Exhibit 10.1

EMPLOYMENT AGREEMENT
 
This EMPLOYMENT AGREEMENT (the “Agreement”) is made this 25th day of April 2011,
by and between ARNO THERAPEUTICS, INC., a Delaware corporation with principal
executive offices at 4 Campus Drive, 2nd Floor, Parsippany, NJ 07054 (the
“Company”), and GLENN MATTES, residing at [ADDRESS] Doylestown, PA 18902 (the
“Executive”).

WITNESSETH:
 
WHEREAS, the Company desires to employ Executive as President and Chief
Executive Officer of the Company; and
 
WHEREAS, Executive 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
contained herein, the parties hereto hereby agree as follows:
 
1.     Employment.  The Company agrees to employ Executive, and Executive agrees
to be employed by the Company, upon the terms and subject to the conditions of
this Agreement.
 
2.     Term.  Executive’s employment by the Company shall commence on April 25,
2011 (the “Effective Date”) and continue for a period of three (3) years from
the Effective Date unless terminated earlier as set forth in Section 9 below
(the “Term”); provided, however, that the Term shall be automatically extended
for an additional one-year period, on an annual basis, unless the Company or
Executive provides the other party with at least 90 days' prior written notice
prior to the end of the then Term of the intent to not renew the contract
("Notice of Non-Renewal").
 
3.     Duties; Place of Performance; Etc.
 
(a)  Executive shall serve as President and Chief Executive Officer of the
Company and shall, subject to the direction of the Board of Directors of the
Company (the “Board”), have such powers and perform such duties as are
customarily performed by the President and Chief Executive Officer of a
similarly situated company including, but not limited to:
 
(i)         Developing clinical, regulatory and business strategies of the
Company and managing their implementation;
 
(ii)        Overseeing corporate hiring and supervising the performance of
management;
 
(iii)       Maintaining active, honest communication with Board;

 
 

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(iv)       Developing and maintaining strong relationships with key investor
base, collaboration and development partners, customers, potential customers,
media, analysts and the general public on behalf of the Company;
 
(v)        Enhancing corporate visibility through active participation in
investor meetings and industry conferences;
 
(vi)       Identifying and assessing new business and product opportunities; and
 
(vii)      Managing and leading corporate financing activities, public relations
and the Company’s intellectual property portfolio.
 
(b)         Executive shall also have such other powers and duties as may be
from time to time directed by the Board, provided that the nature of Executive’s
powers and duties so prescribed shall not be inconsistent with Executive’s
position and duties herein.
 
(c)         Executive 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 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,
which will interfere with the performance by Executive of his duties hereunder
or Executive’s availability to perform such duties or that will adversely
affect, or negatively reflect upon, the Company. Notwithstanding the foregoing,
Company agrees that Executive may continue to perform activities as a consultant
to RMH Sciences, LLC not to exceed 8 hours per month.
 
(d)         The duties to be performed by Executive hereunder shall be performed
primarily at the headquarter offices of the Company, which shall be at such
location during the Term as the Company and Executive may mutually agree, but in
any case within the 25-mile radius of the Company’s current headquarter offices
at the address set forth above; provided, however, that Executive understands
that his duties will require periodic travel, which may be substantial at times.
 
4.    Directorship.  Upon the Effective Date, the Company shall cause Executive
to be appointed as a member of the Board.  Thereafter, throughout the Term and
shall include his in the management slate for election as a director at every
stockholders meeting during the Term at which his term as a director would
otherwise expire.  Executive agrees to accept such appointment and nomination,
as applicable, and to serve during the Term, as director of the Company, without
any compensation therefor other than as specified in this Agreement.
 
5.    Compensation.  As full compensation for the performance by Executive of
his duties under this Agreement, the Company shall pay Executive as follows:
 
(a)         Base Salary.
 
(i)  Through the day prior to the first anniversary of the Effective Date, the
Company shall pay Executive a base salary (the “Base Salary”) equal to One
Hundred Thousand Dollars ($100,000.00) per annum, payable semi-monthly in
accordance with the Company’s normal payroll practices.
 

 
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(ii) On and after the first anniversary of the Effective Date and continuing
through the day prior to the second anniversary of the Effective Date, the
Company shall pay the Executive a Base Salary equal to Three Hundred Fifty
Thousand Dollars ($350,000.00) per annum, plus an amount equal to the Consumer
Price Index plus 1% calculated in accordance with subparagraph (iii) below,
payable during the Term in accordance with the Company’s normal payroll
practices.
 
(iii) On and after the second anniversary and for the remainder of the Term,
Executive’s Base Salary shall be increased by an amount determined by
multiplying Executive’s then effective Base Salary by the sum of (1)(A) the then
applicable Consumer Price Index for New York-Northern New Jersey as reported by
the United States Department of Labor, Bureau of Labor Statistics,  plus (B) one
percent (1%), payable during the Term in accordance with the Company’s normal
payroll practices.
 
