Document:

Exhibit
      10.4

    

    DEFAULT
      AGREEMENT

    

    Default
      Agreement, dated as of November 19, 2008, by and among Manhattan
      Pharmaceuticals, Inc. (the “Company”),
      a
      Delaware corporation, with a principal address at 48 Wall Street, Suite 1100,
      New York, New York 10005, and the persons and entities listed on Schedule
      A
      hereto
      (individually, a “Lender”
and,
      collectively, the “Lenders”).

    

    WHEREAS,
      the Company holds 500 shares (the “Shares”)
      of
      Hedrin Pharmaceuticals K/S, a Danish limited partnership (the “Partnership”);
      

    

    WHEREAS,
      the Lenders are the holders of the Company’s 12% Senior Secured Notes (the
“Notes”)
      in the
      principal amounts set forth opposite their names on Schedule A
      hereto;

    

    WHEREAS,
      in connection with the issuance and sale of the Notes, the Company has entered
      into a Security Agreement, dated as of November 19, 2008 (the “Security
      Agreement”),
      with
      the Lenders, pursuant to which the Company has granted to the Lenders a security
      interest in all of the Company’s assets, other than the Shares; 

    

    WHEREAS,
      the Company wishes to provide, as additional security for its Secured
      Obligations (as defined in the Security Agreement) under the Notes, for the
      sale
      of the Shares to the extent necessary to generate proceeds for the payment
      of
      amounts due under the Notes in the event of an Event of Default (as defined
      in
      the Notes) under the Notes, and

    

    NOW,
      THEREFORE, in consideration of the premises and for other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      and
      to induce the Lenders to make the loans under the Notes, the Company hereby
      agrees with the Lenders as follows:

    

    1. Defined
      Terms.
      Capitalized terms used herein and not otherwise defined herein shall have the
      respective meanings ascribed thereto in the Security Agreement.

    

    2. Rights
      Upon an Event of Default.
      

    

    (a) Pursuant
      to and in accordance with the Security Agreement, the Collateral Agent, if
      and
      when so appointed (and if not appointed, the Required Lenders) shall act for
      and
      on behalf of the Lenders as Collateral Agent under this Default Agreement and
      has been appointed the Company’s attorney in fact, with full authority in the
      place and stead of the Company and in the name of the Company to take any and
      all action including, but not limited to, executing any and all instruments
      that
      the Collateral Agent may deem necessary and/or advisable under this Default
      Agreement, as applicable, to enforce Lenders’ rights hereunder.

    

    (b) Upon
      an
      Event of Default, the Collateral Agent shall have the right, subject to
Section
      3
      below,
      with respect to the Shares to give the Company a written notice (the
“Sale
      Notice”)
      that
      all or a portion (as necessary) of the Shares must be immediately sold in order
      to generate proceeds to fulfill any and all Secured Obligations of the Company
      to the Lenders. The Sale Notice may be revoked at any time by written notice
      solely by the Collateral Agent and shall be rescinded and null and void if
      and
      at such time as there is no longer any outstanding uncured Event of
      Default.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (c) After
      receipt of the Sale Notice, the Company shall promptly use its commercially
      reasonable efforts to sell all or a portion (as necessary to pay the Secured
      Obligations) of the Shares to an unaffiliated third party (a “Third
      Party Purchaser”)
      on an
      arms’ length basis. The Company may undertake any reasonable process for selling
      the Shares and the Company shall not be required to retain any investment
      banker, finder, or other financial advisor in connection with the sale of the
      Shares. Any sale of Shares to a Third Party Purchaser shall be subject to the
      approval of the Board of Directors of the Company in the exercise of its
      fiduciary obligations under applicable law. 

    

    (d) To
      the
      extent that the Company is unsuccessful in entering into an agreement with
      a
      Third Party Purchaser with respect to a sale of the Shares within sixty (60)
      days of the Sale Notice, the Company shall on the sixty first (61st)
      day (or
      earlier) inform the Lenders in writing of such fact and, and the Placement
      Agent
      and/or the Required Lenders shall have the option of accepting Shares in
      fulfillment of the Secured Obligations, or requiring the Company to engage
      an
      investment banking firm, acceptable to either the Placement Agent or the
      Required Lenders, to complete the sale of Shares to a Third Party Purchaser.
      Any
      acceptance of Shares by the Lenders, or requirement to engage an investment
      banker, shall be made in writing by the Collateral Agent and shall be binding
      on
      all Lenders. The number of Shares to be transferred to the Lenders shall be
      determined by dividing the amount of the Secured Obligations to be paid by
      the
      fair market value of a Share. The fair market value of a Share shall be
      determined by a reputable investment banker (the “Banker”),
      unaffiliated with the Company or any of the Lenders, and chosen by the Board
      of
      Directors of the Company and reasonably acceptable to the Collateral Agent.
      The
      Company shall pay the fees and expenses of the Banker.

