Document:

Exhibit
      10.1

    

      EMPLOYMENT
        AGREEMENT

       

      This
        EMPLOYMENT AGREEMENT (the "Agreement")
        is
        dated as of August 19, 2008 by and between ARNO
        THERAPEUTICS, INC.,
        a
        Delaware corporation with principal executive offices at 30 Two Bridges Rd.,
        Suite 270, Fairfield, NJ 07004 (the "Company"),
        and
DR.
        ROGER
        BERLIN,
        an
        individual residing at ___________________________ (the "Executive").

       

      WHEREAS,
        the Company desires to employ Executive as Chief Executive Officer of the
        Company; and 

       

      WHEREAS,
        Executive desires to accept such employment upon the terms and conditions
        contained in this Agreement.

       

      NOW,
        THEREFORE, in consideration of the premises and mutual covenants herein
        contained and for other good and valuable consideration, the parties hereby
        agree as follows:

       

      1. Term
        of Employment.
        The
        Executive’s employment by the Company shall commence on September 3, 2008 (the
“Effective
        Date”)
        and
        continue for a period of two (2) years from the Effective Date unless
        terminated earlier
        as set
        forth in Section 8 below (the “Employment
        Term”)
        provided,
        however,
        that
        the Employment 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").
        

       

      2. Position.

       

      a. During
        the Employment Term, Executive shall serve as Chief Executive Officer of
        the
        Company. In such position, Executive shall, subject to any limitations or
        other
        directions determined from time to time by the Board of Directors of the
        Company
        (the "Board"),
        which
        limitations and/or directions shall be consistent with state and federal
        law,
        have such duties and authority as are consistent with the position of Chief
        Executive Officer of a company of similar size and nature,
        including:

       

      (i)
        Developing clinical, regulatory and business strategy of the Company and
        managing its implementation;

       

      (ii)
        Overseeing corporate hiring and supervising the performance of
        management;

       

      (iii)
        Maintaining active, honest communication with the Board;

       

      (iv)
        Developing and maintaining strong relationships with the Company’s key
        investors, collaborators, potential collaborators, 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 commercial opportunities; and

       

      (vii)
        Managing and leading corporate financing activities, public relations and
        intellectual property portfolio.

       

      b. Directorship.
        As of
        the Effective Date, the Board shall appoint Executive to serve as a director
        of
        the Company. The Company shall thereafter use its best efforts to cause the
        Executive to remain a member of the Board throughout the Employment Term
        and
        shall include him in the management slate of nominees for election as a director
        at every stockholders meeting during the Employment Term at which his term
        as a
        director would otherwise expire. The Executive agrees to accept such nomination
        and election, and to serve during the Employment Term, as director of the
        Company, without any additional compensation other than as specified in this
        Agreement. Upon
        the
        expiration of the Employment Term or the earlier termination of Executive’s
        employment pursuant to Section 8, unless otherwise agreed, Executive shall
        be
        deemed to have resigned from the Board and shall forfeit his position as
        a
        director of the Company.

       

      c. During
        the Employment Term, Executive shall devote his full business time and attention
        to the performance of his duties hereunder, which shall be performed primarily
        at the offices of the Company, which are currently located in Fairfield,
        New
        Jersey. Without the prior written consent of the Board, Executive shall not
        engage in any other business, profession or occupation for compensation or
        otherwise that would conflict or interfere with the rendition of his services
        hereunder or adversely affect or negatively reflect upon the Company.
        Notwithstanding the foregoing, Executive shall be entitled to spend two business
        days per quarter working with the Gates Foundation. 

       

      3. Base
        Salary.
        During
        the Employment Term, the Company shall pay Executive a base salary
        ("Base
        Salary")
        at an
        annual rate of Three Hundred Seventy Five Thousand Dollars ($375,000.00),
        payable in regular installments in accordance with the Company's usual payroll
        practices in effect from time to time. The Board (or a designated committee
        thereof) may, in its sole discretion, increase such Base Salary from time
        to
        time. 

       

      4. Bonus
        Compensation. 

       

      a. Performance
        Bonus.
        During
        the Employment Term, Executive shall also be eligible to receive an annual
        cash
        performance bonus (the "Performance
        Bonus").
        The
        amount of such Performance Bonus shall be determined at the discretion of
        the
        Board, or a designated committee thereof, which amount may be up to fifty
        percent (50%) of Executive’s Base Salary in the event of exceptional
        performance. The Board, or such designated committee, shall use as guidance
        for
        the determination of the Performance Bonus certain corporate and individual
        goals (the “Performance
        Goals”),
        which
        shall be established within 30 days of the Effective Date of this Agreement
        by
        the Executive and the Board (or a designated committee thereof), and renewed
        annually on a calendar year basis, with the first calendar year being pro-rated
        as discussed otherwise herein, by the Executive and the Board (or a designated
        committee thereof). Any Performance Bonus will be paid to the Executive within
        30 days of the end of each calendar year during the Employment
        Term.

       

      
        
          
          

        

        
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      b. Merger
        and Acquisition Bonus. Upon
        a
        Merger
        or Acquisition (as defined below) where the Company is ascribed an aggregate
        valuation equal to or above those amounts set forth below, the Executive
        will be
        paid the following amounts: 

       

      (i)
        $100,000 where the Company’s aggregate valuation is greater than $100,000,000
        but less than $150,000,000;

       

      (ii)
        $150,000 where the Company’s aggregate valuation is greater than or equal to
        $150,000,000 but less than $200,000,000;

       

      (iii)
        $200,000 where the Company’s aggregate valuation is greater than or equal to
        $200,000,000 but less than $250,000,000; 

       

      (iv)
        $250,000 where the Company’s aggregate valuation is greater than or equal to
        $250,000,000; and 

       

      (v)
        $500,000 where Company’s aggregate valuation is greater than or equal to
        $300,000,000.

       

      c. In
        the
        event of a Merger or Acquisition, the applicable Merger or Acquisition Bonus
        shall be paid on the effective date of such Merger or Acquisition. 

       

      d. For
        purposes of this Agreement, a “Merger
        or Acquisition”
shall
        mean the
        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). Notwithstanding
        the foregoing, no transaction shall be considered a Merger or Acquisition
        under
        this Agreement, and no bonus shall be paid, pursuant to this Section
        4(b):

       

      (i)
        if
        the Company’s stockholders existing prior to such transaction(s) hold in the
        aggregate more than fifty percent (50%) of the securities or assets of the
        surviving or resulting company; or

       

      (ii)
        in
        connection with a private placement of equity securities of the Company in
        connection with a financing of the Company’s on-going operations; or

       

      (iii)
        for
        any transaction ascribing a valuation to the Company of less than Seventy
        Five
        Million Dollars ($75,000,000); provided, however, that such a transaction
        may be
        considered as part of a series of transactions that gives rise to a Merger
        or
        Acquisition. 

