EX 10.1


    EXHIBIT
      10.1

     

    EMPLOYMENT
      AGREEMENT

     

    This
      Agreement (this “Agreement”),
      dated
      as of January
      26, 2006, by and between MANHATTAN PHARMACEUTICALS, INC., a Delaware corporation
      with principal executive offices at 810 Seventh Avenue, 4th Floor, New York,
      New
      York 10019 (the “Company”),
      and
      Alan G. Harris, M.D. Ph.D.,
      residing at 190 East 72nd
      Street,
      Apartment #26B, New York, New York 10021 (the
      “Employee”).

     

    W
      I T N E S S E T H:

     

    WHEREAS,
      the Company desires to employ the Employee as Chief Medical Officer of the
      Company, and the Employee desires to serve the Company in such capacity, upon
      the terms and subject to the conditions contained in this
      Agreement;

     

    NOW,
      THEREFORE, in consideration of the mutual covenants and agreements herein
      contained, the parties hereto hereby agree as follows:

     

    1.    Employment.

     

    (a)    Services.
      The
      Employee will be employed by the Company as its Chief
      Medical Officer.
      The
      Employee will report to the Chief Executive Officer of the Company and shall
      perform such duties as are consistent with his position as Chief
      Medical Officer (the “Services”).
      The
      Employee agrees to perform such duties faithfully, to devote substantially
      all
      of his working time, attention and energies to the business of the Company,
      and
      while he remains employed, not to engage in any other business activity that
      is
      in conflict with his duties and obligations to the Company without the prior
      written consent of the Chief Executive Officer of the Company. 

     

    (b)    Acceptance.
      Employee hereby accepts such employment and agrees to render the
      Services.

     

    2.    Term.
      The
      employment of the Employee by the Company as provided in Section 1 shall be
      for
      a period of three (3) years commencing on February 1, 2006 (the “Effective
      Date”),
      unless
      sooner terminated in accordance with the provisions of Section 8 below (the
      “Term”);
      provided, however, that the Term shall be extended automatically for additional
      one-year periods unless one party shall advise the other in writing at least
      60
      days before the initial expiration of the Term or an anniversary date thereof
      that this Agreement shall no longer be so extended. Notwithstanding
      anything to the contrary contained herein, Sections 5 and 6 shall survive the
      expiration or termination hereof.  

     

    3.    Best
      Efforts; Place of Performance.

     

    (a)    The
      Employee shall devote substantially all of his business time, attention and
      energies to the business and affairs of the Company and
      shall
      use his best efforts to advance the best interests of the Company and shall
      not
      during the Term be actively engaged in any other business activity, whether
      or
      not such business activity is pursued for gain, profit or other pecuniary
      advantage, that will interfere with the performance by the Employee of his
      duties hereunder or the Employee’s availability to perform such duties or that
      will adversely affect, or negatively reflect upon, the Company.

     

    (b)    The
      duties to be performed by the Employee hereunder shall be performed primarily
      at
      the principal office of the Company in New York, New York, subject to reasonable
      travel requirements on behalf of the Company, or
      such
      other place as the Board of Directors of the Company (the “Board”)
      may
      reasonably designate. Notwithstanding the foregoing, the Company may be
      relocated to another city within the United States with consent of the
      Board.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4.    Compensation.
      As full
      compensation for the performance by the Employee of his duties under this
      Agreement, the Company shall pay the Employee as follows:

     

    (a)    Base
      Salary.
      The
      Company shall pay Employee a salary (the “Base
      Salary”)
      equal
      to Two Hundred Seventy-Five Thousand Dollars ($275,000.00) per year. Payment
      shall be made in accordance with the Company’s normal payroll
      practices.

     

    (b)    Guaranteed
      Bonus.
      The
      Company shall pay Employee a cash bonus of $50,000, payable in two equal
      installments (the “Guaranteed
      Bonus”).
      The
      first installment of $25,000 shall be paid to the Employee on the date that
      is
      six (6) months after the Effective Date and the second installment of $25,000
      shall be paid to the Employee on the first anniversary of the Effective Date,
      provided, however, that the Employee is still employed by the Company on the
      applicable date of payment.