    

    (e) In
      the
      event that (i) the value of all the Shares, together with the value of cash
      and
      other assets available to apply to the Secured Obligations is greater than
      the
      Secured Obligations and (ii) the Collateral Agent provides notice to the Company
      that the Lenders will accept Shares as partial fulfillment of the Secured
      Obligations, then to the extent that any of the Company’s cash and other assets
      do not fulfill all of the Secured Obligations of the Company to the Lenders
      then
      the Company shall, transfer such number of Shares equal to the value of any
      remaining outstanding Secured Obligations to the Lenders as fulfillment of
      any
      remaining outstanding Secured Obligations of the Company. Any Shares, cash
      and
      other property transferred to the Lenders shall (unless otherwise agreed by
      the
      Company and all the Lenders) be allocated to the Lenders pro rata based on
      the
      amount of Secured Obligations owed to each such Lender so that, each Lender
      shall receive the same combination of Shares, cash and other
      property.

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    

    3. Joint
      Venture Agreements.

    

    (a) Reference
      is made to the Limited Partnership Agreement of the Partnership, dated February,
      2008, as amended (the “Partnership
      Agreement”),
      and
      the Shareholders’ Agreement, dated February 2008, as amended (the “Shareholders’
      Agreement”)
      of
      Hedrin Pharmaceuticals General Partner ApS (the “General
      Partner”),
      among
      the holders of shares of the General Partner. It is acknowledged and agreed
      that, in accordance with the Shareholders’ Agreement, any transfer of Shares
      must be accompanied by a transfer of a pro rata number of shares of the General
      Partner (“General
      Partner Shares”).
      Any
      transfer of Shares hereunder and a corresponding transfer of General Partner
      Shares, including any sale to a Third Party Purchaser or transfer to the
      Lenders, shall be subject to compliance with the terms of the Partnership
      Agreement and the Shareholders’ Agreement. Without limiting the foregoing, the
      Lenders acknowledge that (i) the Shares are subject to a right of first refusal
      in favor of the other limited partners of the Partnership as set forth in the
      Partnership Agreement, (ii) the other limited partners of the Partnership have
      certain tag-along rights (“Tag-Along
      Rights”)
      with
      respect to transfers of the Shares as set forth in the Partnership Agreement
      and
      (iii) the Shareholders’ Agreement contains certain restrictions on transfer of
      the General Partner Shares. In addition, under the Joint Venture Agreement,
      dated January 31, 2008, as amended, by and between the Company and Nordic
      Biotech Venture Fund II K/S (“Nordic”),
      Nordic has certain rights to sell its shares in the Partnership and the General
      Partner (the “Put
      Rights”)
      to the
      Company.

    

    (b) The
      Company shall have no liability hereunder to the extent that any sale or
      transfer of the Shares contemplated by this Agreement is not completed because
      of any action or inaction by the other limited partners of the Partnership
      or
      shareholders of the General Partner, including due to any exercise by Nordic
      of
      its Put Rights or Tag-Along Rights. In the event that any action or inaction
      by
      the other limited partners of the Partnership or shareholders of the General
      Partnership, are in violation of the Partnership Agreement or the Shareholders’
Agreement, as the case may be, the Company will use its reasonable commercial
      efforts to cause such parties to comply with the terms of the Partnership
      Agreement and/or the Shareholders’ Agreement, as applicable. The Company may, in
      its sole discretion, cease all efforts to sell Shares (and General Partner
      Shares) to a Third Party Purchaser or transfer Shares (and General Partner
      Shares) to the Lenders hereunder, without any liability to the Lenders
      hereunder, if Nordic exercises any of its Put Rights or Tag-Along Rights.

    

    (c) Nothing
      contained herein shall be deemed a transfer, attempted transfer, lien, pledge
      or
      other encumbrance on the Shares or the General Partner Shares. Nothing contained
      herein shall prevent, or require any Lender consent for, the Company’s exercise
      of all rights and privileges of a shareholder of the Partnership or the General
      Partner with respect to the Shares and General Partner Shares, including any
      sale of the Shares or the General Partner Shares. 

    

    (d) In
      accordance with the Partnership Agreement, upon any transfer of the Shares
      and
      General Partner Shares to the Lenders, the Lenders shall execute and adhere
      to
      the Partnership Agreement and the Shareholders’ Agreement. BY
      EXECUTING THIS AGREEMENT EACH LENDER AGREES THAT UPON EXECUTION OF THE
      PARTNERSHIP AGREEMENT AND THE SHAREHOLDERS’ AGREEMENT BY THE COLLATERAL AGENT,
      SOLELY ON BEHALF OF THE LENDERS, EACH LENDER SHALL BE BOUND BY THE PARTNERSHIP
      AGREEMENT AND THE SHAREHOLDERS’ AGREEMENT AS IF HE, SHE OR IT WERE A PARTY
      SIGNATORY THERETO. 

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    

    4. Paragraph
      Headings.
      The
      paragraph headings used in this Agreement are for convenience of reference
      only
      and are not to affect the construction hereof or be taken into consideration
      in
      the interpretation hereof. 