       

      5. Equity.
        

       

      a. Employment
        Options. On
        the
        Effective Date, the Company shall grant to Executive stock options (the
        "Employment
        Options"),
        pursuant to the Company's 2005 Stock Option Plan, to purchase Four
        Hundred Thirty Thousand (430,000) shares
        of
        common stock of the Company, par value $0.0001 per share (the "Common
        Stock").
        The
        Employment Options shall be
        incentive stock options issued as provided in Internal Revenue Code Section
        422
        and shall generally vest
        and
        become exercisable, if at all, in two equal annual installments of Two
        Hundred Fifteen Thousand (215,000) shares of Common Stock
        on each
        anniversary of the Effective Date (each date on which Employment Options
        vest is
        hereinafter referred to as a “Vesting
        Date”).
        The
        Employment Options shall have a 10 year term and shall be exercisable at
        an
        exercise price per share equal to the closing price of the Common Stock on
        the
        Effective Date as reported on the OTC Bulletin Board or such other securities
        exchange or market on which the Common Stock is then eligible for trading.
        

       

      
        
          
          

        

        
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      b. Performance
        Options. Promptly
        following the Effective Date, the Company shall grant to the Executive options
        (the “Performance
        Options”)
        to
        purchase Four
        Hundred Thirty Thousand (430,000) shares
        of
        Common Stock.
        The
        Performance Options shall be
        incentive stock options issued as provided in Internal Revenue Code Section
        422.
        Except as otherwise provided herein, contingent
        upon the
        successful achievement of the Performance Goals, the
        Performance Options shall vest as follows:

       

      (i)
        Up to
        71,667 Performance Options shall vest, if at all, on December 31,
        2008;

       

      (ii)
        Up
        to 215,000 Performance Options shall vest, if at all, on December 31, 2009;
        and

       

      (iii)
        Up
        to 143,333 Performance Options shall vest, if at all, on the second anniversary
        of the Effective Date

       

      To
        the
        extent any installment of the Performance Options subject to each vesting
        period
        described above does not vest, the unvested portion of such installment shall
        immediately and automatically expire and Executive shall have no further
        rights
        thereto.  The
        Performance Options shall have a 10 year term and shall be exercisable at
        an
        exercise price per share equal to the closing price of the Common Stock on
        the
        Effective Date as reported on the OTC Bulletin Board or such other securities
        exchange or market on which the Common Stock is then eligible for
        trading.

       

      c. Technology
        Options.
        In
        the
        event that the Company acquires by license, acquisition or otherwise, an
        additional biotechnology product or series of biotechnology products (a
“Technology”)
        for
        development that is first identified by the Executive, then the Company shall
        grant to the Executive options (the “Technology
        Options”)
        to
        purchase a number of shares of Common Stock, as follows:

       

      (i)
        One
        Hundred Thousand (100,000) shares of Common Stock of the Company for a
        Technology that is in pre-clinical development; 

       

      (ii)
        Two
        Hundred Thousand (200,000) shares of Common Stock of the Company for a
        Technology that is currently being studied in a Phase I human clinical trial,
        as
        defined in 21 C.F.R. §312(a);

       

      
        
          
          

        

        
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      (iii)
        Four Hundred Thousand (400,000) shares of Common Stock of the Company for
        a
        Technology that is currently being studied in a Phase II human clinical trial,
        as defined in 21 C.F.R. §312(b). 

       

      (iv)
        Any
        such Technology Options issued to the Executive shall vest immediately upon
        the
        date of grant and shall be exercisable for a period of five (5) years at
        an
        exercise price per share equal to the fair market value of the Common Stock
        on
        the date of the grant of such Technology Options, as determined in accordance
        with the Company’s stock option pricing policies then in effect.

       

      d. The
        parties specifically acknowledge and agree that the equity provisions of
        this
        Employment Agreement supersede any and all prior or subsequent agreements,
        including but not limited to any stock option agreement(s), relating to grant
        of
        equity options to the Executive.  To the extent there is a disagreement of
        the terms of this Employment Agreement and a prior or subsequent stock option
        agreement, including but not limited to those dealing with change of control
        and
        vesting, then the terms of this Agreement shall control.

       

      6. Employee
        Benefits.
        During
        the Employment Term, Executive shall be entitled to: (a) participation in
        the
        Company's health, dental and other welfare benefit as in effect from time
        to
        time; (b) up to four (4) non-consecutive weeks of vacation per year; and
        (c)
        sick leave and holidays in accordance with the Company's policies as in effect
        from time to time (collectively, "Employee
        Benefits"),
        on a
        basis no less favorable than those benefits generally made available to other
        senior executives of the Company or, as applicable, to the Company's employees
        generally. The Company shall reimburse the Executive for the premiums
        attributable to a term life insurance policy for the Executive in an amount
        equal to Two Million Dollars ($2,000,000). Executive shall be designated
        as a
        named insured on directors and officers’ liability insurance of the Company
        providing policy limits of not less than Two Million Dollars ($2,000,000),
        and
        Executive shall be provided evidence of such insurance within 30 days of
        the
        date of this Agreement.

       

      7. Business
        Expenses.
        During
        the Employment Term, reasonable business expenses incurred by Executive in
        the
        performance of his duties hereunder shall be reimbursed by the Company in
        accordance with the Company's policies in effect from time to time.  

       

      8. Termination.
        Notwithstanding any provision to the contrary contained herein, this Agreement
        and Executive's employment with the Company may be terminated by either party
        at
        any time and for any reason.
        Notwithstanding any other provision of this Agreement, the provisions of
        this
        Section 8 shall exclusively govern Executive's rights upon termination of
        employment with the Company.

       

      a. By
        the
        Company For Cause or By Executive Resignation Without Good
        Reason.

       

      (i)
        The
        Employment Term and Executive's employment hereunder may be terminated by
        the
        Company for Cause (as defined below) and shall terminate automatically upon
        Executive's resignation without Good Reason (as defined in Section 8(c)(ii)).
        

       

      
        
          
          

        

        
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      (ii)
        For
        purposes of this Agreement, "Cause"
        shall
        mean: (A) 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 him in writing constituting
        an action of the Board;
        (B)
        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; (C)
        Executive's indictment of any felony; (D) 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; (E) 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 clause (E) 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; (F) any
        misappropriation or embezzlement of the property of the Company or its
        affiliates (whether or not a misdemeanor or felony) by Executive; and (G)
        a
        material breach by Executive of this Agreement.

       

      (iii)
        If
        Executive's employment is terminated by the Company for Cause, or if Executive
        resigns without Good Reason, Executive shall be entitled to receive: (A)
        his
        Base Salary through the date of such termination; (B) any Performance Bonus
        earned but unpaid as of the date of termination for any previously completed
        year of employment; (C) reimbursement for any unreimbursed business expenses
        properly incurred by Executive prior to the date of such termination in
        accordance with Company policy; and (D) such Employee Benefits, if any, as
        to
        which Executive may be entitled under the employee benefit plans of the Company
        for Executive (the amounts described in clauses (A) through (D) hereof being
        referred to as the "Accrued
        Rights").
        Additionally, if Executive's employment is terminated by the Company for
        Cause,
        or if Executive resigns without Good Reason, then (1) all unvested Employment
        and Performance Options shall expire immediately, and (2) the Executive shall
        have a period of 90 days to exercise any and all currently vested Employment
        Options and Performance Options, after which time all Employment and Performance
        Options shall expire. 

