any controlling stockholder thereof
      since
      January 1, 2005.

     

    ANSWER:

    


    QUESTION
      5:

    


    State
      below whether you or any of your associates are a member of NASD, a controlling
      shareholder of a member, a person associated or affiliated with a member or
      an
      underwriter or related person with respect to the proposed offering. If you
      responded “yes,” describe such relationship:

    


    ANSWER:


    


    QUESTION
      6:

    


    Are
      you a
      broker-dealer?

    


    ANSWER:  Yes
      ______ No______


    


    QUESTION
      7:

    


    If
      you
      are not a broker-dealer, are you affiliated with a broker-dealer?

    


    ANSWER:  Yes
      ______ No______

    


    QUESTION
      8:

    


    If
      you
      are a broker-dealer or are affiliated with a broker-dealer, did you purchase
      the
      securities in the ordinary course of business?

    


    
      
        
        

      

      
        A-3

        
          

        

      

      
        
        

      

       

    

    ANSWER:  Yes
      ______ No______


    


    QUESTION
      9:

    


    If
      you
      are a broker-dealer or are affiliated with a broker-dealer, did you have any
      agreements or understandings, directly or indirectly, with any person to
      distribute the securities at the time that you purchased the
      securities?

    


    ANSWER:  Yes
      ______ No______


    


    Please
      note that the SEC takes the position that if you are a broker-dealer, you are to
      be identified in the Registration Statement as an underwriter. In the “Plan of
      Distribution,” the Registration Statement will provide substantially as
      follows:

    


    “The
      selling stockholders and any broker-dealers, agents or underwriters that
      participate with the selling stockholders in the distribution of the issued
      and
      outstanding shares of common stock or the shares of stock issuable upon exercise
      of warrants may be deemed to be “underwriters” within the meaning of the
      Securities Act, in which event any commissions received by these broker-dealers,
      agents or underwriters and any profits realized by the selling stockholders
      on
      the resales of the securities may be deemed to be underwriting commissions
      or
      discounts under the Securities Act. Selling stockholders who are broker-dealers
      are deemed to be underwriters. If any selling stockholders are deemed to be
      underwriters, the selling stockholders may be subject to certain statutory
      and
      regulatory liabilities, including liabilities imposed pursuant to Sections
      11,
      12 and 17 of the Securities Act and Rule 10b-5 under the Exchange Act.”



     

    QUESTION
      10:

     

    Are
      their
      specific individuals who have voting or investment control over the securities?
      If you are an entity, you must answer “yes” to this question and identify such
      individual(s) by name below.

     

    ANSWER:  Yes
      ______ No______

    


    If
      you
      answered “yes”, please list the names of such individuals: 

     

    
      
        

      

    

    
      
        

      

    

    


    
      
        
        

      

      
        A-4

        
          

        

      

      
        
        

      

      
        


        The
          answers to the foregoing questions are true and correct to the best of
          the
          undersigned’s knowledge, information and belief. The undersigned agrees to
          promptly notify the Company in writing in care of the Chief Financial Officer
          of
          (a) any transfer by you of your Shares or Warrants, (b) sales of common
          stock of
          the Company (giving the number of shares sold and the name of the broker-dealer
          used) and (c) any other changes in the answers to this questionnaire that
          should
          be made as a result of any material development occurring subsequent to
          the date
          hereof.

      

       

    

    Dated:
      ___________, 2007.

    
      
        	 	 	 
	 	
                
Signature


      

       

      
        
          
          

        

        
          A-5

          
            

          

        

        
          
          

        

      

    


    Appendix
      B

     

    Form
      of Legal Opinion

    


    1. The
      Company is a corporation duly incorporated, validly existing and in good
      standing under the laws of the State of Delaware and has all requisite corporate
      power and authority to carry on its business and to own its property as now
      conducted and owned. 