     

    (c)    Annual
      Milestone Bonus.
      At
      the
      discretion of the Chief Executive Officer, in conjunction with the Board, the
      Employee shall receive a bonus on each anniversary of the Effective Date during
      the Term (the “Annual
      Milestone Bonus”)
      in an
      amount up to thirty percent (30%) of his Base Salary, based on the attainment
      by
      the Employee of certain financial, clinical development and business milestones
      (the
      “Milestones”)
      as
      established annually by the Chief Executive Officer, in conjunction with the
      Board, after consultation with the Employee, prior
      to
      the start of each anniversary of this Agreement.
      The
      Milestones for the first year of this Agreement shall be established by the
      Chief Executive Officer, in conjunction with the Board, after consultation
      with
      the Employee, subsequent to, but not more than sixty (60) days following, the
      Effective Date. The Milestones for each subsequent year shall be established
      by
      the
      Chief
      Executive Officer, in conjunction with the Board, after consultation with the
      Employee, at least sixty (60) days prior to each anniversary of this Agreement.
      The Annual Milestone Bonus shall be payable either as a lump-sum payment or
      in
      installments as determined by the Company in its sole discretion.

     

    (c)    Withholding.
      The
      Company shall withhold all applicable federal, state and local taxes and social
      security and such other amounts as may be required by law from all amounts
      payable to the Employee under this Section 4.

     

    (d)    Initial
      Option.
      As
      additional compensation for the Services, the Company shall grant the Employee
      an option to purchase 300,000 shares of the Common Stock of the Company at
      a
      price per share equal to the last closing sale price of the Company’s Common
      Stock on the Effective Date (the “Initial
      Option”).
      The
      Initial Option shall (i) be governed by the Company’s 2004 Stock Option Plan;
      (ii) vest in three equal installments of 100,000 shares on the first, second
      and
      third anniversary of the Effective Date; (iii) be exercisable for 10 years
      from
      the date of grant; and (iv) remain exercisable for 90 days from the date that
      the Employee is no longer an employee of the Company, subject, in each case,
      to
      the provisions of Section 9 below. In connection with such grant, the Employee
      shall enter into the Company’s standard stock option agreement which will
      incorporate the foregoing vesting schedule and the provisions contained in
      Section 9 hereof. 

     

    (e)    Expenses.
      The
      Company shall reimburse the Employee for all normal, usual and necessary
      expenses incurred by the Employee in furtherance of the business and affairs
      of
      the Company, including reasonable travel and entertainment, upon timely receipt
      by the Company of appropriate vouchers or other proof of the Employee’s
      expenditures and otherwise in accordance with any expense reimbursement policy
      as may from time to time be adopted by the Company.

     

    (f)    Other
      Benefits.
      The
      Employee shall be entitled to all rights and benefits for which he shall be
      eligible under any benefit or other plans (including, without limitation,
      dental, medical, medical reimbursement and hospital plans, pension plans,
      employee stock purchase plans, profit sharing plans, bonus plans and other
      so-called "fringe" benefits) as the Company shall make available to its senior
      executives from time to time.

     

    
      
         

      

      
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    (g)    Vacation.
      The
      Employee shall, during the Term, be entitled to a vacation of three (3)
      nonconsecutive weeks per annum,
      in
      addition to holidays observed by the Company.
      The
      Employee shall not be entitled to carry any vacation forward to the next year
      of
      employment and shall not receive any compensation for unused vacation
      days.

     

    5.    Confidential
      Information and Inventions.

     

    (a)    The
      Employee recognizes and acknowledges that in the course of his duties he is
      likely to receive confidential or proprietary information owned by the Company,
      its affiliates or third parties with whom the Company or any such affiliates
      has
      an obligation of confidentiality. Accordingly, during and after the Term, the
      Employee agrees to keep confidential and not disclose or make accessible to
      any
      other person or use for any other purpose other than in connection with the
      fulfillment of his duties under this Agreement, any Confidential and Proprietary
      Information (as defined below) owned by, or received by or on behalf of, the
      Company or any of its affiliates. “Confidential and Proprietary Information”
shall include, but shall not be limited to, confidential or proprietary
      scientific or technical information, data, formulas and related concepts,
      business plans (both current and under development), client lists, promotion
      and
      marketing programs, trade secrets, or any other confidential or proprietary
      business information relating to development programs, costs, revenues,
      marketing, investments, sales activities, promotions, credit and financial
      data,
      manufacturing processes, financing methods, plans or the business and affairs
      of
      the Company or of any affiliate or client of the Company. The Employee expressly
      acknowledges the trade secret status of the Confidential and Proprietary
      Information and that the Confidential and Proprietary Information constitutes
      a
      protectable business interest of the Company. The Employee agrees: (i) not
      to
      use any such Confidential and Proprietary Information for himself or others;
      and
      (ii) not to take any Company material or reproductions (including but not
      limited to writings, correspondence, notes, drafts, records, invoices, technical
      and business policies, computer programs or disks) thereof from the Company’s
      offices at any time during his employment by the Company, except as required
      in
      the execution of the Employee’s duties to the Company. The Employee agrees to
      return immediately all Company material and reproductions (including but not
      limited, to writings, correspondence, notes, drafts, records, invoices,
      technical and business policies, computer programs or disks) thereof in his
      possession to the Company upon request and in any event immediately upon
      termination of employment.