       

      (iv)
        Following a termination of Executive's employment by the Company for Cause
        or
        resignation by Executive without Good Reason, except as set forth in Section
        8(a)(iii), Executive shall have no further rights to any compensation or
        any
        other benefits under this Agreement;
        provided, however, following the termination or expiration of this Agreement
        for
        any reason, and notwithstanding any provision herein to the contrary, the
        Executive will continue to be covered under any directors and officers liability
        insurance maintained by the Company to the some extent as other former officers
        and directors of the Company.

      
        
          
          

        

        
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      b. Disability
        or Death.
        

       

      (i)
        The
        Employment Term and Executive's employment hereunder shall terminate
        automatically upon Executive's death and may be terminated by the Company
        if
        Executive becomes physically or mentally incapacitated and is, therefore,
        unable
        for a period of six (6) consecutive calendar months or for an aggregate of
        nine
        (9) calendar months in any twelve (12) calendar consecutive month period
        to
        perform Executive's duties (such incapacity is hereinafter referred to as
        "Disability").
        Any
        question as to the existence of the Disability of Executive as to which
        Executive and the Company cannot agree shall be determined in writing by
        a
        qualified independent physician agreed upon by the Company and Executive
        ("Independent
        Physician").
        The
        Independent Physician shall be (i) licensed in the State of Executive’s
        residence; (ii) be Board certified in the medical specialty at issue; and
        (iii)
        have experience in disability determinations.
        Executive hereby agrees to make himself available and
        to
        cooperate in any reasonable examination by an Independent Physician.
        Company
        agrees to pay the costs of the Independent Physician and all related expenses.
        The Company shall maintain the confidentiality of all medical information
        which
        it receives pursuant to this Agreement and to abide by the requirements of
        Health Insurance Portability and Accountability Act of 1996, as
        amended.

       

      (ii)
        If,
        prior to the first anniversary of the Effective Date, the Executive's employment
        is terminated for either death or Disability, then the Executive, or
        Executive's
        designated beneficiary, if any, otherwise the personal representative
        of
        Executive's Estate
        (as the
        case may be), shall be entitled to: (A) the Accrued Rights; (B) one half
        of the
        Performance Bonus, if any, that Executive would have been entitled to receive
        in
        respect of the fiscal year in which such termination occurs, payable when
        such
        Performance Bonus would have otherwise been payable had Executive's employment
        not terminated (a “Pro-Rata
        Bonus”); (C)
        continued payment of his then current Base Salary and Employee Benefits for
        a
        period of 180 calendar days following any such termination; (D) all unvested
        Employment Options scheduled to vest on the next Vesting Date immediately
        following such termination shall immediately vest and remain exercisable
        for a
        period of 360 calendar days, after which date all Employment Options shall
        expire; (E) other than as described in the immediately preceding sentence,
        all
        unvested Employment Options shall immediately and automatically expire; (F)
        all
        vested Performance Options shall remain exercisable for a period of 360 calendar
        days, after which date all Performance Options shall expire; and (G) all
        unvested Performance Options shall immediately and automatically
        expire.

       

      (iii)
        If,
        on or after the first anniversary of the Effective Date, the Executive's
        employment is terminated for either death or Disability, then Executive,
        or
        Executive's
        designated beneficiary, if any, otherwise the personal representative
        of
        Executive's Estate
        (as the
        case may be), shall be entitled to: (A) the Accrued Rights; (B) the full
        Performance Bonus, if any, that Executive would have been entitled to receive
        in
        respect of the fiscal year in which such termination occurs, payable when
        such
        Performance Bonus would have otherwise been payable had Executive's employment
        not terminated; (C)
        continued payment of his then current Base Salary and Employee Benefits for
        a
        period of 360 calendar days following any such termination; (D) all unvested
        Employment Options scheduled to vest on the next Vesting Date immediately
        following such termination shall immediately vest and remain exercisable
        for a
        period of 360 calendar days, after which date all vested Employment Options
        shall expire, provided, however, that in no event shall the period for
        exercising the Employment Options extend beyond the original terms of such
        awards; (E) other than as described in section (D) above, all unvested
        Employment Options shall immediately and automatically expire; (F) all vested
        Performance Options shall remain exercisable for a period of 360 calendar
        days,
        after which date all vested Performance Options shall expire, provided, however,
        that in no event shall the period for exercising the Performance Options
        extend
        beyond the original terms of such awards; and (G) all unvested Performance
        Options shall immediately and automatically expire.

       

      
        
          
          

        

        
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      c. By
        the
        Company Without Cause or Resignation by Executive for Good
        Reason.

       

      (i)
        The
        Employment Term and Executive's employment hereunder may be terminated by
        the
        Company without Cause or by Executive's resignation for Good Reason.

       

      (ii)
        For
        purposes of this Agreement, "Good
        Reason"
        shall
        mean: (A) any material
        diminution
        by the Company of Executive's (1) title of Chief Executive Officer, (2) duties,
        or (3) Base Salary; or (B) a
        material breach by the Company of any of the provisions contained herein,
        which,
        if capable of being cured, is not cured by the Company within thirty (30)
        days
        after written notice thereof by Executive to the Company; (C) relocation
        of
        Company’s principal executive office more than 50 miles without the Executive’s
        consent; or (D) if at any time the Executive shall be removed from the Board
        of
        Directors other than as a result of a termination of this Agreement.

       

      (iii)
        If,
        prior to the first anniversary of the Effective Date, the Executive's employment
        is terminated by the Company without Cause, or if Executive resigns for Good
        Reason, Executive shall be entitled to the following compensation and benefits:
        (A) the Accrued Rights; (B) subject to Executive's continued compliance with
        the
        provisions of Sections 9 and 10, continued payment of his then current Base
        Salary and Employee Benefits for a period of 180 days following such
        termination; (C) subject to Executive's continued compliance with the provisions
        of Sections 9 and 10, an amount equal to one-half of the Performance Bonus,
        if
        any, that the Executive would have earned for the year in which such termination
        occurs; (D) unvested Employment Options scheduled to vest on the next Vesting
        Date immediately following such termination shall immediately vest and remain
        exercisable for a period of 360 days, after which date all Employment Options
        shall expire; (F) other than as described in (D) above, all unvested Employment
        Options shall immediately and automatically expire; (F) all vested Performance
        Options shall remain exercisable for a period of 360 days, after which date
        all
        Performance Options shall expire immediately expire; and (G) all unvested
        Performance Options shall immediately and automatically expire. 

       

      (iv)
        If,
        on or after the first anniversary of the Effective Date, the Executive's
        employment is terminated by the Company without Cause, or if Executive resigns
        for Good Reason, Executive shall be entitled to the following compensation
        and
        benefits: (A) the Accrued Rights; (B) subject to Executive's continued
        compliance with the provisions of Sections 9 and 10, continued payment of
        his
        then current Base Salary and Employee Benefits for a period of 360 calendar
        days
        following such termination; (C) subject to Executive's continued compliance
        with
        the provisions of Sections 9 and 10, an amount equal to the Performance Bonus,
        if any, that the Executive would have earned for the year in which such
        termination occurs; (D) unvested Employment Options scheduled to vest
on
        the
        next Vesting Date immediately following such termination shall
        immediately vest and remain exercisable for a period of 360 calendar days,
        after
        which date all Employment Options shall expire; provided, however, that in
        no
        event shall the period for exercising the Employment Options extend beyond
        the
        original terms of such awards; (E) all vested Performance Options shall remain
        exercisable for a period of 360 calendar days, after which date all Performance
        Options shall expire immediately expire; provided, however, that in no event
        shall the period for exercising the Performance Options extend beyond the
        original terms of such awards; and (F) all unvested Performance Options shall
        expire immediately.