(b)        Performance Bonus.  During the Term, Executive shall also be eligible
to receive an annual cash performance bonus (the "Performance Bonus").  The
amount of such Performance Bonus shall be based on the achievement of specific
objectives to be established by the Board, or a designated committee thereof, on
an annual basis (the “Performance Goals”) which amount may be up to fifty
percent (50%) of Executive’s Base Salary in the event of achievement of the
Performance Goals.  The Performance Goals for the first twelve (12) months of
the Term shall be established at or promptly following the date of this
Agreement by Executive and the Board (or a designated committee
thereof).  Notwithstanding the Base Salary described in Section 5(a)(i),
Executive shall be eligible to receive a Performance Bonus of up to One Hundred
Seventy Five Thousand Dollars ($175,000.00) during the first year of employment
irrespective of the Base Salary amount for such period.  Each year during the
Term, the Performance Goals, shall be renewed on a calendar year basis (with the
first calendar year being pro-rated), by Executive and the Board (or a
designated committee thereof) no later than 15 days prior to the end of such
calendar year.  Any Performance Bonus will be paid to Executive within 30 days
of the end of each calendar year during the Term with respect to which a
Performance Bonus is earned.
 
(c)        Change of Control Bonus. In the event of a Change of Control (as
defined below), the Executive shall be entitled to receive a cash bonus (the
“Change of Control Bonus”) in an amount equal to the greater of (i) One Hundred
Thousand Dollars ($100,000.00), and (ii) the product obtained by multiplying (1)
the difference between (A) the aggregate value to be received by the Company
and/or its stockholders in connection with such Change of Control and (B) One
Hundred Million Dollars ($100,000,000.00) by (2) 0.15%.  The Change of Control
Bonus will be paid to the Executive pro rata as and when the Company and/or its
stockholders receive payments relating to such Change of Control.
 
(d)        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 Executive under this Section 5.

 
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(e)        Options.  Executive will be granted options (the “Options”) pursuant
to the Company’s 2005 Stock Option Plan (the “Plan”) to purchase that number of
shares of the Company’s common stock, par value $0.0001 per share (the “Common
Stock”), which represents in the aggregate not less than five percent (5%) of
the outstanding shares of Common Stock on a Fully Diluted Basis.  Each such
Option shall have a term equal to 10 years, an exercise price equal to the fair
market value of the Common Stock as of the grant date and be subject to the
provisions of Section 10 below.
 
(i)  Sixty percent (60%) of the Options shall be designated as “Employment
Options” and shall vest, if at all, as follows:
 
A.   twenty five percent (25%) of the shares subject to such Employment Option
shall vest upon or be deemed vested as of the first anniversary of the Effective
Date; and thereafter
 
B.    the remaining unvested shares subject to such Employment Option shall vest
upon or be deemed vested in 24 equal monthly installments as of each subsequent
monthly anniversary of the Effective Date commencing with the 13-month
anniversary.
 
(ii)        Forty percent (40%) of the Options shall be designated as
“Performance Options.” The Performance Options shall vest in three equal annual
installments during the Term (representing in each year approximately 13.33% of
the total Options), subject to the successful annual achievement of the
applicable Performance Goals for such year.  The vesting of each installment of
the Performance Option shall be determined no later than 15 days prior to the
end of the applicable calendar year.
 
(iii)       The Company agrees to file a registration statement on Form S-8
including the shares of Common Stock issuable upon exercise of the Options on or
before December 31, 2011.
 
(iv)      The Company shall take all reasonable actions necessary to cause an
increase in the number of shares of Common Stock issuable under the Plan
sufficient to permit the issuance of the Options described in Section 5(e).
 
(v)       For purposes of this Agreement, “Fully Diluted Basis” shall mean the
sum of (A) the number of shares of Common Stock actually outstanding, plus (B)
the number of shares of Common Stock issuable upon conversion or exercise, as
the case may be, of all securities of the Company convertible into, exercisable
for, or exchangeable for, directly or indirectly, shares of Common Stock
outstanding at such time, including but not limited to, options and warrants to
purchase Common Stock disregarding any vesting or similar provisions.
 
(f)         Restricted Stock. The Company shall issue to Executive on the
Effective Date, Two Hundred Fifty Thousand shares of Common Stock (the
“Restricted Stock”) pursuant to the Plan.  The Restricted Stock shall have a
deemed fair market value of $1.00 per share (as determined in good faith by the
Board) and will be issued to Executive for no additional consideration payable
by Executive.  The Restricted Stock will be subject to vesting as provided below
and, subject to the provisions of Section 10 below, upon termination of
Executive’s employment with the Company, any shares of Restricted Stock that
have not vested as of such termination shall be forfeited to the Company.
Subject to the provisions of Section 10 below, the Restricted Stock shall vest
in 12 equal monthly installments as of each one month anniversary of the
Effective Date.