     

    (b)    Except
      with prior written authorization by the Company, the Employee agrees not to
      disclose or publish any of the Confidential and Proprietary Information, or
      any
      confidential, scientific, technical or business information of any other party
      to whom the Company or any of its affiliates owes an obligation of confidence,
      at any time during or after his employment with the Company.

     

    (c)    Notwithstanding
      the foregoing, Confidential and Proprietary Information shall not include any
      information or material which the Employee can establish through competent
      proof: (i) is or becomes generally available to the public other than as a
      result of disclosure thereof by the Employee; (ii) is lawfully received by
      the
      Employee on a non-confidential basis from a third party that is not itself
      under
      an obligation of confidentiality or non-disclosure to the Company with respect
      to such information; (iii) was in the Employee's possession at the time of
      disclosure by the Company and was not acquired, directly or indirectly from
      the
      Company; or (iv) is required to be publicly disclosed by law or by regulation;
      provided, however, that in such event Employee shall provide the Company with
      prompt advance notice of such disclosure so that the Company has the opportunity
      if it so desires to seek a protective order or other similar protection. If,
      in
      the absence of a protective or other similar order, the Employee is legally
      compelled to disclose Confidential and Proprietary Information, such
      Confidential and Proprietary Information (and only such Confidential and
      Proprietary Information) may be disclosed in such proceeding without liability
      hereunder; provided, however, that the Employee shall give the Company written
      notice of the Confidential and Proprietary Information to be disclosed as far
      in
      advance of its disclosure as is practical and, upon the Company’s request and
      expense, the Employee shall use all reasonable efforts to obtain assurances
      that
      confidential treatment will be accorded to such Confidential and Proprietary
      Information in such proceeding.

     

    
      
         

      

      
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    (d)    The
      Employee agrees that all inventions, discoveries, improvements and patentable
      or
      copyrightable works (“Inventions”)
      initiated, conceived or made by him, either alone or in conjunction with others,
      during the Term shall be the sole property of the Company to the maximum extent
      permitted by applicable law and, to the extent permitted by law, shall be “works
      made for hire” as that term is defined in the United States Copyright Act (17
      U.S.C.A., Section 101). The Company shall be the sole owner of all patents,
      copyrights, trade secret rights, and other intellectual property or other rights
      in connection therewith. The Employee hereby assigns to the Company all right,
      title and interest he may have or acquire in all such Inventions; provided,
      however, that the Board may in its sole discretion agree to waive the Company’s
      rights pursuant to this Section 5(d) with respect to any Invention that is
      not
      directly or indirectly related to the Company’s business. The Company
      acknowledges that as of the Effective Date, the Employee has undertaken certain
      activities prior to the Effective Date and that pursuant thereto has developed
      the Inventions and/or engaged in such specific activities set forth on
Annex
      A
      hereto,
      and that pursuant to the foregoing sentence, the Board has waived the Company’s
      rights with respect to such Inventions and/or activities as they are in
      existence on the Effective Date. Notwithstanding the foregoing, nothing in
      this
      Section 5(d) shall be construed to limit, restrict or modify in any way
      Executive’s obligations under this Agreement, including without limitation
      Section 3(a) and Section 6 hereof. The Employee further agrees to assist the
      Company in every proper way (but at the Company’s expense) to obtain and from
      time to time enforce patents, copyrights or other rights on such Inventions
      in
      any and all countries, and to that end the Employee will execute all documents
      necessary:

     

    (i)    to
      apply
      for, obtain and vest in the name of the Company alone (unless the Company
      otherwise directs) letters patent, copyrights or other analogous protection
      in
      any country throughout the world and when so obtained or vested to renew and
      restore the same; and

     

    (ii)    to
      defend
      any opposition proceedings in respect of such applications and any opposition
      proceedings or petitions or applications for revocation of such letters patent,
      copyright or other analogous protection.