       

      
        
          
          

        

        
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      (v)
        Following Executive's termination of employment by the Company without Cause
        (other than by reason of Executive's death or Disability) or by Executive's
        resignation for Good Reason, all Employment Options which were not then vested
        (or did not become vested pursuant to Section 8(c)(iii) or (iv) hereof) shall
        immediately and automatically expire and, except as set forth in this Section
        8(c)(iii) or (iv), Executive shall have no further rights to any compensation
        or
        any other benefits under this Agreement.

       

      d. By
        the
        Company upon a Change of Control.

       

      (i)
        If,
        prior to the first anniversary of the Effective Date, the Executive's employment
        is terminated as a result of a Change of Control, as defined in the Company’s
        2005 Stock Option Plan, Executive shall be entitled to receive the following
        compensation and benefits: (A) the Accrued Rights; (B) subject to Executive's
        continued compliance with the provisions of Sections 9 and 10, continued
        payment
        of his then current Base Salary and Employee Benefits for a period of 180
        calendar days following such termination; (C) subject to Executive's continued
        compliance with the provisions of Sections 9 and 10, an amount equal to the
        Performance Bonus, if any, that the Executive would have earned for the year
        in
        which such termination occurs; (D) all unvested Employment Options and
        Performance Options shall immediately vest and remain exercisable for a period
        of 360 calendar days, after which date all Employment Options and Performance
        Options shall expire immediately; provided, however, that in no event shall
        the
        period for exercising the Employment Options or the Performance Options extend
        beyond the original terms of such awards.

       

      (ii)
        If,
        on or after the first anniversary of the Effective Date, the Executive's
        employment is terminated as a result of a Change of Control, as defined in
        the
        Company’s 2005 Stock Option Plan, Executive shall be entitled to receive the
        following compensation and benefits: (A) the Accrued Rights; (B) subject
        to
        Executive's continued compliance with the provisions of Sections 9 and 10,
        continued payment of his then current Base Salary and Employee Benefits for
        a
        period of 360 calendar days following such termination; (C) subject to
        Executive's continued compliance with the provisions of Sections 9 and 10,
        an
        amount equal to the Performance Bonus, if any, that the Executive would have
        earned for the year in which such termination occurs; (D) all unvested
        Employment Options and Performance Options shall immediately vest and remain
        exercisable for a period of 360 calendar days, after which date all Employment
        Options and Performance Options shall expire immediately; provided, however,
        that in no event shall the period for exercising the Employment Options or
        the
        Performance Options extend beyond the original terms of such
        awards..

      
        
          
            
            

          

          
            9

            
              

            

          

          
            
            

          

        

      

      

      e. Expiration
        of Employment Term.
        In the
        event either party delivers a Notice of Non-Renewal, unless Executive's
        employment is terminated prior to the expiration of the Employment Term pursuant
        to paragraphs (a), (b), (c) or (d) of this Section 8, Executive shall be
        entitled to receive the Accrued Rights. Upon expiration
        of the then Term
        following either party's election not to extend the Employment Term, (i)
        any
        unvested Employment Options and Performance Options shall expire, and (ii)
        any
        vested Employment Options and Performance Options shall remain exercisable
        for a
        period of one
        hundred eighty (180) days
        from the
        date the
        Employment Term ends;
        provided, however, that in no event shall the period for exercising the
        Employment Options or the Performance Options extend beyond the original
        terms
        of such awards. Further, except as set forth in this Section 8(e), Executive
        shall have no further rights to any compensation or any other benefits under
        this Agreement; provided,
        however, that following the termination or expiration of this Agreement for
        any
        reason, and notwithstanding any provision herein to the contrary, the Executive
        will continue to be covered under any directors and officers liability insurance
        maintained by the Company to the some extent as other former officers and
        directors of the Company.

       

      f. Notice
        of Termination.
        Any
        purported termination of employment by the Company or by Executive (other
        than
        due to Executive's death) shall be communicated by at least 30 days’ prior
        written notice to the other party hereto in accordance with the provisions
        of
        this Agreement ("Notice
        of Termination"),
        which
        notice shall indicate the specific termination provision in this Agreement
        relied upon and shall set forth in reasonable detail the facts and circumstances
        claimed to provide a basis for termination of employment under the provision
        so
        indicated. In lieu of such 30 day notice, the Company may pay the Executive
        the
        compensation he would otherwise have been entitled to during such 30 day
        period.

       

      g. To
        the
        extent any provision of this Agreement may be deemed to provide a benefit
        to
        Executive that is treated as non-qualified deferred compensation pursuant
        to
        Section 409A of the Internal Revenue Code of 1986, as amended, such
        provision shall be interpreted in a manner that qualifies for any applicable
        exemption from compliance with Section 409A or, if such interpretation
        would cause any reduction of benefit(s), such provision shall be interpreted
        (if
        reasonably possible) in a manner that complies with Section 409A and does
        not cause any such reduction.

       

      h. Payments
        to Executive.
        Except
        as otherwise provided herein, all payments required to be made by the Company
        to
        Executive under this Section 8 in connection with the termination of Executive's
        employment shall be payable in regular installments in accordance with the
        Company's usual payroll practices. The obligations of the Company to make
        any
        payments described in Sections 8(b)(ii)(B) and (C), 8(c)(iii)(B) and (C),
        8(c)(iv)(B) and (C), and 8(d)(iii)(B) and (C) and its obligations under Sections
        8(b)(iii), 8(c)(iii)(E), 8(c)(iv)(E) and (F), and 8(d)(iii)(E) shall be subject
        to Executive's
        continued compliance with his obligations under Sections 9 and 10
        hereof.
        In
        the
        event that the Executive brings any claims against the Company, the Company
        shall, in addition to any other rights that the Company may have at law or
        at
        equity, have the right to cease making any of the payments described in Section
        8. The
        Company shall have no obligation to pay any compensation or provide any benefits
        to Executive except as expressly set forth in this Section 8.

       

      9. Non-Competition
        and Non-Solicitation.

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      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 10 below) and Executive agrees that, during the Employment Term
        and
        for a period of six (6) months
        (or 12
        months if Executive's employment is terminated by Executive without Good
        Reason)
        thereafter, he shall not in any manner, directly or indirectly, on behalf
        of
        himself or any natural person, firm, partnership, joint venture,
        corporation,
        limited
        liability company
        or other
        business entity ("Person"),
        enter
        into or engage in any business that is directly or indirectly competitive
        with
        the Company’s Business (as defined below), 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, member 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
        such
        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 strong 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
        9(a)
        shall be deemed to prohibit Executive from acquiring or holding, solely for
        investment purposes, publicly traded 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.
        For
        purposes of this Agreement, "Company's
        Business"
        shall
        be the development of novel therapeutics for the treatment of cancer, which
        shall be specifically limited to the investigation, development, and/or testing
        of compounds developed by the Company during the tenure of the Executive’s
        employment.