    


    2. The
      Company has full power and authority, and all requisite corporate action on
      the
      part of the Company has been taken, which is necessary for (a) the
      authorization, execution and delivery of the Transaction Documents and (b)
      the
      performance of all obligations of the Company under the Transaction
      Documents.

    


    3. The
      Transaction Documents have been duly authorized, executed and delivered on
      behalf of the Company and constitute the valid and binding obligations of the
      Company, enforceable against it in accordance with their respective
      terms.

    


    4. The
      Securities to be sold by the Company pursuant to the Subscription Agreements,
      when issued and delivered in accordance with the provisions of the Subscription
      Agreements, including payment by the investors therefor, will be duly
      authorized, validly issued, fully paid and nonassessable and, to our knowledge,
      none of them will have been issued in violation of any preemptive right or
      any
      similar right. Upon delivery of and payment for the Securities in accordance
      with the Subscription Agreements, each Purchaser will receive good title to
      the
      Securities purchased by it, free and clear of all encumbrances and restrictions,
      other than restrictions on transfer imposed by applicable securities laws.
      

    


    5. The
      Warrant Shares have been duly authorized and reserved for issuance and, when
      issued and delivered upon exercise of the Warrants in accordance with the terms
      thereof, will be duly authorized, validly issued, fully paid and nonassessable
      and, to our knowledge, none of them will have been issued in violation of any
      preemptive right or any similar right. Upon delivery of and payment for the
      Warrant Shares in accordance with the terms of the Warrants, each recipient
      of
      the respective Warrant Shares will receive good title to such shares, free
      and
      clear of all encumbrances and restrictions, other than restrictions on transfer
      imposed by applicable securities laws.

    


    6. The
      Placement Warrant Shares (as defined in the Agency Agreement) have been duly
      authorized and reserved for issuance and, when issued and delivered upon
      exercise of the Placement Warrants (as defined in the Agency Agreement), will
      be
      duly authorized, validly issued, fully paid and nonassessable and, to our
      knowledge, none of them will have been issued in violation of any preemptive
      right or any similar right. Upon delivery of and payment for the Placement
      Warrant Shares in accordance with the Placement Warrants, each recipient of
      the
      respective securities will receive good title to such shares, free and clear
      of
      all encumbrances and restrictions, other than restrictions on transfer imposed
      by applicable securities laws. 

    


    7. The
      execution, delivery and performance by the Company of the Subscription
      Agreements and the offer, issuance and sale of the Securities and the Placement
      Warrants require no consent of, action by or in respect of, or filing with,
      any
      person, court, governmental body, agency, or official, other than filings (if
      any) required to be made pursuant to applicable state securities laws and
      post-sale filings pursuant to applicable state and federal securities
      laws.

    


    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

       

    

    8. Subject
      to the Agent’s compliance with applicable securities laws and to the accuracy of
      the representations and warranties of each Purchaser made in such purchaser’s
      Subscription Agreement, the offer, issuance, sale and delivery of the Shares
      and
      the Placement Warrants under the circumstances contemplated by the Transaction
      Documents constitute exempt transactions under Rule 506 of Regulation D under
      the Securities Act of 1933, as amended (the “Securities
      Act”),
      and
      do not require registration under the Securities Act.

    


    9. The
      execution, delivery and performance of the Subscription Agreements by the
      Company and the issuance and sale of the Securities and Placement Warrants
      will
      not result in a breach or violation of any of the terms and provisions of,
      or
      constitute a default under (1) any statute, rule, regulation or, to our
      knowledge, order of any governmental agency or body of any court, domestic
      or
      foreign, having jurisdiction over the Company, or (2) the Certificate of
      Incorporation or By-Laws of the Company.

    


    10. Except
      as
      described in the Subscription Agreements or Memorandum, to our knowledge, there
      are no legal or governmental proceedings pending or threatened to which the
      Company is a party or to which the property of the Company is subject, which
      singly or in the aggregate could have a material adverse effect on the Company’s
      results of operations or condition (financial or otherwise).

    


    
      
        
        

      

      
        B-2