 
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(g)        Adjustments to Options and Restricted Stock.  In the event of changes
in the outstanding Common Stock by reason of stock dividends, stock splits,
reverse stock splits, recapitalizations, reorganizations, mergers,
consolidations, combinations or other changes in capitalization occurring after
the date of this Agreement, the number of shares underlying the Options and
Restricted Stock and, with respect to the Options, the exercise price, shall be
equitably adjusted by the Board.
 
(h)        Expenses.  The Company shall reimburse Executive for all normal,
usual and necessary expenses incurred by Executive 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 Executive’s expenditures and otherwise in accordance with any
expense reimbursement policy as may from time to time be adopted by the Company.
 
(i)          Insurance. Executive shall be designated as a named insured on
directors’ and officers’ liability insurance of the Company.
 
(j)          Executive Benefits.
 
(i) Executive will be entitled to participate in all long-term and short-term
incentive compensation programs, profit sharing programs and retirement programs
(including without limitation equity-based programs) made available from time to
time to senior executives of the Company.
 
(ii) During the Term, Executive shall receive a monthly car allowance in an
amount equal to One Thousand Five Hundred Dollars ($1,500) per month.
 
(k)         Vacation.  Executive shall, during the Term, be entitled to three
(3) non-consecutive weeks of vacation per annum, in addition to nationally
recognized holidays.
 
6.    Confidential Information and Inventions.
 
(a)        Executive 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, Executive 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.  Additionally, information that, by its
nature and content, would be readily recognized by a reasonable person to be
proprietary to the Company shall also be deemed Confidential and Proprietary
Information.  Executive 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.  Executive agrees not to:
 
 
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(i)  use any such Confidential and Proprietary Information for strictly personal
use or for others; and
 
(ii) permanently remove 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 Executive’s duties to the Company, provided; however, that
Executive shall not be prevented from using or disclosing any Confidential and
Proprietary Information:
 
A.  that Executive can demonstrate was known to his prior to the effective date
of that certain Confidential Disclosure Agreement entered into between the
Parties dated January 4, 2010;
 
B.   that is now, or becomes in the future, available to persons who are not
legally required to treat such information as confidential unless such persons
acquired the Confidential and Proprietary Information through acts or omissions
of Executive; or
 
C.   that he is compelled to disclose pursuant to the order of a court or other
governmental or legal body having jurisdiction over such matter, provided that
(1) Executive shall give Company sufficient advance written notice of such
required disclosure to permit it to seek a protective order or other similar
order with respect to such Confidential Information, and (2) thereafter
Executive shall disclose only the minimum Confidential Information required to
be disclosed in order to comply, whether or not a protective order or other
similar order is obtained by the Company.  The Confidential Information that is
disclosed pursuant to this paragraph shall remain Confidential Information for
all other purposes.
 
(b)        Executive 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.
 
(c)         Except with prior written authorization by the Company, Executive
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 a legal
duty of confidence, at any time during or after his employment with the Company.

 
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(d)        Executive agrees that all inventions, discoveries, improvements and
patentable or copyrightable works, relating to the Company’s business
(“Inventions”) initiated, conceived or made by her, 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.  Executive 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 6(d)
with respect to any Invention that is not directly or indirectly related to the
Company’s business.  Executive 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 Executive 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)         Executive acknowledges that while performing the services under this
Agreement the Executive or, in the course of their services on behalf of the
Company, other employees, agents or advisors of the Company or its affiliates
may locate, identify and/or evaluate molecules, compounds, products and product
candidates having commercial potential in the specific segments of the
pharmaceutical or biotechnology research and development industries in which the
Company is then operating (the “Corporate Opportunities”). Executive
understands, acknowledges and agrees that, subject to the intellectual property
rights of any third parties in such Corporate Opportunities, the Executive shall
not pursue any such Corporate Opportunity for himself or for others unless on
behalf of the Company or unless such Corporate Opportunity is first offered to
the Company and the Company rejects such Corporate Opportunity.  Notwithstanding
the foregoing, nothing in this Agreement shall be construed as a limitation of
Executive’s fiduciary duties as an officer and director of the Company.
 
(f)         The provisions of this Section 6 shall survive any termination of
this Agreement.

 
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7.    Non-Competition and Non-Solicitation.
 
(a)        Executive understands and recognizes that his services to the Company
are special and unique and that in the course of performing such services
Executive will have access to and knowledge of Confidential and Proprietary
Information (as defined in Section 6) and Executive agrees that, during the Term
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 that is directly or indirectly
competitive with the Company’s business, 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; provided, however, that if a Person’s business
has multiple lines or segments, some of which are not competitive with the
Company’s business, nothing herein shall prevent Executive from being employed
by, working for or assisting that line or segment of a Person’s business that is
not competitive with the Company’s business.  Executive 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 legitimate
business interest in protecting the continuity of its business interests and the
restriction herein agreed to by Executive narrowly and fairly serves such an
important and critical business interest of the Company.  Notwithstanding the
foregoing, nothing contained in this Section 7(a) shall be deemed to prohibit
Executive from acquiring or holding, solely for investment purposes, the
securities of any corporation or other entity, 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 or other
entity.
 