       

      b. During
        the Employment Term and for a period of 12 months thereafter (or six (6)
        months
        in the case of clause (b)(ii)), Executive shall not, directly or indirectly,
        without the prior written consent of the Company: (i)
        solicit or induce any person
        who, at any time during the preceding twelve (12) months, was an employee
        of the Company or any of its subsidiaries or of
        Two
        River
        Group Holdings, LLC ("Two
        River")
        to
        leave the employ of the Company or such subsidiaries or Two River
        or hire,
        or assist any other Person in hiring, any such employee;
        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. The
        Company and Executive mutually agree that both during the Employment 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.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      d. In
        the
        event that Executive breaches any provisions of this Section 9 or Section
        10,
        then, in addition to any other rights that the Company may have, the Company
        shall be entitled
        to cease
        making any payments to Executive under Section 8 hereof, cancel any options
        that
        vested under Section 8 hereof, recover any amounts paid under Section 8 hereof
        (including amounts received by Executive in respect of any options that became
        vested under Section 8) other than payments in respect of the Accrued Rights
        and
        seek
        injunctive relief to enforce the restrictions contained in such Sections,
        which
        injunctive relief shall be in addition to any rights or remedies available
        to
        the Company under the law or in equity.  The
        Executive’s agreement to the terms and conditions contained in this section
        shall in no way be considered his consent to the entry of such relief, and
        the
        Executive and the Company agree that no such relief will be sought until
        notice
        is given to the Executive and a 14 day period in which the Executive has
        to cure
        the alleged violation lapses.

       

      e. The
        rights and remedies enumerated in Section 9(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 9, 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 9 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 9 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. The
        provisions of this Section 9 shall survive the termination of Executive's
        employment for any reason.

       

      10. 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 Employment
        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 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. 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: (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 his 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 him prior to the date of this Agreement;
        (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
        Executive shall give prompt written notice to the Company of such requirement,
        disclose no more information than is so required, and cooperate with any
        attempts by the Company to obtain a protective order or similar
        treatment.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      b. 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.

       

      c. If
        Executive creates, invents, designs, develops, contributes to or improves
        any
        works of authorship, inventions, intellectual property, materials documents
        or
        other work product relating to the Company's Business ("Inventions")
        either
        alone or with third parties, at any time during Executive's employment by
        the
        Company and within the scope of such employment and/or with the use of any
        Company resources, Executive shall promptly and fully disclose same to the
        Company and hereby irrevocably assigns, transfers and conveys, to the maximum
        extent permitted by applicable law, all rights and intellectual property
        rights
        therein (including rights under patent, industrial property, copyright,
        trademark, trade secret, unfair competition and related laws) to the Company
        to
        the extent ownership of any such rights does not vest originally in the Company.
        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 agrees that all Inventions, 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). Executive further agrees to assist the Company
        (at
        the Company's expense but without further remuneration) to obtain and from
        time
        to time enforce, protect, record or register patents, copyrights or other
        rights
        on such Inventions in any and all countries, and to that end Executive shall
        execute all documents necessary to: (i)
        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)
        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. If the Company is
        unable for any other reason to secure Executive's signature on any document
        for
        this purpose, then Executive hereby irrevocably designates and appoints the
        Company and its duly authorized officers and agents as Executive's agent
        and
        attorney-in-fact, to act for and in Executive's behalf and stead to execute
        any
        documents and to do all other lawfully permitted acts in connection with
        the
        foregoing

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      d. Executive
        acknowledges that while performing the services under this Agreement Executive
        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 Company or one of its affiliates ("Third
        Party Inventions").
        Executive 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 Executive), agents or consultants during
        the
        Employment Term shall be and remain the sole and exclusive property of the
        Company or such affiliate and Executive shall have no rights whatsoever to
        such
        Third-Party Inventions and will not pursue for himself or for others any
        transaction relating to Third-Party Inventions that is not on behalf of the
        Company.

       

      e. Upon
        termination of Executive's employment with the Company for any reason, Executive
        shall: (i) cease and not thereafter commence use of any Confidential and
        Proprietary Information, Inventions, Third Party Inventions or other
        intellectual property owned or used by the Company, its subsidiaries or
        affiliates (including, without limitation, any trade secret, trademark, trade
        name, logo, domain name or other source indicator); (ii) immediately destroy,
        delete, or return to the Company, at the Company's option, all originals
        and
        copies in any form or medium (including memoranda, books, papers, plans,
        computer files, letters and other data) in Executive's possession or control
        (including any of the foregoing stored or located in Executive's office,
        home,
        laptop or other computer, whether or not Company property) that contain
        Confidential and Proprietary Information or otherwise relate to the Company's
        Business and the business of its affiliates and subsidiaries, except that
        Executive may retain only those portions of any personal notes, notebooks
        and
        diaries that do not contain any Confidential and Proprietary Information;
        and
        (iii) notify and fully cooperate with the Company regarding the delivery
        or
        destruction of any other Confidential and Proprietary Information of which
        Executive is or becomes aware.

       

      f. Executive
        shall not improperly use for the benefit of, bring to any premises of, divulge,
        disclose, communicate, reveal, transfer or provide access to, or share with
        the
        Company any confidential, proprietary or non-public information or intellectual
        property relating to, a former employer or other third party without the
        prior
        written permission of such third party. Executive shall comply with all relevant
        policies and guidelines of the Company, including regarding the protection
        of
        confidential information and intellectual property and potential conflicts
        of
        interest. Executive acknowledges that the Company may amend any such policies
        and guidelines from time to time, and that Executive remains at all times
        bound
        by their most current version.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      g. The
        provisions of this Section 10 shall survive the termination of Executive's
        employment for any reason.

       

      11. Specific
        Performance.
        Executive acknowledges and agrees that the Company's remedies at law for
        a
        breach of any of the provisions of Section 9 or Section 10 may be
        inadequate and the Company may suffer irreparable damages as a result of
        such
        breach.  In recognition of this fact, Executive agrees that, in the event
        of such a breach, in addition to any remedies at law or under this Agreement,
        the Company shall be entitled to cease making any payments otherwise required
        by
        this Agreement and to seek equitable relief in the form of specific performance,
        temporary restraining order, temporary or permanent injunction or any other
        equitable remedy which may then be available.  The
        Executive’s agreement to the terms and conditions contained in this section
        shall in no way be considered his consent to the entry of such relief, and
        the
        Executive and the Company agree that no such relief will be sought until
        notice
        is given to the Executive and a 14 day period in which the Executive has
        to cure
        the alleged violation lapses.

       

      12. Representations.
        Executive
        hereby represents and warrants to the Company as follows:

       

      a. Neither
        the execution nor 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,
        to
        any
        prior employer under
        (whether immediately, upon the giving of notice or lapse of time or both)
        any
        prior employment agreement, contract, or other instrument to which Executive
        is
        a party or by which he is bound,
        or
        under applicable law.

       

      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 him 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. 

       

      c. Executive
        has not taken or retained (and will not take or retain) any documents or
        files,
        whether in hard copy or electronic form, which were created, collected or
        received by Executive in connection with any prior employment, except for
        documents and files relating solely to Executive’s compensation. 

