SHAMAN PHARMACEUTICALS INC
<DOCUMENT>
<TYPE>EX-10.60
<SEQUENCE>4
<FILENAME>j0459_ex1060.htm
<TEXT>

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<TITLE>Prepared by MerrillDirect</TITLE>
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<table border=0 cellspacing=0 cellpadding=0>
 <tr>
  <td  align=right width=501 valign=top><u><font size=2>SECURITY
  AGREEMENT</font></u></td>
  <td  align=right width=482 valign=top><b><font size=2>EXHIBIT 10.60</font></b></td>
 </tr>
</TABLE>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; THIS SECURITY AGREEMENT is entered
into as of February 28, 2001, between SHAMAN PHARMACEUTICALS, INC., a Delaware
corporation (&#147;<b>Debtor</b>&#148;), for the benefit of&nbsp;
Anthony Conte (&#147;<b>Secured Party</b>&#148;).</font></p>

<p align=center><u><font size=2>RECITALS</font></u></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pursuant to the Promissory Note of even
date entered into between Secured Party and Debtor (the &#147;<b>Promissory Note</b>&#148;), Debtor has agreed to
pledge its assets as security for the payment of the Promissory Note.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debtor is granting to Secured Party a
fully perfected security interest in all of Debotr&#146;s personal property, now or
hereafter acquired, including, without limitation, its present and future
accounts, accounts receivable, assets, general intangibles, equipment,
inventory, deposit accounts, and its intellectual property and tangible assets
relating to SP-303, SB-300, NSF and NSF-IB, and to Debtor&#146;s patents, products,
inventory, latex/raw material, work in process, and customer lists that embody
(without limitation) that intellectual property, specifically including, without
limitation, its intellectual property, technology, royalty rights, and tangible
assets related to its diabetes program as described in the letter agreement
between Debtor and Metabolex, Inc. attached hereto as Exhibit A and all
proceeds thereof (collectively the &#147;Collateral&#148;), to secure prompt payment and
performance of the Obligations and Debtor&#146;s obligations to Secured Party under
this Agreement.&nbsp; This security interest
will be prior to any competing security interest, lien or other interest or
claim in such Collateral.</font></p>

<dir>
<p><font size=2>NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Debtor agrees as follows:</font></p>
</dir>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Grant of Security Interest</u>.&nbsp; Debtor hereby assigns and grants to Secured
Party, to secure the due and timely payment and performance of the Obligations
(as defined below), whether now existing or hereafter arising, a first priority
perfected security interest in all of Debtor&#146;s right, title and interest,
whether now existing or hereafter arising, in and to the Collateral (as defined
below) other than Debtor&#146;s irrevocable licenses.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Collateral</u>.&nbsp; The &#147;<b>Collateral</b>&#148;
consists of the following personal property.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  All intellectual property
rights of
Debtor relating to SP-303, SB-300, NSF and NSF-IB, including, without
limitation, protocols and methodology, Debtor&#146;s license agreement with Dr.
Tempesta, and U.S. patent # 5,211,944, U.S. patent # 5,494,661, US patent
application serial # 09/066,989, US patent application serial # 09/243,197, US
patent application serial # 09/364,248, Shaman docket # SHOBOT-08, and numerous
related international and national patent office actions/prosecutions ongoing
in Europe, North America and Asia (collectively, the &#147;<b>SP-303 Intellectual Property</b>&#148;).</font></p>

<PAGE>


<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font size=2>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Any and all goods, supplies, wares,
merchandise, and other tangible personal property, including customer lists,
latex/raw material, work in process, supplies and components, and finished
goods that embody the SP-303 Intellectual Property, whether held for sale or
lease or to be furnished under any contract for service or so leased or
furnished, and also including products of and accessions to inventory, packing
and shipping materials, and all documents of title, whether negotiable or
nonnegotiable, representing any of the foregoing (collectively, the &#147;<b>SP-303 Inventory</b>&#148;).</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; All rights of Debtor under its

agreements for distribution of the SP-303 Inventory, including without
limitation, Debtor&#146;s rights under an Agreement with GNC.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; All intellectual property rights of
Debtor relating to it Diabetes program, including, without limitation, patents,
technology, ethnobotanical information, databases, and royalty rights, as set
forth in <u>Exhibit B</u> (collectively, the &#147;<b>Diabetes
Intellectual Property</b>&#148;), including, without limitation, the
information to be transferred to Metabolex a provided in Exhibit A.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Any and all goods, supplies,
wares, and
other tangible personal property that embody the Diabetes Intellectual
Property, including supplies of raw plant material, extracts, and isolated
compounds, and all documents of title, whether negotiable or nonnegotiable,
representing any of the foregoing (collectively, the &#147;<b>Diabetes Inventory</b>&#148;), including, without
limitation, property to be transferred to Metabolex as provided in Exhibit A.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; All accounts, contract rights,