    

    5. No
      Waiver; Cumulative Remedies.
      The
      Lenders shall not by any act, delay, indulgence, omission or otherwise be deemed
      to have waived any right or remedy hereunder or to have acquiesced in any Event
      of Default or in any breach of any of the terms and conditions hereof. No
      failure to exercise, nor any delay in exercising, on the part of the Lenders,
      any right, power or privilege hereunder shall operate as a waiver thereof.
      No
      single or partial exercise of any right, power or privilege hereunder shall
      preclude any other or further exercise thereof or the exercise of any other
      right, power or privilege. A waiver by the Lenders of any right or remedy
      hereunder on any one occasion shall not be construed as a bar to any right
      or
      remedy which the Lenders would otherwise have on any future occasion. The rights
      and remedies herein provided are cumulative, may be exercised singly or
      concurrently and are not exclusive of any rights or remedies provided by law.
      

    

    6. Waivers
      and Amendments; Successors and Assigns.
      None of
      the terms or provisions of this Agreement may be waived, amended, supplemented
      or otherwise modified except by a written instrument executed by the Company
      and
      the Collateral Agent. This Agreement shall be binding upon the successors and
      assigns of the Borrower; provided that any Third Party Purchaser of the Shares
      or the General Partner Shares shall not be bound by this Agreement, and, subject
      to the foregoing, shall inure to the benefit of the Lenders and their respective
      successors and assigns. 

     

    7. Notices.
      Any
      notice required or permitted hereunder shall be given in writing and shall
      be
      deemed effectively given: (a) when personally delivered, (b) five (5) days
      after
      having been deposited in the United States mail, certified or registered, return
      receipt requested, postage prepaid, or (c) one (1) business day after having
      been dispatched by a nationally recognized overnight courier service, addressed
      to (i) in the case of the Company, at its address as set forth above and (ii)
      in
      the case of the Lenders, at the addresses set forth on Schedule
      A
      to this
      Agreement.

     

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

     

    9. Termination.
      This
      Agreement shall terminate and be of no further force or effect at such time
      as
      the Company shall have fully satisfied its Secured Obligations or shall have
      disposed of all of the Shares. 

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
      first above written. 

    

    
      	  
               	
              MANHATTAN
                PHARMACEUTICALS, INC.

            
	 	 	 
	
               

            	
              By:  

            	
              /s/
                Michael McGuinness

            
	
               

            	
              Name:
                Michael McGuinness

              Title:
                Chief Financial Officer

            

    

    

    
      	
               

            	
              LENDERS:

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

            

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    ANNEX
      A

    

    Investor
      Counterpart Signature Page

    

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

    

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Neel B. Ackerman

            
	 	 	 
	
              Signature:

            	 	
              Signature: /s/
                Neel B. Ackerman

            
	 	 	 
	
              Date:

            	 	
              Date:
                October 27, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name: Martha N. Ackerman

            
	 	 	 
	
              Title:

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

            
	 	 	 
	 	 	
              Date:
                October 27, 2008

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity: Stephen M. Burnich 

                                                 
                     Revocable Trust u/a 10/08/04

            	 	
              Print
                Name:

            
	 	 	 
	
              Signature: /s/
                Stephen M. Burnich

            	 	
              Signature:

            
	 	 	 
	
              Date: October
                29, 2008

            	 	
              Date:

            
	 	 	 
	
              Print
                Name: Stephen M. Burnich

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title: Trustee

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Ennio De Pianto

            
	 	 	 
	
              Signature:

            	 	
              Signature: /s/
                Ennio De Pianto

            
	 	 	 
	
              Date:

            	 	
              Date: October
                29, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Matthew Ernst

            
	 	 	 
	
              Signature:

            	 	
              Signature: /s/
                Matthew Ernst

            
	 	 	 
	
              Date:

            	 	
              Date: October
                29, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	
               

            
	 	 	
              Date:

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity: John M. Goodman Living Trust

            	 	
              Print
                Name:

            
	 	 	 
	
              Signature: /s/
                John M. Goodman

            	 	
              Signature:

            
	 	 	 
	
              Date: November
                4, 2008

            	 	
              Date:

            
	 	 	 
	
              Print
                Name: John M. Goodman

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title: Trustee

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Leon Kanner

            
	 	 	 
	
              Signature:

            	 	
              Signature: /s/
                Leon Kanner

            
	 	 	 
	
              Date:

            	 	
              Date:
                October 29, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name: Rosemary Kanner

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature: /s/ Rosemary Kanner

            
	 	 	 
	 	 	
              Date:
                October 29, 2008

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Richard Kindt

            
	 	 	 
	
              Signature:

            	 	
              Signature: /s/
                Ricahrd Kindt

            
	 	 	 
	
              Date:

            	 	
              Date:
                October 29, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Douglas E. Pritchett

            
	 	 	 
	
              Signature:

            	 	
              Signature: /s/
                Douglas E. Pritchett

            
	 	 	 
	
              Date:

            	 	
              Date:
                October 31, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Jerome A. Shinkay

            
	 	 	 
	
              Signature:

            	 	
              Signature: /s/
                Jerome A. Shinkay

            
	 	 	 
	
              Date:

            	 	
              Date:
                October 31, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Michael J. Spezia

            
	 	 	 
	
              Signature:

            	 	
              Signature: /s/
                Michael J. Spezia

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 3, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: George D. Wilson