       

      13. Miscellaneous.

       

      a. Governing
        Law.
        This
        Agreement shall be governed by and construed in accordance with the laws
        of the
        State of New Jersey, without regard to the conflicts of laws principles
        thereof.

       

      b. Arbitration.
        Any
        dispute arising out of, or relating to, this Agreement or the breach thereof
        (other than Sections 9 or 10 hereof), or regarding the interpretation thereof,
        shall be exclusively decided by binding arbitration conducted in New
        Jersey
        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 by the Company. In the event Executive
        prevails at arbitration, he shall be entitled to payment of reasonable
        attorney’s fees in addition to all other relief awarded by the arbitrator.
        Judgment on the arbitration award may be entered by any court of competent
        jurisdiction. 

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      c. Entire
        Agreement/Amendments.
        This
        Agreement contains the entire understanding of the parties with respect to
        the
        employment of Executive by the Company. There are no restrictions, agreements,
        promises, warranties, covenants or undertakings between the parties with
        respect
        to the subject matter herein other than those expressly set forth herein.
        This
        Agreement may not be altered, modified or amended except by written instrument
        signed by the parties hereto.

       

      d. No
        Waiver.
        The
        failure of a party to insist upon strict adherence to any term of this Agreement
        on any occasion shall not be considered a waiver of such party's rights or
        deprive such party of the right thereafter to insist upon strict adherence
        to
        that term or any other term of this Agreement.

       

      e. Severability.
        In the
        event that any one or more of the provisions of this Agreement shall be or
        become invalid, illegal or unenforceable in any respect, the validity, legality
        and enforceability of the remaining pro-visions of this Agreement shall not
        be
        affected thereby.

       

      f. Assignment.
        This
        Agreement and all of Executive's rights and duties hereunder, shall not be
        assignable or delegable by Executive or the Company, except as set forth
        below.
        Any purported assignment or delegation by Executive in violation of the
        foregoing shall be null and void ab
        initio
        and of
        no force and effect. This Agreement may be assigned by the Company only to
        a
        Person which is a successor in interest to substantially all of the business
        operations of the Company. Upon such assignment, the rights and obligations
        of
        the Company hereunder shall become the rights and obligations of such successor
        Person.

       

      g. Successors;
        Binding Agreement.
        This
        Agreement shall inure to the benefit of and be binding upon personal or legal
        representatives, executors, administra-tors, successors, heirs, distributees,
        devisees and legatees.

       

      h. Notice.
        For the
        purpose of this Agreement, notices and all other communications provided
        for in
        the Agreement shall be in writing and shall be deemed to have been duly given
        when delivered by hand or overnight courier or three days after it has been
        mailed by United States registered mail, return receipt requested, postage
        prepaid, addressed to the respective addresses set forth below in this
        Agreement, or to such other address as either party may have furnished to
        the
        other in writing in accordance herewith, except that notice of change of
        address
        shall be effective only upon receipt.

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

      If
        to the
        Company:

      

      Arno
        Therapeutics, Inc.

      30
        Two
        Bridges Rd., Suite 270

      Fairfield,
        NJ 07004

      

      If
        to
        Executive:

       

      To
        the
        most recent address of Executive set forth in the personnel records of the
        Company.

       

      i. Cooperation.
        After
        the termination of the Employment Term, Executive shall cooperate with the
        Company in connection with any action or proceeding (or any appeal from any
        action or proceeding) that relates to events occurring during Executive's
        employment hereunder, but shall be done to the extent reasonably possible
        in a
        manner as to reduce interference in Executive's new position after his
        employment hereunder ends. The Company shall reimburse Executive for any
        reasonable out of pocket expenses he incurs in connection with such cooperation.
        This provision shall survive any termination of this Agreement. 

       

      j. Withholding
        Taxes.
        The
        Company may withhold from any amounts payable under this Agreement such federal,
        state and local taxes as may be required to be withheld pursuant to any
        applicable law or regulation.

       

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

       

      

       

      [Remainder
        of Page Intentionally Left Blank]

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the parties hereto have duly executed this Employment Agreement
        as of the day and year first above written.

      

        
          	 	
                  ARNO
                    THERAPEUTICS, INC.

                
	 	 
	 	
                  By:
                    

                	
                  /s/
                    David M. Tanen

                	 
	 	
                  Name: 
                    David
                    M. Tanen

                	 
	 	
                  Title:   
                    Secretary
                    and Director

                	 
	 	 	 	 
	 	 	 	 
	 	
                  EXECUTIVE:

                
	 	 
	 	
                  /s/
                    Roger Berlin   

                	 
	 	
                  Dr.
                    Roger Berlin

                

        

      

      

        
          
            
            

          

          
            18Exhibit
      10.1

     

    AMENDMENT
      NO. 2 TO

    THIRD
      AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

    

    Amendment
      No. 2 to Third Amended and Restated Loan and Security Agreement, dated as of
      August 28, 2008 (this “Amendment”), by and among Wachovia Bank, National
      Association, successor by merger to Congress Financial Corporation, in its
      capacity as agent (in such capacity, “Agent”), acting for and on behalf of
      Lenders (as hereinafter defined), the financial institutions from time to time
      parties to the Loan Agreement (as hereinafter defined) as lenders (“Lenders”),
      Atlantic Express Transportation Corp., a New York corporation (“Parent”), Amboy
      Bus Co., Inc., a New York corporation (“Amboy”), Atlantic Escorts Inc., a New
      York corporation (“Atlantic Escorts”), Atlantic Express Coachways, Inc., a New
      Jersey corporation (“Coachways”), Atlantic Express New England, Inc., a
      Massachusetts corporation (“AE-NE”), Atlantic Express of California, Inc., a
      California corporation (“AE-CA”), Atlantic Express of Illinois, Inc., an
      Illinois corporation (“AE-I”), Atlantic Express of L.A., Inc., a California
      corporation (“AELA”), Atlantic Express of Missouri Inc., a Missouri corporation
      (“AE Missouri”), Atlantic Express of New Jersey, Inc., a New Jersey corporation
      (“AENJ”), Atlantic Express of Pennsylvania, Inc., a Delaware corporation
      (“AEP”), Atlantic Express of Upstate New York, Inc., formerly known as TNT Bus
      Service, Inc., a New York corporation (“AE Upstate”), Atlantic Transit Corp., a
      New York corporation (“ATC”), Atlantic-Hudson, Inc., a New York corporation
      (“AH”), Atlantic Paratrans, Inc., a New York corporation (“AP”), Atlantic
      Paratrans of NYC, Inc., a New York corporation (“APNY”), Atlantic Queens Bus
      Corp., a New York corporation (“AQ”), Block 7932, Inc., a New York corporation
      (“Block”), Brookfield Transit Inc., a New York corporation (“Brookfield”),
      Courtesy Bus Co., Inc., a New York corporation (“Courtesy”), Fiore Bus Service,
      Inc., a Massachusetts corporation (“Fiore”), Groom Transportation, Inc., a
      Massachusetts corporation (“Groom”), G.V.D. Leasing Co., Inc., a New York
      corporation (“GVD”), James McCarthy Limo Service, Inc., a Massachusetts
      corporation (“Limo”), Jersey Business Land Co., Inc., a New Jersey corporation
      (“JBL”), K. Corr, Inc., a New York corporation (“Corr”), Merit Transportation
      Corp., a New York corporation (“Merit”), Metro Affiliates, Inc., a New York
      corporation (“Metro”), Metropolitan Escort Service, Inc., a New York corporation
      (“Metropolitan Escort”), Midway Leasing Inc., a New York corporation (“Midway”),
      180 Jamaica Corp., a New York corporation (“Jamaica”), R. Fiore Bus Service,
      Inc., a Massachusetts corporation (“FBS”), Raybern Bus Service, Inc., a New York
      corporation (“RBS”), Raybern Capital Corp., a New York corporation (“RBC”),
      Raybern Equity Corp., a New York corporation (“REC”), Robert L. McCarthy &
Son, Inc., a Massachusetts corporation (“McCarthy”), Staten Island Bus, Inc., a
      New York corporation (“SI-Bus”), Temporary Transit Service, Inc., a New York
      corporation (“TTS”), Transcomm, Inc., a Massachusetts corporation (“Transcomm”),
      Winsale, Inc., a New Jersey corporation (“Winsale” and together with Parent,
      Amboy, Atlantic Escorts, Coachways, AE-NE, AE-CA, AE-I, AELA, AE Missouri,
      AENJ,
      AEP, AE Upstate, ATC, AH, AP, APNY, AQ, Block, Brookfield, Courtesy, Fiore,
      Groom, GVD, Limo, JBL, Corr, Merit, Metro, Metropolitan Escort, Midway, Jamaica,
      FBS, RBS, RBC, REC, McCarthy, SI-Bus, TTS and Transcomm, each individually
      a
“Borrower” and collectively, “Borrowers”) and the parties hereto from time to
      time as guarantors (each individually a “Guarantor” and collectively,
“Guarantors”, as defined in the Loan Agreement).