instruments, documents, chattel paper, and obligations in any form owing to
Debtor arising out of the sale or lease of goods or the rendition of services
by Debtor whether or not earned by performance; all credit insurance,
guaranties, letters of credits, advices of credit, and other security for any
of the above; all merchandise returned to or reclaimed by Debtor (collectively,
the &#147;<b>Accounts</b>&#148;).</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Any and all goods, supplies, wares,
merchandise, and other tangible personal property, including work in process,
supplies and components, and finished goods, whether held for sale or lease or
to be furnished under any contract for service or so leased or furnished, and
also including products of and accessions to inventory, packing and shipping
materials, and all documents of title, whether negotiable or nonnegotiable,
representing any of the foregoing (collectively, the &#147;<b>Inventory</b>&#148;).</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; All equipment, fixtures, machinery,
machine tools, office equipment, furniture, computer equipment, furnishings,
motor vehicles, goods, all attachments, accessories, accessions, parts,
replacements, substitutions, additions and improvements thereto, and all
supplies used or to be used in connection therewith, including, without
limitation, each of the items of equipment set forth on any schedule of
equipment that is either now or in the furture delivered by Debtor to Secured
Party and incorporated herein by reference (collectively, the &#147;Equipment&#148;).</font></p>

<PAGE>


<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font size=2>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; All general
intangibles, choses in
action, causes of action, and all other personal property of every kind and
nature (other than goods and Accounts), including, without limitation, patents,
trademarks, trade names, service marks, copyright licenses, label rights and
applications for any of the above; and goodwill, trade secrets, licenses,
franchises, rights under agreements, deposit accounts, tax refunds, tax refund
claims, and money due from pension funds (collectively the &#147;General
Intangibles&#148;).</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  All notes, drafts,
instruments,
documents, securities, money, letters of credit, advices of credit or other
property owned by Debtor or in which Debtor has an interest that now or
hereafter are at any time in the possession or control of Secured Party or in
transit by mail or carrier to or in the possession of any third party acting on
behalf of Secured Party, without regard to whether Secured Party received the
same in pledge, for safekeeping, as agent for collection or transmission or
otherwise, or whether Secured Party had conditionally released the same and all
deposit accounts of Debtor, including all demand, time, savings, passbooks, or
other accounts.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (k)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; All replacements,
modifications and
accessions to any of the foregoing, wherever located.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (l)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; All proceeds (including
insurance
proceeds) of the foregoing.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (m)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; All books, correspondence, records an
d
other documents relating to the above-described property.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; As used in this Security Agreement,
the term &#147;<b>proceeds</b>&#148;
includes whatever is receivable or received when collateral or the proceeds
thereof is paid, collected or otherwise disposed of whether such disposition is
voluntary or involuntary, and all claims arising out of the damage,
destruction, or decrease in value of the collateral.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Obligations Secured</u>.&nbsp; The &#147;<b>Obligations</b>&#148;
secured by the Collateral consist of the full and timely payment and
performance of all of debt evidenced by the Promissory Note and the obligations
under this Security Agreement.&nbsp; The
terms &#147;indebtedness&#148; and &#147;obligations&#148; are used in the most comprehensive sense
and include all obligations in connection with the Promissory Note to Secured
Party.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Covenants of Debtor</u>.&nbsp; Debtor agrees:</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; to do all acts necessary to
maintain,
preserve and protect the Collateral.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; not to change the location of the
tangible Collateral, except for inventory in the ordinary course of business,
or to make any change in Debtor&#146;s name or place of business, or, if Debtor has
more than one place of business, its head office, or office in which Debtor&#146;s
records relating to the Collateral are kept beyond Debtor&#146;s ordinary course of
business conduct.</font></p>

<PAGE>


<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font size=2>(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; to procure and deliver from
time to
time any financing statements and other writings necessary to perfect, maintain
and protect its security interest hereunder and&nbsp;the priority thereof and
the purposes of this Agreement and to deliver promptly to Secured Party all
originals of Collateral or proceeds consisting of chattel paper or instruments,
if any.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; to keep separate, accurate and
complete
records of the Collateral and to provide Secured Party with such records and
other reports and information relating to the Collateral as Secured Party may
request from time to time.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; not to surrender or lose
possession of
(other than to Secured Party), sell (except for inventory in the ordinary
course of business and pursuant to the agreement with Metabolex set forth on
Exhibit A), encumber, lease, rent, or otherwise dispose of or transfer any
Collateral or right or interest therein, except for routine disposal of
equipment being replaced in the ordinary course of business, and to keep the
Collateral free from all levies and security interests or other charges except
for security interests existing on the date of this Agreement with pre-existing
lenders and those other levies, security interests or other charges approved in
writing by Secured Party.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; To pay promptly when due all
federal,
state, and local taxes or assessments now or hereafter imposed on or affecting
any Collateral and to deliver to Secured Party, on demand, appropriate
certificates attesting to the payments.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Not to cause or suffer any of
Debtor&#146;s
representations and/or warranties to become untrue.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; To appear in and defend any action or