     

    (e)    The
      Employee acknowledges that while performing the Services under this Agreement
      the Employee may locate, identify and/or evaluate patented or patentable
      inventions having commercial potential in the fields of pharmacy,
      pharmaceutical, biotechnology, healthcare, technology and other fields which
      may
      be of potential interest to the Companay or one of its affiliates (the
“Third
      Party Inventions”).
      The
      Employee understands, acknowledges and agrees that all rights to, interests
      in
      or opportunities regarding, all Third-Party Inventions identified by the
      Company, any of its affiliates or either of the foregoing persons’ officers,
      directors, employees (including the Employee), agents or consultants during
      the
      Term shall be and remain the sole and exclusive property of the Company or
      such
      affiliate and the Employee shall have no rights whatsoever to such Third-Party
      Inventions and will not pursue for himself or for others any transaction
      relating to the Third-Party Inventions which is not on behalf of the Company;
      provided, however, that the Company acknowledges and agrees that Employee may,
      with the Company’s prior written consent, discuss the development of any Third
      Party Inventions that the Employee has located, identified and/or evaluated,
      and
      which the Company has decided not to pursue, solely with Paramount Biosciences,
      LLC (“Paramount”). Notwithstanding the foregoing, the Company acknowledges and
      agrees that Employee shall be permitted to discuss the development of any Third
      Party Inventions that the Employee has located, identified and/or evaluated,
      and
      which each of the Company and Paramount has decided not to pursue in accordance
      with the foregoing, provided that such discussions are consented to in advance
      by each of the Company and Paramount and that such discussions do not conflict
      with or interfere in any way with Executive’s obligations under this Agreement,
      including without limitation Section 3(a) and Section 6 hereof.

     

    
      
         

      

      
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    (f)    Employee
      agrees that he will promptly disclose to the Company, or any persons designated
      by the Company, all improvements and Inventions made or conceived or reduced
      to
      practice or learned by him, either alone or jointly with others, during the
      Term. 

     

    (g)    The
      provisions of this Section 5 shall survive any termination of this
      Agreement.

     

    6.    Non-Competition,
      Non-Solicitation and Non-Disparagement.

     

    (a)    The
      Employee understands and recognizes that his services to the Company are special
      and unique and that in the course of performing such services the Employee
      will
      have access to and knowledge of Confidential and Proprietary Information (as
      defined in Section 5) and the Employee agrees that, during the Term and for
      a
      period of twelve
      (12) months
      thereafter, he shall not in any manner, directly or indirectly, on behalf of
      himself or any person, firm, partnership, joint venture, corporation or other
      business entity (“Person”),
      enter
      into or engage in any business which is engaged in any business directly or
      indirectly competitive with the business of the Company, either as an individual
      for his own account, or as a partner, joint venturer, owner, executive,
      employee, independent contractor, principal, agent, consultant, salesperson,
      officer, director or shareholder of a Person in a business competitive with
      the
      Company within the geographic area of the Company’s business, which is deemed by
      the parties hereto to be worldwide. The Employee acknowledges that, due to
      the
      unique nature of the Company’s business, the loss of any of its clients or
      business flow or the improper use of its Confidential and Proprietary
      Information could create significant instability and cause substantial damage
      to
      the Company and its affiliates and therefore the Company has a strong legitimate
      business interest in protecting the continuity of its business interests and
      the
      restriction herein agreed to by the Employee narrowly and fairly serves such
      an
      important and critical business interest of the Company. For purposes of this
      Agreement, the Company shall be deemed to be actively engaged on the date hereof
      in the development and commercialization of drugs for the treatment of obesity
      and dermatologic conditions and novel application drug delivery systems for
      presently marketed prescription and over-the-counter drugs and providing
      consulting services in connection therewith, and in the future in any other
      business in which it actually devotes substantive resources to study, develop
      or
      pursue. Notwithstanding the foregoing, nothing contained in this Section 6(a)
      shall be deemed to prohibit the Employee from (i) acquiring or holding, solely
      for investment, publicly traded securities of any corporation, some or all
      of
      the activities of which are competitive with the business of the Company so
      long
      as such securities do not, in the aggregate, constitute more than three percent
      (3%) of any class or series of outstanding securities of such
      corporation.