     

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    W I T N E S S E T H
      :

    

    WHEREAS,
      Agent, Lenders, Borrowers and Guarantors have entered into financing
      arrangements pursuant to which Agent and Lenders may make loans and advances
      and
      provide other financial accommodations to Borrowers as set forth in the Third
      Amended and Restated Loan and Security Agreement, dated as of May 15, 2007,
      as
      amended by Amendment No. 1 to Third Amended and Restated Loan and Security
      Agreement, dated as of January 1, 2008, by and among Agent, Borrowers,
      Guarantors and Lenders (as amended, modified, supplemented, extended, renewed,
      restated or replaced the “Loan Agreement”, and together with all agreements,
      documents and instruments at any time executed and/or delivered in connection
      therewith or related thereto, as from time to time amended, modified,
      supplemented, extended, renewed, restated or replaced, collectively, the
“Financing Agreements”). All capitalized terms used herein shall have the
      meanings assigned thereto in the Loan Agreement and the other Financing
      Agreements, unless otherwise defined herein;

    

    WHEREAS,
      Borrowers and Guarantors have requested that Agent and Lenders make certain
      amendments to the Loan Agreement, and Agent and Lenders are willing to agree
      to
      such request, and make certain other amendments to the Loan Agreement, subject
      to the terms and conditions set forth herein; and

    

    WHEREAS,
      by this Amendment, Agent, Lenders, Borrowers and Guarantors wish and intend
      to
      evidence such amendments.

    

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

    

    1.
      Definitions.
      For
      purposes of this Amendment, unless otherwise defined herein, all terms used
      herein shall have the respective meanings assigned to such terms in the Loan
      Agreement and the other Financing Agreements.

    

    2.
      Minimum
      EBITDA.
      Section
      9.17 of the Loan Agreement is hereby amended by deleting such Section in its
      entirety and replacing it with the following:

    

    “9.17
      Minimum
      EBITDA.
      At the
      end of each calendar month (commencing with the month ending August 31, 2007),
      Parent and its Subsidiaries shall have EBITDA of not less than $26,000,000
      for
      the twelve (12) consecutive month period then ended; provided,
      that,
      (a) Parent and its Subsidiaries shall not be required to comply with this
      Section for any calendar month if Excess Availability is equal to or greater
      than (i) $5,000,000 at all times during the period from July 1 to September
      15
      of any year, and (ii) $8,000,000 at all times during the period from September
      16 of any year through June 30 of the immediately following year; (b) solely
      for
      purposes of this Section 9.17: (i) the calculation of EBITDA shall not include
      the effects of any non cash accounting adjustments for FASB 133, and (ii) for
      the period from January 1, 2008 through and including February 15, 2009, the
      calculation of the Borrowing Base for purposes of the calculation of Excess
      Availability shall not include Reserves established to reflect obligations,
      liabilities or indebtedness (contingent or otherwise) of Borrowers or Guarantors
      to Agent or any Bank Product Provider arising under or in connection with any
      Hedge Agreement in an amount of up to $5,000,000; and (c) to the extent Parent
      and its Subsidiaries have failed to maintain the minimum EBITDA required by
      this
      Section 9.17 as of the end of any such calendar month, to the extent that Parent
      receives a cash capital contribution from any of its Permitted Holders or AETG
      no later than the EBITDA Capital Contribution Deadline that would if it had
      been
      received prior to the end of such month meant that Parent was in compliance
      with
      this Section 9.17, then Parent and its Subsidiaries shall be deemed to have
      complied with this Section 9.17 for such month.”.

     

    
      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

    

    

    3.
      Amendment
      Fee.
      In
      addition to all other fees, charges, interest and expenses payable by Borrowers
      and Guarantors to Agent and Lenders under the Loan Agreement and the other
      Financing Agreements, Borrowers shall pay to Agent, for the benefit of
Lenders,
      an
      amendment fee in the amount of $15,000, which fee shall be fully earned as
      of
      and payable on the date hereof and may be charged to any loan account of
      Borrowers maintained by Agent.

     

    4.
      Additional
      Representations, Warranties and Covenants.
      Each
      Borrower and Guarantor, jointly and severally, represents, warrants and
      covenants with and to Agent and Lenders as follows, which representations,
      warranties and covenants are continuing and shall survive the execution and
      delivery hereof, and the truth and accuracy of, or compliance with each,
      together with the representations, warranties and covenants in the other
      Financing Agreements, being a continuing condition of the making of Loans by
      Agent or any Lender to Borrowers:

    

    (a)
      This
      Amendment has been duly authorized, executed and delivered by all necessary
      action on the part of each Borrower and Guarantor which is a party hereto and,
      if necessary, their respective members or stockholders, as the case may be,
      and
      are in full force and effect as of the date hereof, as the case may be, and
      the
      agreements and obligations of Borrowers and Guarantors contained herein
      constitute legal, valid and binding obligations of Borrowers and Guarantors
      enforceable against them in accordance with their terms.

    

    (b)
      As of
      the date hereof, all of the representations and warranties set forth in the
      Loan
      Agreement and the other Financing Agreements are true and correct in all
      material respects on and as of the date hereof as if made on the date hereof,
      except to the extent any such representation or warranty is made as of a
      specified date, in which case such representation or warranty shall have been
      true and correct as of such date.