(b)        During the Term and for a period of 12 months thereafter, Executive
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 subsidiaries
to leave the employ of the Company or such subsidiaries; or
 
(ii)  solicit the business of any agent, client or customer of the Company or
any of its subsidiaries with respect to products or services similar to and
competitive with those provided or supplied by the Company or any of its
subsidiaries.
 
(c)         Executive and Company mutually 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, and in the case
of the Company including any officer, director or material shareholder of the
Company.  Notwithstanding the foregoing, nothing in this Agreement shall
preclude the parties hereto or their successors from making truthful statements
in the proper performance of their jobs or that are required by applicable law,
regulation or legal process, and the parties shall not violate this provision in
making truthful statements in response to disparaging statements made by the
other party.
 
(d)         In the event that Executive materially breaches any provisions of
Section 6 or this Section 7, then, in addition to any other rights which the
Company may have, the Company shall be entitled to seek injunctive relief to
enforce the restrictions contained in such Sections which injunctive relief
shall be in addition to any other rights or remedies available to the Company
under the law or in equity.

 
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(e)         The right and remedy enumerated in Section 7(d) shall be independent
of 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 7, 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 7 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 7 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 6 or this Section 7, Executive 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.  Executive
agrees that he shall not raise in any proceeding brought to enforce the
provisions of Section 6 or this Section 7 that the covenants contained in such
Sections limit his ability to earn a living.
 
(g)        The provisions of this Section 7 shall survive any termination of
this Agreement, provided that the Company has not breached its obligations under
this Agreement.
 
8.    Representations and Warranties by Executive.  Executive hereby represents
and warrants to the Company as follows:
 
(a)        Neither the execution or delivery of this Agreement nor the
performance by Executive of his duties and other obligations hereunder violate
or will violate any statute or law or conflict with or constitute a default or
breach of any covenant or obligation, including without limitation any
non-competition restrictions, under any prior employment agreement, contract, or
other instrument to which Executive is a party or by which he is bound (whether
immediately, upon the giving of notice or lapse of time or
both).  Notwithstanding the foregoing, Executive makes no representation as to
the enforceability of the provisions of Section 7.
 
(b)        Executive 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 Executive enforceable against his in accordance with its terms.  No approvals
or consents of any persons or entities are required for Executive to execute and
deliver this Agreement or perform his duties and other obligations hereunder.
 
9.    Termination.  Notwithstanding any provision to the contrary contained
herein, and subject to the provisions of Section 10 below, which shall
exclusively govern Executive's rights upon termination of employment with the
Company, this Agreement and Executive's employment with the Company may be
terminated by either party at any time and for any reason or no reason at
all.  In the event that the Company terminates Executive’s employment without
Cause (as defined below), it shall provide Executive with 30 days prior written
notice of such termination.

 
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10.  Severance.
 
(a)         In the event that Executive’s employment is terminated by the
Company without Cause (as defined below), or by Executive for Good Reason (as
defined below), then upon such termination the Company shall pay Executive’s
earned and accrued Base Salary, any earned but unpaid Performance Bonus and
accrued vacation through the date of termination, at the rate in effect at the
time of termination, and in addition, the Company shall:
 
(i) continue to pay Executive’s Base Salary at the rate in effect at the time of
termination (without regard to any reduction in base salary that served as the
basis for a resignation for Good Reason) for a period of twelve (12) months
following the date of termination (the “Severance Period”);
 
(ii) the vesting of all unvested Employment Options and Restricted Stock shall
be accelerated such that all unvested Employment Options and Restricted Stock
shall be deemed vested as if Executive had remained continuously employed with
the Company for one year following the termination date, and all earned but
unvested Performance Options shall be deemed vested; and
 
(iii) all vested Options shall remain exercisable for a period of 365 calendar
days following the termination date, after which date all Options shall expire;
provided, however, that no such Option shall be exercisable after the expiration
of its maximum term pursuant to the terms thereof.
 
(b)        In the event that Executive’s employment is terminated by the Company
for Cause, or by Executive other than for Good Reason, then upon such
termination the Company shall pay Executive’s earned and accrued Base Salary
through the date of termination, at the rate in effect at the time of
termination, and (i) Executive shall not be entitled to any severance benefits,
and (ii) the vesting applicable to all unvested Options and Restricted Stock
shall cease immediately and the Executive shall have a period of 90 days to
exercise any and all vested Options, after which time all Options shall expire.
 