            
	 	 	 
	
              Signature:

            	 	
              Signature: /s/
                George D. Wilson

            
	 	 	 
	
              Date:

            	 	
              Date:
                October 27, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name: Diane J. Wilson

            
	 	 	 
	
              Title:

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

            
	 	 	 
	 	 	
              Date:
                October 27, 2008

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Joseph L. Jerger

            
	 	 	 
	
              Signature:

            	 	
              Signature: /s/
                Joseph L. Jerger

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 6, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: David Pudelsky

            
	 	 	 
	
              Signature:

            	 	
              Signature: /s/
                David Pudelsky

            
	 	 	 
	
              Date:

            	 	
              Date: November
                6, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name: Nancy Pudelsky

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature: /s/ Nancy Pudelsky

            
	 	 	 
	 	 	
              Date:
                November 6, 2008

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: James R. Buck

            
	 	 	 
	
              Signature:

            	 	
              Signature: /s/
                James R. Buck

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 6, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: John O. Dunkin

            
	 	 	 
	
              Signature:

            	 	
              Signature: /s/
                John O. Dunkin

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 4, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity: NFS/FMTC SEP IRA FBO

                                                 
                Jay Jennings

            	 	
              Print
                Name:

            
	 	 	 
	
              Signature: /s/
                Jay Jennings

            	 	
              Signature:

            
	 	 	 
	
              Date: October
                29, 2008

            	 	
              Date:

            
	 	 	 
	
              Print
                Name: Jay Jennings

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title: IRA
                Owner

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity: Landmark Community Bank

                                                 
                Collateral Account FBO

                                                 
                Estate of Catherine Nasser

            	 	
              Print
                Name:

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

            	 	
              Signature:

            
	 	 	 
	
              Date: November
                4, 2008

            	 	
              Date:

            
	 	 	 
	
              Print
                Name: William K. Nasser, Jr.

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title: 
                Attorney-in-fact

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity: Nasser Family Trust

            	 	
              Print
                Name:

            
	 	 	 
	
              Signature: /s/
                William K. Nasser

            	 	
              Signature:

            
	 	 	 
	
              Date: November
                4, 2008

            	 	
              Date:

            
	 	 	 
	
              Print
                Name: William K. Nasser

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title: Trustee

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: James R. Kahn

            
	 	 	 
	
              Signature:

            	 	
              Signature: 
                /s/ James R. Kahn

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 12, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name: Debra A. Kahn

            
	 	 	 
	
              Title:

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

            
	 	 	 
	 	 	
              Date:
                November 12, 2008

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: A. Starke Taylor, Jr.

            
	 	 	 
	
              Signature:

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

            
	 	 	 
	
              Date:

            	 	
              Date:
                October 7, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name: Carolyn Taylor

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature: /s/ Carolyn Taylor

            
	 	 	 
	 	 	
              Date:
                October 7, 2008

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Mark Vollmer

            
	 	 	 
	
              Signature:

            	 	
              Signature: /s/
                Mark Vollmer

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 11, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Robert J. Guercio

            
	 	 	 
	
              Signature:

            	 	
              Signature: 
                /s/ Robert J. Guercio

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 6, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	
               

            	 	
              Date:

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	
               

            
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Ralph Hanby

            
	 	 	
               

            
	
              Signature:

            	 	
              Signature: 
                /s/ Ralph Hanby

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 13, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Robert E. Jacobson

            
	 	 	 
	
              Signature:

            	 	
              Signature: 
                /s/ Robert E. Jacobson

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 10, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name: Saralee Jacobson

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature: /s/ Saralee Jacobson

            
	 	 	 
	 	 	
              Date:
                November 10, 2008

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Michael Cushing

            
	 	 	 
	
              Signature:

            	 	
              Signature: 
                /s/ Michael Cushing

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 13, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Raymond Yarusi, Jr.

            
	 	 	 
	
              Signature:

            	 	
              Signature: 
                /s/ Raymond Yarusi, Jr.

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 12, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: James C. Orr

            
	 	 	 
	
              Signature:

            	 	
              Signature: 
                /s/ James C. Orr

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 9, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Vernon L. Simpson

            
	 	 	 
	
              Signature:

            	 	
              Signature: 
                /s/ Vernon L. Simpson

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 17, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity: Michael Yokoyama & Jaye 

                                                 
                Ventui Family Trust

            	 	
              Print
                Name:

            
	
               

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

            	 	
              Signature:

            
	 	 	 
	
              Date: November
                12, 2008

            	 	
              Date:

            
	 	 	 
	
              Print
                Name: Michael Yokoyama & Jaye Ventui

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title: Co-Trustees

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Frederick Peet

            
	 	 	 
	
              Signature:

            	 	
              Signature: 
                /s/ Frederick Peet

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 7, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Ronald Rasmussen

            
	 	 	 
	
              Signature:

            	 	
              Signature: 
                /s/ Ronald Rasmussen

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 12, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Lewis R. Jacobson

            
	 	 	 
	
              Signature:

            	 	
              Signature: 
                /s/ Lewis R. Jacobson

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 17, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Mark B. Ginsburg

