Exhibit
      10.7

     

    AMENDMENT
      NO. 2 TO EMPLOYMENT AGREEMENT

     

    This
      AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT (this "Amendment")
      is
      entered into as of November 19, 2008 and shall be effective as of October 1,
      2008, by and between Manhattan Pharmaceuticals, Inc. (the "Company")
      and
      Douglas Abel (the "Executive").

     

    WITNESSETH
      THAT:

     

    WHEREAS,
      the
      Company and the Executive entered into that certain Employment Agreement, dated
      as of April 1, 2005 (the "Agreement"),
      as
      amended on March 28, 2008 (“Amendment
      No. 1”);
      

     

    WHEREAS,
      the
      Company proposes to offer and sell (the “Offering”)
      up to
      $2,500,000 of units (each a “Unit”
and
      collectively, the “Units”)
      consisting of (i) a senior secured note in the principal amount of $5,000 (each
      a “Note”
and
      collectively, the “Notes”)
      and
      (ii) a warrant to purchase up to a number of shares of the Company’s common
      stock, $.001 par value per share, determined by dividing 300% of the principal
      amount of the Note by $.09, the exercise price per share of the
      warrant;

    


    WHEREAS,
      if
      $2,500,000 of Units are sold (the “Maximum
      Amount”),
[l]
      (the “Placement
      Agent”)
      has
      the option to sell an additional $1,000,000 of Units (the “Overallotment
      Amount”)
      as
      part of the Offering; 

    


    WHEREAS,
      the
      Company may hold a closing at any time after subscriptions for at least
      $1,000,000 of Units have been received and accepted and other conditions to
      the
      closing have been satisfied (the “First
      Closing”);

    


    WHEREAS,
      after
      the
      First Closing the Company may sell up to the Maximum Amount (or any
      Overallotment Amount, if applicable) until December 31, 2008 or, upon mutual
      agreement of the Company and the Placement Agent, January 31, 2009 (the
“Expiration
      Date”);
      provided that the final closing (the “Final
      Closing”)
      shall
      occur no later than 10 business days after the Expiration Date; and

    


    WHEREAS,
      in
      connection with Offering, the Executive has determined that it is in the best
      interest of the Company to temporarily reduce his salary effective as of October
      1, 2008 in accordance with the terms of this Amendment until such time as the
      Company shall have received at least $2,500,000 of gross proceeds from the
      sale
      of the Units or other sales of securities (including any warrant exercise)
      or
      from other revenue received by the Company in the operation of its business
      or
      any combination of the foregoing (collectively, the “Qualified
      Payments”).

    


    NOW
      THEREFORE,
      for and
      in consideration of the foregoing, the Company and the Executive hereby agree
      as
      follows:

     

    1. Section
      4(a)
      of the
      Agreement is hereby amended and restated in its entirety to read as
      follows:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    “(a) Base
      Salary.
      

     

    (i) During
      the Term, the Company shall pay the Executive a salary (the “Base
      Salary”)
      which
      shall initially be equal to $375,000 per year. Effective as of October 1, 2008,
      the Base Salary payable to the Executive shall be decreased to $250,000 per
      year
      (the “First
      Tier Amount”).
      Upon
      consummation of the Final Closing (as defined in Amendment No. 2 to this
      Agreement, dated November 19, 2008 (“Amendment
      No. 2”)),
      the
      Base Salary of the Executive shall be adjusted as follows: (i) in the event
      that
      the Company sells at least $1,500,000 but less than $2,000,000 of Units in
      the
      Offering (as defined in Amendment No. 2), the Base Salary shall be increased
      to
      $300,000 per year (the “Second
      Tier Amount”),
      (ii)
      in the event that the Company sells at least $2,000,000 but less than $2,500,000
      of Units in the Offering, the Base Salary shall be increased to $337,500 per
      year (the “Third
      Tier Amount”)
      and
      (iii) in the event that the Company sells $2,500,000 of Units or more Units
      in
      the Offering, the Base Salary shall be increased to $375,000 (the “Fourth
      Tier Amount”,
      and
      each of the of the First Tier Amount, Second Tier Amount, Third Tier Amount
      or
      Fourth Tier Amount, a “Tier
      Amount”),
      in
      each case, retroactively effective on and as of October 1, 2008; provided,
      however,
      that to
      the extent the Base Salary shall be increased above the First Tier Amount
      following the Final Closing (as defined in Amendment No. 2), the Executive
      shall
      receive a lump sum payment equal to the difference between the amount received
      during the entire pay period following October 1, 2008 based upon a Base Salary
      of $250,000 and the applicable Tier Amount determined following the Final
      Closing in the next payroll payment made to the Executive.

     

    (ii) In
      the
      event that the aggregate principal amount of Notes sold in the Offering is
      equal
      to or greater than $1,000,000 but less than $2,500,000, then following the
      Final
      Closing the Executive’s Base Salary shall be adjusted to the next applicable
      Tier Amount for every additional $500,000 received by the Company following
      the
      Final Closing (other than from the sale of the Units) up to the Fourth Tier
      Amount. Any increase pursuant to this Section
      4(a)(ii)
      shall be
      effective as of the date the Company receives additional Qualified Payments
      which result in the aggregate amount received by the Company (other than from
      the sale of the Notes) being at least equal to $500,000, $1,000,000 or
      $1,500,000, as the case may be. 

     

    (iii) Payments
      to the Executive of his Base Salary shall be made in accordance with the
      Company’s normal payroll practices. 

     

    (iv) The
      Base
      Salary will be reviewed by the Board no less frequently then annually and except
      as otherwise provided herein may be increased (but not decreased).”

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    2. This
      Amendment may be executed in counterparts, each of which shall constitute an
      original, but both of which together shall constitute one and the same
      instrument. Signatures
      delivered by facsimile shall have the same effect as original
      signatures. This
      Amendment shall be governed by, and construed and interpreted in accordance
      with, the laws of The Commonwealth of Massachusetts, without giving effect
      to
      its principles of conflicts of laws.

     

    3. Except
      as
      specifically amended hereby, the Agreement, as amended by Amendment No. 1,
      remains otherwise unmodified and in full force an effect, and is hereby ratified
      by the Company and the Executive. This Amendment may not be amended except
      in
      accordance with Section
      11(e)
      of the
      Agreement.

     

    [Signature
      pages follows]

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the parties have signed this Amendment to Employment Agreement
      as of the day and year set forth above.

     

    
      	 	
              MANHATTAN
                PHARMACEUTICALS, INC.

            
	 	 	 
	 	
              By:

            	
              /s/
                Michael G. McGuinness

            
	 	
              Name:

            	
              Michael
                G. McGuinness

            
	 	
              Title:

            	
              Chief
                Financial Officer 

            
	 	 	 
	 	
               
                /s/ Douglas Abel

            
	 	
              DOUGLAS
                ABEL