proceeding which may affect its title to or Secured Party&#146;s interest in the
Collateral.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; To promptly supply
Secured Party with
such other information concerning its affairs as Secured Party may request from
time to time hereafter and shall promptly notify Secured Party of any material
adverse change in Debtor&#146;s financial condition and any condition or event that
constitutes a breach of or event that constitutes an Event of Default under
this Agreement.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Representations and Warranties</u>.&nbsp; Debtor represents and&nbsp;warrants to
Secured Party that:</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The exact corporate name of
Debtor is
Shaman Pharmaceuticals, Inc., a Delaware corporation.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debtor&#146;s principal place of
business and
chief executive office is located at 213 East Grand Avenue, South San
Francisco, California 94080-4812.&nbsp;
Debtor maintains all of its records with respect to the Collateral at
that address.&nbsp; Debtor has not at any
time within the past four (4) months maintained its chief executive office or
its records with respect to the Collateral at any other location.&nbsp; All tangible Collateral is and will be
located in the State of California except for inventory shipped in the ordinary
course of business.</font></p>

<PAGE>


<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font size=2>6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Default</u>.&nbsp; Debtor will be in default hereunder if:</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debtor materially breaches
any provision
of this Security Agreement and such breach continues after written notice from
Secured Party for a period of thirty (30) days or such longer period of time
reasonably required to remedy the breach, provided Debtor promptly commences
remedial action within thirty (30) days of such written notice and thereafter
diligently pursues the remedial action.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; If any warranty or representation
in any
Document or in any writing delivered to Secured Party is untrue or inaccurate
in any material respect.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Any material m
isrepresentation or
material misstatement existing now or hereafter in any warranty or
representation in any such guaranty in connection with such guaranty.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debtor fails to pay any amounts
when due
under the Promissory Note or breaches any other provision of the Promissory
Note.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Remedies</u>.&nbsp; Upon a default as defined in Section 6
above, Secured Party may, at Secured Party&#146;s option declare all Obligations
immediately due and payable:</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exercise with respect to the
Collateral
all of the remedies of a secured party under Article 9 of the California
Commercial Code (including any right to recover any deficiency from Debtor).</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exercise any and all remedies
available
under law or in equity.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payment in full of
Indebtedness at any
time shall cure any and all defaults, pursuant to which Secured Party shall
relinquish, release and return to Debtor any and all collateral in its
possession or under its control.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; No delay or omission to exercise
any right or remedy of Secured Party upon a default by Debtor will waive any
right or remedy of Secured Party or be construed as a waiver of any similar
default that occurs later.&nbsp; Debtor
waives any right to require Secured Party to proceed against any other person
or to exhaust any Collateral or to pursue any other remedy in Secured Party&#146;s
power.</font></p>

<PAGE>


<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font size=2>8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Miscellaneous</u>.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The terms of this Security
Agreement
will inure to the benefit of and bind the parties hereto and their respective
successors, assigns, executors, heirs and legal representatives.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; This Security Agreement contains the

entire security agreement between Secured Party and Debtor and may be modified
only by a writing signed by Secured Party and Debtor.&nbsp; If any of the provisions of this Security Agreement are held
invalid or unenforceable, this Security Agreement will be construed as if not
containing the invalid or unenforceable provisions.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; This Security Agreement will be

construed in accordance with and governed by the laws of the State of
California.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Should any party hereto institute any