     

    (b)    During
      the Term and for a period of 18 months thereafter, the Employee shall not,
      directly or indirectly, without the prior written consent of the
      Company:

     

    (i)    solicit
      or induce any employee of the Company or any of its affiliates to leave the
      employ of the Company or any such affiliate; or hire for any purpose any
      employee of the Company or any affiliate or any employee who has left the
      employment of the Company or any affiliate within one year of the termination
      of
      such employee’s employment with the Company or any such affiliate or at any time
      in violation of such employee’s non-competition agreement with the Company or
      any such affiliate; or

     

    (ii)    solicit
      or accept employment or be retained by any Person who, at any time during the
      term of this Agreement, was an agent, client or customer of the Company or
      any
      of its affiliates where his position will be related to the business of the
      Company or any such affiliate; or

     

    (iii)    solicit
      or accept the business of any agent, client or customer of the Company or any
      of
      its affiliates with respect to products, services or investments similar to
      those provided or supplied by the Company or any of its affiliates.

     

    
      
         

      

      
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    (c)    The
      Company and the Employee each agree that both during the Term and at all times
      thereafter, neither party shall directly or indirectly disparage, whether or
      not
      true, the name or reputation of the other party or any of its affiliates,
      including but not limited to, any officer, director, employee or shareholder
      of
      the Company or any of its affiliates.

     

    (d)    In
      the
      event that the Employee breaches any provisions of Section 5 or this Section
      6
      or there is a threatened breach, then, in addition to any other rights which
      the
      Company may have, the Company shall (i) be entitled, without the posting of
      a
      bond or other security, to injunctive relief to enforce the restrictions
      contained in such Sections and (ii) have the right to require the Employee
      to
      account for and pay over to the Company all compensation, profits, monies,
      accruals, increments and other benefits (collectively “Benefits”)
      derived or received by the Employee as a result of any transaction constituting
      a breach of any of the provisions of Sections 5 or 6 and the Employee hereby
      agrees to account for and pay over such Benefits to the Company.
      The
      Employee agrees that in an action pursuant to clause 6(d)(i), that if the
      Company makes a prima facie showing that the Employee has violated or apparently
      intends to violate any of the provisions of this Section 6, the Company need
      not
      prove either damage or irreparable injury in order to obtain injunctive
      relief.

     

    (e)    Each
      of
      the rights and remedies enumerated in Section 6(d) shall be independent of
      the
      others and shall be in addition to and not in lieu of any other rights and
      remedies available to the Company at law or in equity. If any of the covenants
      contained in this Section 6, or any part of any of them, is hereafter construed
      or adjudicated to be invalid or unenforceable, the same shall not affect the
      remainder of the covenant or covenants or rights or remedies which shall be
      given full effect without regard to the invalid portions. If any of the
      covenants contained in this Section 6 is held to be invalid or unenforceable
      because of the duration of such provision or the area covered thereby, the
      parties agree that the court making such determination shall have the power
      to
      reduce the duration and/or area of such provision and in its reduced form such
      provision shall then be enforceable. No such holding of invalidity or
      unenforceability in one jurisdiction shall bar or in any way affect the
      Company’s right to the relief provided in this Section 6 or otherwise in the
      courts of any other state or jurisdiction within the geographical scope of
      such
      covenants as to breaches of such covenants in such other respective states
      or
      jurisdictions, such covenants being, for this purpose, severable into diverse
      and independent covenants.

     

    (f)    In
      the
      event that an actual proceeding is brought in equity to enforce the provisions
      of Section 5 or this Section 6, the Employee shall not urge as a defense that
      there is an adequate remedy at law nor shall the Company be prevented from
      seeking any other remedies which may be available. The Employee agrees that
      he
      shall not raise in any proceeding brought to enforce the provisions of Section
      5
      or this Section 6 that the covenants contained in such Sections limit his
      ability to earn a living.

     

    (g)    The
      provisions of this Section 6 shall survive any termination of this
      Agreement.

     

    7.    Representations
      and Warranties by the Employee.

     

    The
      Employee hereby represents and warrants to the Company as follows:

     

    (i)    Neither
      the execution or delivery of this Agreement nor the performance by the Employee
      of his duties and other obligations hereunder violate or will violate any
      statute, law, determination or award, or conflict with or constitute a default
      or breach of any covenant or obligation under (whether immediately, upon the
      giving of notice or lapse of time or both) any prior employment agreement,
      contract, or other instrument to which the Employee is a party or by which
      he is
      bound.