(c)         In the event that Executive’s employment is terminated at any time
beginning on the day that is 90 days prior to the effective date of a Change of
Control (as defined below) (the “Trigger Date”) and ending on the date that is
12 months from the Trigger Date, then:
 
(i)         Executive shall be entitled to receive the amounts described above
in Sections 10(a)(i)(A) or (B) (as applicable); and

(ii)        all unvested Options and Restricted Stock shall immediately vest in
full and remain exercisable, if applicable, for a period of 365 calendar days
following the date of such termination; provided, however, that no such Option
shall be exercisable after the expiration of its maximum term pursuant to the
terms thereof.  In order to give effect to the foregoing provision,
notwithstanding anything to the contrary set forth in the Executive’s Option
agreements regarding immediate forfeiture of unvested shares upon termination of
service or the duration of post-termination of service exercise periods,
following any termination of the Executive’s employment, none of Executive’s
Options shall terminate with respect to any vested or unvested portion subject
to such equity incentive awards before 90 days following such termination.

 
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(d)        This Section 10 sets forth the only obligations of the Company with
respect to the termination of Executive’s employment with the Company, and
Executive acknowledges that, upon the termination of his employment, he shall
not be entitled to any payments or benefits which are not explicitly provided in
Section 10.  Further, notwithstanding anything to the contrary contained herein,
the Company shall have no obligation to pay, and Executive shall have no
obligation to receive, any compensation, benefits or other consideration
provided for in this Section 10 (the “Payments”) following termination of
Executive’s employment unless Executive executes in no event later than 45 days
following Executive’s termination (the “Release Deadline”) a separate agreement,
in the form attached hereto as Exhibit A (the “Release Agreement”), releasing
the Company from any and all liability in connection with the termination of
Executive’s employment; provided, however, that the failure to execute the
Release Agreement shall not relieve the Company of its obligation to pay to
Executive, and Executive shall be entitled to receive, the amount of any earned
and/or accrued but unpaid Base Salary, earned but unpaid Performance Bonus and
accrued vacation through the date of termination.  The Company will pay the
Payments in accordance with its regular payroll schedule; provided, however,
that no Payments will be paid prior to the Release Deadline.  If the Company
determines that the Payments constitute “deferred compensation” under Section
409A (as defined in Section 11), and Executive’s Separation from Service (as
defined in Section 11) occurs at a time during the calendar year when the
Release Agreement could be executed in the calendar year following the calendar
year in which Executive’s Separation from Service occurs, then regardless of
when the Release is returned to the Company, the Release will not be deemed
executed any earlier than the Release Deadline.  Notwithstanding any other
payment schedule set forth in this Agreement, none of the Payments will be paid
or otherwise delivered prior to the execution of the Release Agreement.  Except
to the extent that Payments may be delayed until the Specified Employee Initial
Payment Date pursuant to Section 11, on the first regular payroll pay day
following the execution of the Release, the Company will pay Executive the
Payments Executive would otherwise have received under the Agreement on or prior
to such date but for the delay in Payments related to the execution of the
Release, with the balance of the Payments being paid as originally scheduled.
 
(e)         In the event that Executive’s employment is terminated by the
Company without Cause, or by Executive for Good Reason, then upon such
termination the Company shall provide Executive with a letter, signed by the
Chairman of the Board, in substantially the form attached hereto as Exhibit B.
 
(f)         Upon termination of Executive’s employment hereunder for any reason,
Executive shall be deemed to have resigned as director of the Company, effective
as of the date of such termination.

 
11

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(g)        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 Executive under this Section 10.
 
(h)        The provisions of this Section 10 shall survive any termination of
this Agreement.
 
(i)          For purposes of this Agreement, “Cause” shall include any of the
following:
 
(i)      Executive's willful failure to adequately perform material duties or
obligations hereunder, or willful misconduct by Executive in respect of such
duties or obligations, including, without limitation, willful failure, disregard
or refusal by Executive to abide by specific objective and lawful directions
received by his in writing constituting an action of the Board and, within 30
days after written notice from the Company of such failure, disregard or refusal
and Executive has not corrected such failure, disregard or refusal.
 
(ii)     any willful, intentional or grossly negligent act by Executive having
the reasonably foreseeable effect of actually and substantially injuring,
whether financial or otherwise, the business reputation of the Company;
 
(iii)    Executive's indictment of any felony;
 
(iv)    Executive being convicted of a misdemeanor involving moral turpitude
that causes, or could reasonably be expected to cause, substantial harm to the
Company or its reputation;
 
(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 Executive engaged in some form of harassment prohibited by
law (including, without limitation, age, sex or race discrimination); provided,
however, that Cause shall not exist under this clause (v) unless the Company
gives written notice to Executive where such notice describes with particularity
the alleged act(s) at issue and has given Executive an opportunity to be heard
at a meeting of the Board with or without counsel, and the Board provides
Executive with a summary of its findings;
 
(vi)    any misappropriation or embezzlement of the property of the Company or
its affiliates (whether or not a misdemeanor or felony) by Executive; and
 
(vii)   a material breach by the Executive of Section 6, 7 or 8 of this
Agreement.
 