            
	 	 	 
	
              Signature:

            	 	
              Signature: /s/
                Mark B. Ginsburg

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 18, 2008

            
	
               

            	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Gregory Dovolis

            
	 	 	 
	
              Signature:

            	 	
              Signature: /s/
                Greogory Dovolis

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 3, 2008

            
	 	 	
               

            
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: William S. Silver

            
	 	 	 
	
              Signature:

            	 	
              Signature: 
                /s/ William S. Silver

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 5, 2008

            
	
               

            	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Praful Desai

            
	 	 	 
	
              Signature:

            	 	
              Signature: 
                /s/ Praful Desai

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 5, 2008

            
	
               

            	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity:

            	 	
              Print
                Name: Thomas Gemellaro

            
	 	 	 
	
              Signature:

            	 	
              Signature: 
                /s/ Thomas Gemellaro

            
	 	 	 
	
              Date:

            	 	
              Date:
                November 13, 2008

            
	 	 	 
	
              Print
                Name:

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title:

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      	
              IF
                AN ENTITY:

            	 	
              IF
                AN INDIVIDUAL:

            
	 	 	 
	
              Print
                Name of Entity: Howard M. Tanning Rollover

                                                 
                IRA

            	 	
              Print
                Name:

            
	 	 	 
	
              Signature: 
                /s/ Howard M. Tanning

            	 	
              Signature:

            
	 	 	 
	
              Date: 
                November 3, 2008

            	 	
              Date:

            
	 	 	 
	
              Print
                Name: Howard M. Tanning

            	 	
              Co-Investor
                Print Name:

            
	 	 	 
	
              Title: 
                IRA Owner

            	 	
              Co-Investor
                Signature:

            
	 	 	 
	 	 	
              Date:

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
      A

     

    
      	
              Name of Lenders

            	 	
              Principal Amount

              of Note

            	 
	 	 	 	 
	
              Neel
                B. Ackerman and Martha N. Ackerman

            	 	
              $

            	
              200,000

            	 
	
              Stephen
                M. Burnich Revocable Trust u/a 10/08/04

            	 	
              $

            	
              25,000

            	 
	
              Ennio
                De Pianto

            	 	
              $

            	
              50,000

            	 
	
              Matthew
                Ernst

            	 	
              $

            	
              25,000

            	 
	
              John
                M. Goodman Living Trust

            	 	
              $

            	
              25,000

            	 
	
              Leon
                Kanner & Rosemary E. Kanner

            	 	
              $

            	
              25,000

            	 
	
              Richard
                Kindt

            	 	
              $

            	
              10,000

            	 
	
              Douglas
                E. Pritchett

            	 	
              $

            	
              50,000

            	 
	
              Jerome
                A. Shinkay

            	 	
              $

            	
              10,000

            	 
	
              Michael
                J. Spezia

            	 	
              $

            	
              25,000

            	 
	
              George
                D. Wilson & Diane J. Wilson

            	 	
              $

            	
              10,000

            	 
	
              Joseph
                L. Jerger

            	 	
              $

            	
              10,000

            	 
	
              David
                & Nancy Pudelsky

            	 	
              $

            	
              25,000

            	 
	
              James
                R. Buck

            	 	
              $

            	
              10,000

            	 
	
              John
                O. Dunkin

            	 	
              $

            	
              15,000

            	 
	
              NFS/FMTC
                SEP IRA FBO Jay Jennings

            	 	
              $

            	
              15,000

            	 
	
              Landmark
                Community Bank Collateral Account FBO Estate of Catherine
                Nasser

            	 	
              $

            	
              65,000

            	 
	
              Nasser
                Family Trust

            	 	
              $

            	
              25,000

            	 
	
              James
                R. Kahn & Debra A. Kahn, JTWROS

            	 	
              $

            	
              5,000

            	 
	
              Carolyn
                N. Taylor & A. Starke Taylor, Jr.

            	 	
              $

            	
              50,000

            	 
	
              Mark
                Vollmer

            	 	
              $

            	
              5,000

            	 
	
              Robert
                J. Guercio

            	 	
              $

            	
              25,000

            	 
	
              Ralph
                Hanby

            	 	
              $

            	
              5,000

            	 
	
              Robert
                E. Jacobson & Saralee Jacobson, JTWROS

            	 	
              $

            	
              10,000

            	 
	
              Michael
                Cushing

            	 	
              $

            	
              30,000

            	 
	
              Raymond
                Yarusi, Jr.