    

    (c)
      Neither the execution, delivery and performance of this Amendment, nor the
      consummation of any of the transactions contemplated herein (i) are in
      contravention of law or any indenture, agreement or undertaking to which any
      Borrower or Guarantor is a party or by which any Borrower or Guarantor or its
      property are bound (including without limitation the Note Indenture) or
      (ii) violates any provision of the certificate of incorporation,
      certificate of formation, operating agreement, by-laws or other governing
      documents of any Borrower or Guarantor.

    

    (d)
      No
      Default or Event of Default exists or has occurred and is continuing as of
      the
      date of this Amendment.

    

    5.
      Conditions
      Precedent.
      The
      effectiveness of the amendments contained herein shall be subject to the
      satisfaction of each of the following, in a manner satisfactory to Agent and
      its
      counsel:

     

    
      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

    

    

    (a)
      Agent
      shall have received this Amendment, duly authorized, executed and delivered
      by
      Borrowers and Guarantors; and

    

    (b)
      No
      Default or Event of Default shall have occurred and be continuing as of the
      date
      of this Amendment.

    

    6.
      Effect
      of this Amendment.
      Except
      as expressly set forth herein, no other amendments, consents, changes or
      modifications to the Financing Agreements are intended or implied, and in all
      other respects the Financing Agreements are hereby specifically ratified,
      restated and confirmed by all parties hereto as of the effective date hereof
      and
      Borrowers shall not be entitled to any other or further amendment or consent
      by
      virtue of the provisions of this Amendment or with respect to the subject matter
      of this Amendment. To the extent of conflict between the terms of this Amendment
      and the other Financing Agreements, the terms of this Amendment shall control.
      The Loan Agreement and this Amendment shall be read and construed as one
      agreement.

    

    7.
      Further
      Assurances.
      The
      parties hereto shall execute and deliver such additional documents and take
      such
      additional action as may be necessary or desirable to effectuate the provisions
      and purposes of this Amendment.

    

    8.
      Governing
      Law.
      The
      validity, interpretation and enforcement of this Amendment and any dispute
      arising out of the relationship between the parties hereto shall be governed
      by
      the internal laws of the State of New York but excluding any principles of
      conflicts of law or other rule of law that would cause the application of the
      law of any jurisdiction other than the laws of the State of New
      York.

    

    9.
      Binding
      Effect.
      This
      Amendment shall be binding upon and inure to the benefit of each of the parties
      hereto and their respective successors and assigns.

    

    10.
      Headings.
      The
      headings listed herein are for convenience only and do not constitute matters
      to
      be construed in interpreting this Amendment.

    

    11.
      Counterparts.
      This
      Amendment may be executed in any number of counterparts, each of which shall
      be
      an original and all of which shall together constitute but one and the same
      agreement. In making proof of this Amendment, it shall not be necessary to
      produce or account for more than one counterpart thereof signed by each of
      the
      parties hereto. Delivery of an executed counterpart of this Amendment by
      telefacsimile or other means of electronic transmission shall have the same
      force and effect as delivery of an original executed counterpart of this
      Amendment. Any party delivering an executed counterpart of this Amendment by
      telefacsimile or other means of electronic transmission also shall deliver
      an
      original executed counterpart of this Amendment, but the failure to deliver
      an
      original executed counterpart shall not affect the validity, enforceability,
      and
      binding effect of this Amendment as to such party or any other
      party.

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    

    
      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

    

    

    

    IN
      WITNESS WHEREOF, Agent, Lenders, Borrowers and Guarantors have caused these
      presents to be duly executed as of the day and year first above
      written.

     

    
      
        
          	 	
                  BORROWERS

                
	 	 
	 	
                  ATLANTIC
                    EXPRESS TRANSPORTATION CORP.

                
	 	
                  AMBOY
                    BUS CO., INC. 

                
	 	
                  ATLANTIC
                    ESCORTS INC.

                
	 	
                  ATLANTIC
                    EXPRESS COACHWAYS, INC. 

                
	 	
                  ATLANTIC
                    EXPRESS NEW ENGLAND, INC. 

                
	 	
                  ATLANTIC
                    EXPRESS OF CALIFORNIA, INC. 

                
	 	
                  ATLANTIC
                    EXPRESS OF ILLINOIS, INC. 

                
	 	
                  ATLANTIC
                    EXPRESS OF L.A., INC.

                
	 	
                  ATLANTIC
                    EXPRESS OF MISSOURI INC. 

                
	 	
                  ATLANTIC
                    EXPRESS OF NEW JERSEY, INC. 

                
	 	
                  ATLANTIC
                    EXPRESS OF PENNSYLVANIA, INC. 

                
	 	
                  ATLANTIC
                    EXPRESS OF UPSTATE NEW YORK, INC. 

                
	 	
                  ATLANTIC
                    TRANSIT CORP. 

                
	 	
                  ATLANTIC-HUDSON,
                    INC. 

                
	 	
                  ATLANTIC
                    PARATRANS, INC. 

                
	 	
                  ATLANTIC
                    PARATRANS OF NYC, INC. 

                
	 	
                  ATLANTIC
                    QUEENS BUS CORP. 

                
	 	
                  BLOCK
                    7932, INC. 

                
	 	
                  BROOKFIELD
                    TRANSIT INC. 

                
	 	
                  COURTESY
                    BUS CO., INC. 

                
	 	
                  FIORE
                    BUS SERVICE, INC. 

                
	 	
                  GROOM
                    TRANSPORTATION, INC. 

                
	 	
                  G.V.D.
                    LEASING CO., INC. 

                
	 	
                  JAMES
                    MCCARTHY LIMO SERVICE, INC. 

                
	 	
                  JERSEY
                    BUSINESS LAND CO., INC. 

                
	 	
                  K.
                    CORR, INC. 

                
	 	
                  MERIT
                    TRANSPORTATION CORP. 

                
	 	
                  METRO
                    AFFILIATES, INC. 

                
	 	
                  METROPOLITAN
                    ESCORT SERVICE, INC. 

                
	 	
                  MIDWAY
                    LEASING INC. 

                
	 	
                  180
                    JAMAICA CORP. 

                
	 	
                  R.
                    FIORE BUS SERVICE, INC. 

                
	 	
                  RAYBERN
                    BUS SERVICE, INC. 

                
	 	
                  RAYBERN
                    CAPITAL CORP. 

                
	 	
                  RAYBERN
                    EQUITY CORP. 

                
	 	
                  ROBERT
                    L. MCCARTHY & SON, INC. 

                
	 	
                  STATEN
                    ISLAND BUS, INC. 

                
	 	
                  TEMPORARY
                    TRANSIT SERVICE, INC. 

                
	 	
                  TRANSCOMM,
                    INC. 

                
	 	
                  WINSALE,
                    INC.

                

        

      

       

      
        	 	
                By:
                  

              	
                /s/
                  Nathan Schlenker

              	 
	 	 	 	 
	 	
                Title:
                  

              	
                Chief
                  Financial Officer

              	 

      

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    AGENT
      AND LENDERS

    

    WACHOVIA
      BANK, NATIONAL ASSOCIATION, 

    successor
      by merger to Congress Financial Corporation,

    as
      Agent
      and as Lender

     

    

      
        	
                By:
                  

              	
                Herb
                  Korn

              	 
	 	 	 
	
                Title:
                  

              	
                Director

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