(j)         For purposes of this Agreement, “Good Reason” shall mean:
 
(i)       any material diminution by the Company of Executive's title, duties or
Base Salary;  or

 
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(ii)     a material breach by the Company of Section 4 or 5 of this Agreement,
which, if capable of being cured, is not cured by the Company within 30 days of
written notice by Executive to the Company; or
 
(k) For purposes of this Agreement, “Change of Control” shall have the meaning
set forth in the Plan, except that, notwithstanding the terms of the Plan, no
transaction shall be considered a Change of Control under this Agreement:
 
  (i) as a result of a Change of Control arising out of  or in connection with
issuance and sale by the Company of its equity securities for the purpose of
financing the Company’s on-going operations; or
 
  (ii) as a result of a Change of Control arising out of any transaction
ascribing a valuation of the Company of less Forty Five Million Dollars
($45,000,000).
 
11.  Certain Tax Provisions.
 
(a)         Section 409A.  Notwithstanding anything to the contrary set forth
herein, any payments and benefits provided under this Agreement (the “Severance
Benefits”) that constitute “deferred compensation” within the meaning of Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the
regulations and other guidance thereunder and any state law of similar effect
(collectively “Section 409A”) shall not commence in connection with Executive’s
termination of employment unless and until Executive has also incurred a
“separation from service” (as such term is defined in Treasury Regulation
Section 1.409A-1(h) (“Separation From Service”), unless the Company reasonably
determines that such amounts may be provided to Executive without causing
Executive to incur the additional 20% tax under Section 409A.  If Executive is,
upon the separation from service, a “specified employee” of the Company or any
successor entity thereto, as such term is defined in Section 409A(a)(2)(B)(i) of
the Code, then, solely to the extent necessary to avoid the incurrence of the
adverse personal tax consequences under Section 409A, the timing of the
Severance Benefit payments shall be delayed until the earlier to occur of: (i)
the date that is six months and one day after Executive’s Separation From
Service, or (ii) the date of Executive’s death (such applicable date, the
“Specified Employee Initial Payment Date”), the Company (or the successor entity
thereto, as applicable) shall pay to Executive a lump sum amount equal to the
sum of the Severance Benefit payments that Executive would otherwise have
received through the Specified Employee Initial Payment Date if the payment of
the Severance Benefits had not been so delayed pursuant to this Section.

 
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(b)        Section 280G.  Notwithstanding anything to the contrary contained in
this Agreement, to the extent that any of the payments and benefits provided for
under this Agreement or any other agreement or arrangement between Executive and
the Company  (collectively, the "Payments")  constitute a "parachute payment"
within the meaning of Section 280G of the Code and (ii) but for this Section
11(b), would be subject to the excise tax imposed by Section 4999 of the Code,
then the Payments shall be payable either (i) in full or (ii) as to such lesser
amount which would result in no portion of such Payments being subject to excise
tax under Section 4999 of the Code; whichever of the foregoing amounts, taking
into account the applicable federal, state and local income taxes and the excise
tax imposed by Section 4999, results in Executive’s receipt on an after-tax
basis, of the greatest amount of economic benefits under this Agreement,
notwithstanding that all or some portion of such benefits may be taxable under
Section 4999 of the Code.  Unless Executive and the Company otherwise agree in
writing, any determination required under this Section 11(b) shall be made in
writing by the Company’s independent public accountants (the "Accountants"),
whose reasonable determination shall be conclusive and binding upon Executive
and the Company for all purposes.  For purposes of making the calculations
required by this Section 11(b), the Accountants may make reasonable assumptions
and approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of  the Sections 280G and 4999
of the Code.  Executive and the Company shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section 11(b).  If a reduction in Payments is
necessary so that no portion of the Payments is subject to the excise tax under
Section 4999 of the Code, reduction shall occur in the manner that results in
the greatest economic benefit to Executive.  If more than one method of
reduction will result in the same economic benefit, the items so reduced will be
reduced pro rata.  If this Section 11(b) is applied to reduce an amount payable
to Executive, and the Internal Revenue Service successfully asserts that,
despite the reduction, Executive has nonetheless received payments which are in
excess of the maximum amount that could have been paid to his without being
subjected to any excise tax, then, unless it would be unlawful for the Company
make such a loan or similar extension of credit to Executive, Executive may
repay such excess amount to the Company though such amount constitutes a loan to
Executive made at the date of payment of such excess amount, bearing interest at
120% of the applicable federal rate (as determined under section 1274(d) of the
Code in respect of such loan).
 
12.  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)        Simultaneously with the execution of this Agreement, the Company and
the Executive shall enter into the Indemnification Agreement attached hereto as
Exhibit C.
 