     

    
      
         

      

      
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    (ii)    The
      Employee has the full right, power and legal capacity to enter and deliver
      this
      Agreement and to perform his duties and other obligations hereunder. This
      Agreement constitutes the legal, valid and binding obligation of the Employee
      enforceable against him in accordance with its terms. No approvals or consents
      of any persons or entities are required for the Employee to execute and deliver
      this Agreement or perform his duties and other obligations
      hereunder.

     

    8.    Termination.
      The Employee’s employment hereunder shall be terminated upon the Employee’s
      death and may be terminated as follows:

     

    (a)    The
      Employee’s employment hereunder may be terminated by the Chief Executive Officer
      of the Company for Cause. Any of the following actions by the Employee shall
      constitute “Cause”:

     

    (i)    The
      willful failure, disregard or refusal by the Employee to perform his duties
      hereunder;

     

    (ii)    Any
      willful, intentional or grossly negligent act by the Employee having the effect
      of injuring, in a material way (whether financial or otherwise and as determined
      in good-faith by the Chief Executive Officer of the Company), the business
      or
      reputation of the Company or any of its affiliates, including but not limited
      to, any officer, director, executive or shareholder of the Company or any of
      its
      affiliates; 

     

    (iii)    Willful
      misconduct by the Employee
      in
      respect of the duties or obligations of the Employee under this
      Agreement,
      including, without limitation, insubordination with respect to directions
      received by the Employee from the Chief Executive Officer of the
      Company;

     

    (iv)    The
      Employee’s indictment of any felony or a misdemeanor involving moral turpitude
      (including entry of a nolo contendere plea);

     

    (v)    The
      determination by the Company, after a reasonable and good-faith investigation
      by
      the Company following a written allegation by another employee of the Company,
      that the Employee engaged in some form of harassment prohibited
      by law
      (including, without limitation, age, sex or race discrimination);

     

    (vi)    Any
      misappropriation or embezzlement of the property of the Company or its
      affiliates (whether or not a misdemeanor or felony);

     

    (vii)    Breach
      by
      the Employee of any of the provisions of Sections
      5, 6 or 7 of
      this
      Agreement; and

     

    (viii)    Breach
      by
      the Employee of any provision of this Agreement other than those contained
      in
Sections
      5, 6 or 7 which
      is
      not cured by the Employee within thirty (30) days after notice thereof is given
      to the Employee by the Company.

     

    (b)    The
      Employee’s employment hereunder may be terminated by the Chief Executive Officer
      of the Company due to the Employee’s Disability. For purposes of this Agreement,
      a termination for “Disability”
shall
      occur (i) when the Chief Executive Officer of the Company has provided a written
      termination notice to the Employee supported by a written statement from a
      reputable independent physician to the effect that the Employee shall have
      become so physically or mentally incapacitated as to be unable to resume, within
      the ensuing six (6) months, his employment hereunder by reason of physical
      or
      mental illness or injury, or (ii) upon rendering of a written termination notice
      by the Chief Executive Officer of the Company after the Employee has been unable
      to substantially perform his duties hereunder for 60 or more consecutive days,
      or more than 90 days in any consecutive twelve month period, by reason of any
      physical or mental illness or injury. For purposes of this Section 8(b), the
      Employee agrees to make himself available and to cooperate in any reasonable
      examination by a reputable independent physician retained by the
      Company.

     

    
      
         

      

      
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    (c)    The
      Employee’s employment hereunder may be terminated by the Chief Executive Officer
      of the Company (or its successor) upon the occurrence of a Change of Control.
      For purposes of this Agreement, “Change
      of Control”
means
      (i) the acquisition, directly or indirectly, following the date hereof by any
      person (as such term is defined in Section 13(d) and 14(d)(2) of the Securities
      Exchange Act of 1934, as amended), in one transaction or a series of related
      transactions, of securities of the Company representing in excess of fifty
      percent (50%) or more of the combined voting power of the Company’s then
      outstanding securities if such person or his or its affiliate(s) do not own
      in
      excess of 50% of such voting power on the date of this Agreement, or (ii) the
      future disposition by the Company (whether direct or indirect, by sale of assets
      or stock, merger, consolidation or otherwise) of all or substantially all of
      its
      business and/or assets in one transaction or series of related transactions
      (other than a merger effected exclusively for the purpose of changing the
      domicile of the Company).