            	 	
              $

            	
              5,000

            	 
	
              James
                Orr

            	 	
              $

            	
              25,000

            	 
	
              Vernon
                L. Simpson

            	 	
              $

            	
              25,000

            	 
	
              Michael
                H. Yokoyama & Jaye S. Venuti Family Trust

            	 	
              $

            	
              25,000

            	 
	
              Frederick
                Peet

            	 	
              $

            	
              20,000

            	 
	
              Ronald
                Rasmussen

            	 	
              $

            	
              10,000

            	 
	
              Lewis
                R. Jacobson

            	 	
              $

            	
              5,000

            	 
	
              Mark
                B. Ginsburg

            	 	
              $

            	
              25,000

            	 
	
              Gregory
                J. Dovolis

            	 	
              $

            	
              20,000

            	 
	
              William
                S. Silver

            	 	
              $

            	
              25,000

            	 
	
              Praful
                Desai

            	 	
              $

            	
              25,000

            	 
	
              Thomas
                Gemellaro

            	 	
              $

            	
              5,000

            	 
	
              Howard
                M. Tanning Rollover IRA

            	 	
              $

            	
              70,000

            	 
	
              TOTAL:

            	 	 	
              1,035,000Exhibit
        10.5

      

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

      

      MANHATTAN
        PHARMACEUTICALS, INC.

      

      12%
        Senior Secured Promissory Note

      

      
        	
                Note
                  No.: __

              	
                November
                  19, 2008

              

      

      

      FOR
        VALUE
        RECEIVED, Manhattan Pharmaceuticals, Inc., a Delaware limited liability
        corporation (the “Company”)
        with
        its principal executive office at 48 Wall Street, Suite 1100, New York, New
        York
        10005, promises to pay to the order of ____________ or registered assigns
        (the
“Holder”)
        on the
        Maturity Date (as defined in Section
        2
        below),
        the principal amount of ________ Dollars ($_______)
        (the “Principal
        Amount”),
        in
        such coin or currency of the United States of America as at the time of payment
        shall be legal tender for the payment of public and private debts. Interest
        on
        this Note shall accrue on the Principal Amount outstanding from time to time
        at
        a rate per annum computed in accordance with Section 3
        hereof.

      

      The
        Company (i) waives presentment, demand, protest or notice of any kind in
        connection with this Note and (ii) agrees, in the event of an Event of Default
        (as defined in Section 7 below), to pay to the holder of this Note, on demand,
        all costs and expenses (including reasonable legal fees and expenses as and
        when
        incurred), incurred in connection with the enforcement and/or collection
        of this
        Note.

      

      This
        Note
        is one of a series of notes (collectively, the “Secured
        Notes”)
        being
        issued pursuant to the Securities Purchase Agreement (the “SPA”)
        by and
        between the Company, the Holder and such other purchasers of Notes (the
“Holders”).
        All
        capitalized terms used herein and not otherwise defined shall have the meanings
        ascribed to them in the SPA.

      

      1. Prepayment.
        This
        Note shall be payable at any time and from time to time, in whole or in part,
        at
        the election of the Company. Any prepayments of this Note prior to the Maturity
        Date shall be applied first to the payment of any fees and expenses then
        owed to
        the Holder, second, to accrued and unpaid Interest (defined below) and third,
        to
        the payment of the Principal Amount then outstanding. Any amounts applied
        by the
        Company to the prepayment of any Secured Notes (including this Note) shall
        be
        allocated pro rata to all Holders based on the amounts then owed to them
        with
        respect to the Secured Notes.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      2. Maturity
        Date.
        The
        entire unpaid Principal Amount of this Note, together with all fees and expenses
        (if any), and accrued, but unpaid, Interest thereon, shall be immediately
        due
        and payable at 12:01 a.m. on November 19, 2010 (the “Maturity
        Date”).
        In
        the event that the Maturity Date falls on a Saturday, Sunday or a holiday
        on
        which banks in the State of New York are closed, the Maturity Date shall
        be the
        first business day occurring immediately after such date.

      

      3. Interest;
        Etc. 

      

      (a) Interest
        Rate.
        This
        Note shall bear interest (the “Interest”)
        on the
        outstanding Principal Amount at the rate of twelve (12%) percent per annum.
        Interest on this Note shall commence accruing on the date hereof and shall
        be
        computed on the basis of a year of 360 days for the actual number of days
        elapsed. Interest shall be compounded quarterly and shall be payable on the
        Maturity Date as set forth in Section
        4
        below.

      

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

      

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

       

      5. Security.
        The
        Company’s obligations under this Note are secured, pursuant to and in accordance
        with the terms and conditions of (i) that certain Security Agreement dated
        as of
        the date hereof by and between, the Company, the Holder and the Holders (the
        “Security
        Agreement”)
        and
        (ii) that certain Default Agreement, dated even date herewith, issued by
        the
        Company, in favor of the Holder and the Holders (the “Default
        Agreement”).
        Forms
        of the Security Agreement and the Default Agreement are annexed as Exhibit
        E
        and
Exhibit
        F,
        respectively, to the SPA.

       

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

       

      6.
        Covenants
        of the Company.
        The
        Company covenants that so long as any of its obligations under the Notes
        remain
        outstanding and unpaid, the Company shall not without the prior written consent
        of the Holders holding a majority of the then outstanding principal amount
        of
        the Secured Notes (the “Requisite
        Holders”):

       

      (a) Indebtedness
        of Borrowed Money.
        Create,
        incur, assume or suffer to exist any indebtedness for borrowed money
        except:

       

      
        	 	
                (i)

              	
                the
                  Notes; and

              

      

       

      
        	 	
                (ii)

              	
                the
                  10% secured promissory notes of the Company in the aggregate principal
                  amount of $70,000 due March 10,
                  2009.