(c)        Any dispute arising out of, or relating to, this Agreement or the
breach thereof (other than Sections 6 or 7 hereof), or regarding the
interpretation thereof, shall be exclusively decided by binding arbitration
conducted in New York, NY in accordance with the rules of the American
Arbitration Association (the “AAA”) 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.  Each of the parties agrees that service of process in such
arbitration proceedings shall be satisfactorily made upon it if sent by
registered mail addressed to it at the address referred to in clause (h)
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.

 
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(d)        This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and their respective heirs, legal representatives, successors
and assigns.
 
(e)         This Agreement, and Executive’s rights and obligations hereunder,
may not be assigned by Executive.  The Company may assign its rights, together
with its obligations, hereunder in connection with any sale, transfer or other
disposition of all or substantially all of its business or assets provided the
assignee entity which succeeds to the Company expressly assumes the Company’s
obligations hereunder and complies with the terms of this Agreement.
 
(f)         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.
 
(g)        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.
 
(h)        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 (5) 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 clause (h).
 
(i)         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.
 
(j)         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.
 
(k)        The section headings contained herein are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Agreement.
 
(l)         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.

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

  ARNO THERAPEUTICS, INC.          
By: 
/s/ David M. Tanen
   
Name:  
David M. Tanen
   
Title:
President
          EXECUTIVE          
By: 
/s/ Glenn Mattes
   
Name:
Glenn Mattes

 
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Exhibit A
[Form of]
Release Agreement

THIS RELEASE AGREEMENT (the “Agreement”) is entered into as of [DATE] by and
between GLENN MATTES (the “Executive”) and ARNO THERAPEUTICS, INC., a Delaware
corporation (the “Company”).

WHEREAS, Executive and the Company are parties to that certain Employment
Agreement dated April ____, 2011 (the “Employment Agreement”), which set forth
the terms of Executive’s employment with the Company as its Chief Executive
Officer and President;

WHEREAS, Section 10 of the Employment Agreement sets forth certain compensation
and other benefits payable to Executive in certain circumstances upon the
termination of his employment with the Company;

WHEREAS, paragraph (d) of Section 10 provides that the Company’s obligation to
pay to Executive the compensation and other benefits described in Section 10 of
the Employment Agreement is conditioned upon the Executive’s execution of a
Release Agreement (as defined therein); and

WHEREAS, the parties intend that this Agreement shall constitute the Release
Agreement described in Section 10(d) of the Employment Agreement.

NOW, THEREFORE, in consideration of the foregoing, the parties hereby agree as
follows:

1.           Release of Claims.  In consideration for the payments and other
benefits described in Section 10 of the Employment Agreement, Executive hereby
fully and finally releases, waives, and discharges any and all legal claims
against the Company that he has through the date on which he signs this
Agreement. This full and final release, waiver, and discharge extends to legal
and equitable claims of any kind or nature whatsoever including, without
limitation, the following:

(a)           All claims that Executive has now, whether or not he now knows
about the claims;

(b)           All claims for attorney’s fees and costs;

(c)           All claims for alleged discrimination against his under any
applicable federal, state, and local law including, without limitation, rights
and claims of age discrimination under the federal Age Discrimination in
Employment Act (“ADEA”) and federal Older Workers Benefits Protection Act
(“OWBPA”); and discrimination claims under the California Fair Employment and
Housing Act (“CFEHA”), Title VII of the Civil Rights Act of 1964 (“Title VII”),
and the Americans With Disabilities Act (“ADA”);

(d)           All claims arising out of his employment and the termination of
his employment and service as an officer with the Company, including, but not
limited to, any alleged breach of contract, wrongful termination, termination in
violation of public policy, defamation, invasion of privacy, fraud, negligence,
infliction of emotional distress, breach of implied contract and breach of the
covenant of good faith and fair dealing;

 
 

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(e)           All claims for any other alleged unlawful employment practices
arising out of or relating to his employment or separation from employment and
service as an officer with the Company; and

(f)           All claims for any other form of pay, for example bonus pay,
incentive pay, holiday pay, and sick pay.

Provided, however, that the foregoing does not constitute a release or waiver of
Executive’s rights, if any, to (a) indemnification under any applicable
directors & officers liability insurance policy, applicable state and federal
law, and the Company’s certificate of incorporation and bylaws, (b) any rights
under stock options, stock purchase agreements and equity plans of the Company
and any vested interest he may have in any 401(k), retirement, defined benefit,
defined contribution or other plan by virtue of his employment with the Company,
(c) any rights or claims that may arise after this Agreement is signed, (d) any
rights to any unemployment compensation benefits to which he is entitled taking
into consideration all payments he receives, (e) any rights under the Employment
Agreement, including without limitation the payments and benefits specifically
promised to Executive under the Employment Agreement, and any rights of
Executive under any other written agreement with the Company entered into after
the date of the Employment Agreement, or (f) the right to institute legal action
for the purpose of enforcing the provisions of this Agreement and/or the
surviving provisions of the Employment Agreement.