     

    (d)    The
      Employee’s employment hereunder may be terminated by the Employee for Good
      Reason. For purposes of this Agreement, “Good
      Reason”
shall
      mean any reduction by the Company of the Employee’s compensation or benefits
      payable hereunder (it being understood that a reduction of benefits applicable
      to all employees of the Company, including the Employee, shall not be deemed
      a
      reduction of the Employee’s compensation package for purposes of this
      definition). 

     

    (e)    The
      Employee’s employment may be terminated by the Company for any reason or no
      reason.

     

    9.    Compensation
      upon Termination.

     

    (a)    If
      the
      Employee’s employment is terminated as a result of his death or Disability, the
      Company shall pay to the Employee or to the Employee’s
      estate, as applicable, his
      Base
      Salary and any accrued but unpaid Bonus and expense reimbursement amounts
      through the date of his death or Disability. All
      of
Employee’s
      stock options, including the Initial Option (the “Stock
      Options”),
      that
      are
      scheduled to vest on
      the
      next succeeding anniversary of the Effective Date
      shall be
      accelerated and deemed to have vested as of the termination date. All
Stock
      Options that
      have
      not vested (or been deemed pursuant to the immediately preceding sentence to
      have vested) as of the date of termination shall be forfeited
      to the Company
      as of
      such date. Stock
      Options that have vested as of the Employee’s termination shall remain
      exercisable for ninety (90) days following such termination.

     

    (b)    If
      the
      Employee’s employment is terminated by the Chief Executive Officer of the
      Company for Cause, then the Company shall pay to the Employee his Base Salary
      through the date of his termination and the Employee shall have no further
      entitlement to any other compensation or benefits from the Company. All
      Stock
      Options that
      have
      not vested as of the date of termination
      shall be forfeited
      to the Company
      as of
      such date. Stock
      Options that have vested as of the Employee’s termination shall remain
      exercisable for ninety (90) days following such termination. 

     

    (c)    If
      the
      Employee’s employment is terminated by the Company (or its successor) upon the
      occurrence of a Change of Control and on the date of termination pursuant to
      Section 8(c) the fair market value of the Company’s Common Stock, in the
      aggregate, as determined in good faith by the Board on the date of such Change
      of Control, is less than $40,000,000, then the Company (or its successor, as
      applicable) shall continue to pay to the Employee his Base Salary and benefits
      for a period of three (3) months following such termination as well as any
      expense reimbursement amounts owed through the date of termination. All Stock
      Options that
      are
      scheduled to vest on
      the
      next succeeding anniversary of the Effective Date
      shall be
      accelerated and deemed to have vested as of the termination date.
      All
      Stock Options that have
      not
      vested
      (or been
      deemed pursuant to the immediately preceding sentence to have
      vested)
      as of
      the date of termination shall be forfeited to the Company as of such date.
      Stock
      Options that have vested as of the Employee’s termination shall remain
      exercisable for ninety (90) days following such termination.

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

    (d)    If
      the
      Employee’s employment is terminated by the Company other than as a result of the
      Employee’s death or Disability and other than for reasons specified in Sections
      9(b) or (c), then the Company shall (i) continue to pay to the Employee his
      Base
      Salary for a period of six (6) months following such termination, (ii) pay
      the
      Employee any expense reimbursement amounts owed through the date of termination,
      and (iii) all Stock Options that are scheduled to vest during the Term shall
      be
      accelerated and deemed to have vested as of the termination date. Stock
      Options that have vested as of the Employee’s termination shall remain
      exercisable for ninety (90) days following such termination. The
      Company’s obligation under clauses (i) and (ii) of this Section 9(d) shall be
      subject to offset by any amounts otherwise received by the Employee from any
      employment during the six (6) month period following the termination of his
      employment. 

     

    (e)    This
      Section 9 sets forth the only obligations of the Company with respect to the
      termination of the Employee’s employment with the Company, and the Employee
      acknowledges that, upon the termination of his employment, he shall not be
      entitled to any payments or benefits which are not expressly provided in Section
      9.

     

    (f)    The
      provisions of this Section 9 shall survive any termination of this
      Agreement.

     

    10.    Miscellaneous.

     

    (a)    This
      Agreement shall be governed by, and construed and interpreted in accordance
      with, the laws of the State of New York, without giving effect to its principles
      of conflicts of laws.