              

      

       

      (b) Limitation
        on Contingent Obligations.
        Guarantee or otherwise be or become liable directly or indirectly for the
        obligations of any other Person whether by agreement to purchase or repurchase
        obligations, or by agreement to supply funds for the purpose of enabling
        such
        other Person to pay any obligations, excluding from this restriction, the
        endorsement of negotiable instruments in the ordinary course of business
        in the
        course of collection.

       

      (c) Dividends.
        Except
        as expressly provided in the SPA, pay or declare any dividend on any class
        of
        its securities or make any other distribution or redeem, purchase or otherwise
        acquire or retire directly or indirectly any securities, other than redemption
        of unvested options or restricted stock redeemed by the Company, at cost,
        in
        connection upon termination of such persons employment or other engagement
        with
        the Company.

       

      (d) Sale
        of Obligations Owing to the Company.
        Sell,
        discount or dispose of notes, accounts receivables, or other obligations
        owing
        to the Company, with or without recourse, other than in the normal course
        of
        business.

       

      (e) Loans
        and Advances to Others.
        Make
        any loans or advances to any other Person other than loans and advances in
        the
        ordinary course of the Company’s business.

       

      
        	 	
                (f)

              	
                Prohibitions
                  of Fundamental Changes and Acquisitions.

              

      

       

      
        	 	
                (i)

              	
                issue
                  any securities or enter into any agreements to issue securities,
                  or
                  rights, options or warrants for the issuance of any securities,
                  other than
                  (1) issuances under the Company’s 2003 Stock Option Plan, provided that
                  the Company shall not increase the number of shares eligible for
                  issuance
                  thereunder, (2) issuances of Common Stock upon the exercise of
                  options or
                  warrants outstanding on the date hereof, (3) pursuant to the SPA,
                  (4) the
                  issuance of the Warrants and shares of Common Stock issuable upon
                  exercise
                  thereof , (5) the issuance warrants issued to the Placement Agent
                  in
                  connection with the transactions contemplated by the SPA and the
                  shares of
                  Common Stock issuable upon exercise thereof and (6) issuances pursuant
                  to
                  the Joint Venture Agreement, between the Company and Nordic Biotech
                  Venture Fund II K/S. dated January 31, 2008, as amended from time
                  to time
                  (the “JV
                  Agreement”);

              

      

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

       

      
        	 	
                (ii)

              	
                consolidate
                  with or merge into any other
                  Person;

              

      

       

      
        	 	
                (iii)

              	
                except
                  as may otherwise be required under the Default Agreement, sell,
                  lease,
                  exchange or otherwise dispose of, any of its securities in one
                  transaction
                  or a series of related transactions, or dispose of any of its assets
                  except in the ordinary course of business or make any material
                  change in
                  the present methods of conducting
                  business;

              

      

       

      
        	 	
                (iv)

              	
                except
                  as contemplated by the JV Agreement, acquire the business of any
                  other
                  Person by way of a purchase of securities or of all or substantially
                  all
                  of the assets of such other Person;
                  and

              

      

       

      
        	 	
                (v)

              	
                form
                  any subsidiary; dissolve or
                  liquidate.

              

      

       

      (g) Limitation
        on Liens.
        Create,
        assume or suffer to exist any Lien of any kind upon any of its property or
        assets (including real property leases), income or profits, whether now owned
        or
        hereafter acquired, except:

       

      
        	 	
                (i)

              	
                Liens
                  existing on the date hereof;

              

      

       

      
        	 	
                (ii)

              	
                Liens
                  and security interests in favor of Holders securing the Company’s
                  obligations under the Notes;

              

      

       

      
        	 	
                (iii)

              	
                Liens
                  for taxes not yet due or which are being contested in good faith
                  and by
                  appropriate proceedings, if adequate reserves with respect thereto
                  are
                  maintained on the books of the
                  Company;

              

      

       

      
        	 	
                (iv)

              	
                deposits
                  to secure the performances of leases, contracts, surety bonds,
                  performance
                  bonds and other obligations of like nature incurred in the ordinary
                  course
                  of business; and

              

      

       

      
        	 	
                (v)

              	
                carriers’,
                  warehousemen’s, mechanics’ or other like liens arising in the ordinary
                  course of business for sums not yet due for a period of more than
                  thirty
                  days or which are being contested in good faith and by appropriate
                  proceedings.

              

      

       

      (h) Expenditures.
        Make
        capital expenditures or commitments for such expenditures, in any fiscal
        year,
        in excess of an aggregate of $50,000 in such year.

       

      (i) Change
        in Business.
        Engage,
        directly or indirectly, in any business other than its current
        business.

      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

       

      (j) Transactions
        with Affiliates.
        Enter
        into any transaction including, without limitation, the purchase, sale or
        exchange of property or assets or the rendering or accepting of any service
        with
        or to any of its Affiliates except with respect to (i) any employment agreement
        or amendment to an existing employment agreement, (ii) any transaction with
        Hedrin Pharmaceuticals K/S or Hedrin Pharmaceuticals General Partner ApS
        or
        (iii) in the ordinary course of business and pursuant to the reasonable
        requirements of the business of the Company and upon terms not less favorable
        to
        the Company than it could obtain in a comparable arm’s length transaction with a
        third party other than such Affiliate. 