Executive also hereby waives any right to reinstatement to employment with the
Company.

For purposes of this Agreement, “Executive” includes anyone who has or obtains
any legal rights or claims through Executive, and the term “Company” means Arno
Therapeutics, Inc., and its past and present parents and subsidiaries, if any,
and each of them; and past and present agents, officers, directors, employees,
insurers, indemnitors, attorneys, successors or assigns of any or all of the
foregoing entities.

 2.           Rights to Counsel, Consider, and Revoke and Rescind.

(a)           Executive acknowledges that he consulted with an attorney prior to
signing the Employment Agreement.  The Company hereby advises Executive to
consult with an attorney prior to signing this Agreement.

(b)           Executive understands that he has the right to take up to 21 days
to consider his waiver of age discrimination rights and claims under the ADEA
and OWBPA, beginning the date on which he received this Agreement. he further
understands that, if he signs this Agreement, he may revoke his waiver of age
discrimination rights and claims under the ADEA and OWBPA within seven days
thereafter, and his waiver will not be effective or enforceable until this
seven-day period has expired.

 3.           Charges. This Agreement does not prohibit Executive from filing an
administrative charge of discrimination with, or cooperating or participating in
an investigation or proceeding conducted by, the Equal Employment Opportunity
Commission or other federal or state regulatory or law enforcement agency.

 4.           Other Agreements.

(a)           Executive’s obligations under Sections 6 and 7 of the Employment
Agreement shall remain in full force and effect and will survive the termination
of Executive’s employment with the Company in accordance with the terms of the
Employment Agreement.  Nothing in this Agreement shall be construed to supersede
or otherwise relieve Executive of such obligations.

 
A-2

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(b)           The Company agrees that no amendment or modification of its
certificate of incorporation or bylaws adopted after the date hereof that
reduces Executive’s rights to seek and obtain indemnification from the Company
in his capacity as officer and/or director shall be effective against Executive.

(c)           The Company acknowledges and agrees that its obligations under
Section 7(c) of the Employment Agreement shall remain in full force and effect
and will survive the termination of Executive’s employment with the Company in
accordance with the terms of the Employment Agreement.  Nothing in this
Agreement shall be construed to supersede or otherwise relieve the Company of
such obligations.

5.            Miscellaneous.  This Agreement states the entire agreement between
Executive and the Company with respect to the subject matter hereof and
supersedes and merges all prior negotiations, agreements, and understandings, if
any.  No modification, release, discharge, or waiver, of any provision of this
Agreement shall be of any force or effect unless made in writing and signed by
Executive and the Company, and specifically identified as a modification,
release, or discharge, of this Agreement.  If any term, clause, or provision of
this Agreement shall for any reason be adjudged invalid, unenforceable, or void,
the same shall not impair or invalidate any of the other provisions of the
Agreement, all of which shall be performed in accordance with their respective
terms.  This Agreement shall inure to the benefit of the successors and assigns
of the Company.

Executive represents that this Agreement, and the release contained in this
Agreement, have been given voluntarily and free from duress or undue influence
on the part of any person or entity released by this Agreement, or by any third
party.  Executive acknowledges and understands that he has no obligation to
enter into this Agreement, but that the Company has no obligation to provide to
Executive the payments and benefits described under Section 10 of the Employment
Agreement if he does not enter into this Agreement.

Executive has read this Agreement carefully and understands all of its terms. he
acknowledges that he has had the opportunity to discuss this Agreement with his
own attorneys prior to signing it, and to make certain that he understands the
meaning of the terms and conditions contained in this Agreement and fully
understands the content and effect of this Agreement. In agreeing to sign this
Agreement, Executive acknowledges that he has not relied on any representations
or statements, whether oral or written, other than the express statements of
this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date(s) set forth below.

EXECUTIVE:
  ARNO THERAPEUTICS, INC.                
By: 
 
Glenn Mattes
 
Its:
           
Dated: 
   
Dated: 
 

 
A-3

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Exhibit B
[Form of Chairman’s Letter]

[DATE]

Dear Mr. Mattes:

In connection with the recent termination of your employment as President and
Chief Executive Officer of Arno Therapeutics, Inc. (the “Company”), I hereby
confirm, on behalf of the Company, that [except as set forth on Annex A hereto,]
I am not aware of any claims against you that could be asserted by the Company,
nor do I know of any third party claims against you arising out of your work for
the Company or your service on the Company’s board of directors.

 
Very truly yours,
         
[CHAIRMAN OF THE BOARD]

 
 
 

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Exhibit C

INDEMNIFICATION AGREEMENT**
 
** separately filed as Exhibit 10.2
 
 
 

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