action or proceeding to enforce any provisions hereof, or for damages by reason
of any alleged breach of any provisions of this Agreement, or for a declaration
of such party&#146;s rights or obligations hereunder, or for any other judicial
remedy, the prevailing party shall be entitled to be reimbursed by the losing
party all costs and expenses incurred thereby, including but not limited to,
reasonable attorney fees.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; All communications required
or given
under this Security Agreement shall be given in writing to Secured Party or
Debtor at the address for such party set forth below, and shall be deemed given
upon the earlier of actual receipt by the party or three (3) days after posting
in the U.S. mail, postage prepaid, and duly addressed:</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width="12%" valign=top>&nbsp;</td>
  <td width="17%" valign=top><font size=2>Secured
  Party:</font></td>
  <td width="70%" valign=top><font size=2>Anthony
  Conte</font></td>
 </tr>
 <tr>
  <td width="12%" valign=top>&nbsp;</td>
  <td width="17%" valign=top>&nbsp;</td>
  <td width="70%" valign=top><font size=2>9
  Gulls Cove</font></td>
 </tr>
 <tr>
  <td width="12%" valign=top>&nbsp;</td>
  <td width="17%" valign=top>&nbsp;</td>
  <td width="70%" valign=top><font size=2>Manhasset,
  NY 11030</font></td>
 </tr>
 <tr>
  <td width="12%" valign=top>&nbsp;</td>
  <td width="17%" valign=top>&nbsp;</td>
  <td width="70%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="12%" valign=top>&nbsp;</td>
  <td width="17%" valign=top><font size=2>Debtor:</font></td>
  <td width="70%" valign=top><font size=2>Shaman
  Pharmaceuticals, Inc.</font></td>
 </tr>
 <tr>
  <td width="12%" valign=top>&nbsp;</td>
  <td width="17%" valign=top>&nbsp;</td>
  <td width="70%" valign=top><font size=2>213
  East Grand Avenue</font></td>
 </tr>
 <tr>
  <td width="12%" valign=top>&nbsp;</td>
  <td width="17%" valign=top>&nbsp;</td>
  <td width="70%" valign=top><font size=2>South
  San Francisco, CA 94080-4812</font></td>
 </tr>
 <tr>
  <td width="12%" valign=top>&nbsp;</td>
  <td width="17%" valign=top>&nbsp;</td>
  <td width="70%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="12%" valign=top>&nbsp;</td>
  <td width="17%" valign=top><font size=2>With
  a copy to:</font></td>
  <td width="70%" valign=top><font size=2>Sharie
  L. Mendrey, Esq.</font></td>
 </tr>
 <tr>
  <td width="12%" valign=top>&nbsp;</td>
  <td width="17%" valign=top>&nbsp;</td>
  <td width="70%" valign=top><font size=2>Farella
  Braun + Martel, LLP</font></td>
 </tr>
 <tr>
  <td width="12%" valign=top>&nbsp;</td>
  <td width="17%" valign=top>&nbsp;</td>
  <td width="70%" valign=top><font size=2>Russ
  Building, 30<sup>th</sup> Floor</font></td>
 </tr>
 <tr>
  <td width="12%" valign=top>&nbsp;</td>
  <td width="17%" valign=top>&nbsp;</td>
  <td width="70%" valign=top><font size=2>235
  Montgomery Street</font></td>
 </tr>
 <tr>
  <td width="12%" valign=top>&nbsp;</td>
  <td width="17%" valign=top>&nbsp;</td>
  <td width="70%" valign=top><font size=2>San
  Francisco, CA 94104</font></td>
 </tr>
</TABLE>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Either party may change the address
to which notices shall be sent to such party by providing written notice
thereof to the other party in accordance with the terms of this Section.</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Time is of the essence in
each and
every provision of this Agreement.</font></p>

<PAGE>


<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font size=2>(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provided Debtor has performed and
repaid
the Obligations in full, within 10 days of such payment, Secured Party shall
deliver to Debtor executed UCC termination statements in customary form.</font></p>

<p><font size=2>&nbsp;</font></p>

<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IN WITNESS WHEREOF, the Debtor has
executed this Security Agreement as of the date and year first above written.</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width="45%" valign=top>&nbsp;</td>
  <td width="11%" valign=top><font size=2>DEBTOR:</font></td>
  <td width="42%" valign=top><font size=2>Shaman Pharmaceuticals, Inc.</font></td>
 </tr>
 <tr>
  <td width="45%" valign=top>&nbsp;</td>
  <td width="11%" valign=top>&nbsp;</td>
  <td width="42%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="45%" valign=top>&nbsp;</td>
  <td width="11%" valign=top>&nbsp;</td>
  <td width="42%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="45%" valign=top>&nbsp;</td>
  <td width="11%" valign=top>&nbsp;</td>
  <td width="42%" valign=top><font size=2>By:&nbsp;
  /s/ Steven R. King</font>
<hr size=1 width="95%" noshade color=black align=left></td>
 </tr>
 <tr>
  <td width="45%" valign=top>&nbsp;</td>
  <td width="11%" valign=top>&nbsp;</td>
  <td width="42%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="45%" valign=top>&nbsp;</td>
  <td width="11%" valign=top>&nbsp;</td>
  <td width="42%" valign=top><font size=2>Steven R. King, its COO</font></td>
 </tr>
</TABLE>

<PAGE>


<p>&nbsp;</p>

<p align=center><b><font size=2>EXHIBIT
A</font></b></p>

<p align=center><b><u><font size=2>Letter
Agreement Between Debtor and Metabolex, Inc.</font></u></b></p>

<p><font size=2>&nbsp;</font></p>

<b><u><PAGE>
</u></b>

<p>&nbsp;</p>

<p align=center><b><font size=2>EXHIBIT
B</font></b></p>

<p align=center><b><u><font size=2>Diabetes
Intellectual Property</font></u></b></p>

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