      

      7. Events
        of Defaults and Remedies

       

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

       

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

       

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

       

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

       

      (d) a
        final
        judgment for the payment of money in excess of $50,000 shall be rendered
        against
        the Company, and such judgment shall remain undischarged for a period of
        sixty
        (60) days from the date of entry thereof unless within such sixty (60) day
        period such judgment shall be stayed, and appeal taken therefrom and the
        execution thereon stayed during such appeal, other than any judgment arising
        out
        of the enforcement of the arbitration award or otherwise in favor of Swiss
        Pharma Contract LTD (as described in the Company’s Confidential Private
        Placement Memorandum); or

       

      (e) The
        Company shall:

       

      
        	 	
                (i)

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

              

      

       

      
        	 	
                (ii)

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

              

      

      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

       

      
        	 	
                (iii)

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

              

      

       

      
        	 	
                (iv)

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

              

      

       

      (f) the
        Security Agreement shall cease at any time after its execution and delivery
        and
        for any reason to create a valid first priority security interest in and
        to the
        property subject thereto or the validity or priority of such security interest
        shall be contested by the Company or any of its Affiliates or by any other
        Person; or any of the other Transaction Documents shall at any time after
        their
        execution and delivery for any reason cease to be in full force and effect
        or
        shall be declared null or void, or the validity or enforceability thereof
        shall
        be contested by the Company or any of its Affiliates or by any other
        Person.

       

      (g) Cross-Default.
        The
        Company shall default in the payment when due (including any applicable grace
        period) of any amount payable under any other obligation of the Company for
        money borrowed in excess of $50,000, which default shall continue uncured
        for
        three (3) business days; 

       

      (h) Cross-Acceleration.
        Any
        indebtedness for borrowed money of the Company (1) shall be duly declared
        to be or shall become due and payable prior to the stated maturity thereof
        or
        (2) shall not be paid as and when the same becomes due and payable
        including any applicable grace period, except in each case with respect to
        trade
        payables and expense accruals;

       

      7.2 Remedies.
        Upon
        the occurrence of an Event of Default, specified in Section
        7.1(e)
        above,
        the outstanding Principal Amount of this Note and all other obligations
        hereunder shall automatically be and become immediately due and payable,
        without
        notice or demand. Upon the occurrence of an Event of Default other than those
        specified in Section
        7.1(e),
        the
        Requisite Holders and/or the Placement Agent may declare, at their option,
        so
        long as the Event of Default is continuing at the time notice thereof is
        given,
        upon five (5) days’ notice or demand, the Secured Notes to be immediately due
        and payable. In any case, the Secured Notes shall become due and payable
        without
        presentment, demand or protest, all of which are hereby expressly waived.
        Upon
        the occurrence of an Event of Default and after the expiration of any grace
        period therefor specified herein, the Holder and/or the Placement Agent shall
        thereupon have, in addition to any rights it may have to proceed directly
        against the Company as a result of such default, the rights, benefits, and
        remedies afforded to it under any of the Transaction Documents. The Company
        agrees that the Holder and the Placement Agent may or may not proceed, as
        each
        determines in their sole discretion, with any or all other rights, benefits,
        and
        remedies which they may have against the Company. The rights afforded to
        the
        Holder and the Placement Agent under all of the foregoing shall be
        cumulative.

      
        
           

        

        
          -6-

          
            

          

        

        
           

        

      

      

      8. Amendments
        and Waivers.

      

      (a) The
        provisions of this Note may from time to time be amended, modified or waived,
        if
        such amendment, modification or waiver is in writing and consented to in
        writing
        by the Company and the Requisite Holders, provided, that any such amendment,
        modification or waiver must apply to all outstanding Secured Notes.

      

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

      

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

      

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

      

      
        
          9.
            Miscellaneous.

        

      

      

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

       

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

      
        
           

        

        
          -7-

          
            

          

        

        
           

        

      

       

      
        	
                To
                  Holder:

              	
                To
                  the Company:

              
	 	 
	 	
                Manhattan
                  Pharmaceuticals, Inc. 

              
	 	
                48
                  Wall Street, Suite 1100

                New
                  York, New York 10005

              
	 	
                Attn:
                  Douglas Abel

                         
                  Chief Executive Officer

              
	
                Fax
                  Number: 

              	
                Fax
                  Number: (212) 582-3957

              

      

      

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

       

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

      

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

      

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

      

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

      

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

      

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

       

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

      
        
           

        

        
          -8-

          
            

          

        

        
           

        

      

       

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

       

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

       

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

      

      [Signature
        Page Follows]

      
        
           

        

        
          -9-

          
            

          

        

        
           

        

      

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

      

      
        	
                Manhattan
                  Pharmaceuticals, Inc.

              
	 	 
	
                By:

              	   

	 	
                Name:
                  Michael McGuinness

              
	 	
                Title:
                  Chief Financial Officer

              

      

      
        
           

        

        
          -10-

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