     

    (b)    Any
      dispute arising out of, or relating to, this Agreement or the breach thereof
      (other than Sections 5 or 6 hereof), or regarding the interpretation thereof,
      shall be finally settled by arbitration conducted in New York City in accordance
      with the rules of the American Arbitration Association then in effect before
      a
      single arbitrator appointed in accordance with such rules. Judgment upon any
      award rendered therein may be entered and enforcement obtained thereon in any
      court having jurisdiction. The arbitrator shall have authority to grant any
      form
      of appropriate relief, whether legal or equitable in nature, including specific
      performance. For the purpose of any judicial proceeding to enforce such award
      or
      incidental to such arbitration or to compel arbitration and for purposes of
      Sections 5 and 6 hereof, the parties hereby submit to the non-exclusive
      jurisdiction of the Supreme Court of the State of New York, New York County,
      or
      the United States District Court for the Southern District of New York, and
      agree that service of process in such arbitration or court proceedings shall
      be
      satisfactorily made upon it if sent by registered mail addressed to it at the
      address referred to in paragraph (g) below. The costs of such arbitration shall
      be borne proportionate to the finding of fault as determined by the arbitrator.
      Judgment on the arbitration award may be entered by any court of competent
      jurisdiction.

     

    (c)    This
      Agreement shall be binding upon and inure to the benefit of the parties hereto,
      and their respective heirs, legal representatives, successors and permitted
      assigns.

     

    (d)    This
      Agreement, and the Executive’s rights and obligations hereunder, may not be
      assigned by the Executive. The rights and obligations of the Company under
      this
      Agreement shall inure to the benefit of and shall be binding upon the successors
      and permitted assigns of the Company, including any successors or permitted
      assigns in connection with any sale, transfer or other disposition of all or
      substantially all of its business or assets.

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

     

    (e)    This
      Agreement cannot be amended orally, or by any course of conduct or dealing,
      but
      only by a written agreement signed by the parties hereto.

     

    (f)    The
      failure of either party to insist upon the strict performance of any of the
      terms, conditions and provisions of this Agreement shall not be construed as
      a
      waiver or relinquishment of future compliance therewith, and such terms,
      conditions and provisions shall remain in full force and effect. No waiver
      of
      any term or condition of this Agreement on the part of either party shall be
      effective for any purpose whatsoever unless such waiver is in writing and signed
      by such party.

     

    (g)    All
      notices, requests, consents and other communications, required or permitted
      to
      be given hereunder, shall be in writing and shall be delivered personally or
      by
      an overnight courier service or sent by registered or certified mail, postage
      prepaid, return receipt requested, to the parties at the addresses set forth
      on
      the first page of this Agreement, and shall be deemed given when so delivered
      personally or by overnight courier, or, if mailed, five days after the date
      of
      deposit in the United States mails. Either party may designate another address,
      for receipt of notices hereunder by giving notice to the other party in
      accordance with this Section 10(g).

     

    (h)    This
      Agreement sets forth the entire agreement and understanding of the parties
      relating to the subject matter hereof, and supersedes all prior agreements,
      arrangements and understandings, written or oral, relating to the subject matter
      hereof. No representation, promise or inducement has been made by either party
      that is not embodied in this Agreement, and neither party shall be bound by
      or
      liable for any alleged representation, promise or inducement not so set
      forth.

     

    (i)    As
      used
      in this Agreement, “affiliate” of a specified Person shall mean and include any
      Person controlling, controlled by or under common control with the specified
      Person.

     

    (j)    The
      section headings contained herein are for reference purposes only and shall
      not
      in any way affect the meaning or interpretation of this Agreement.

     

    (k)    This
      Agreement may be executed in any number of counterparts, each of which shall
      constitute an original, but all of which together shall constitute one and
      the
      same instrument.

     

    (k)    As
      used
      in this Agree-ment, the masculine, feminine or neuter gender, and the singular
      or plural, shall be deemed to include the others whenever and wherever the
      context so requires. Addition-ally, unless the context requires otherwise,
      "or"
      is not exclusive.

    


     

    [Remainder
      of Page Intentionally Left Blank - Signature Page Follows]

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

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

     

    MANHATTAN
      PHARMACEUTICALS, INC.

     

    By: 
      /s/
      Douglas Abel

      
        

      

    

    Name:
      Douglas Abel

    Title:
      President and Chief Executive Officer

     

    EMPLOYEE

     

    /s/
      Alan
      G. Harris

      
        

      

    

    Alan
      G.
      Harris, M.D., Ph.D.

     

    
      
         

      

        -11-