Exhibit 10.56
EMPLOYMENT AGREEMENT
 
This EMPLOYMENT AGREEMENT, effective as of March 27, 2009 (the “Commencement
Date”), is made by and between Neurogen Corporation, a Delaware corporation (the
“Company”) with offices at 45 Northeast Industrial Road, Branford, Connecticut
06405, and Dr. George Maynard, who currently resides in Clinton, Connecticut
(the “Employee”).

WHEREAS, the Company and the Employee desire to maintain an employment
relationship; and
 
WHEREAS, the Company and the Employee desire to enter into this Agreement to
address, on the terms and conditions hereinafter set forth, certain matters
relating to such employment.
 
NOW, THEREFORE, the Company and the Employee agree as follows:
 
1.  
DEFINITIONS

 
(a)  
Cause

 
For purposes of this Agreement “cause” means:
 
(i)   the Employee is convicted of a felony or entry of a plea of nolo
contendere (or similar plea) in a criminal proceeding for commission of a felony
or serious misdemeanor;
 
(ii)   any willful act or omission by the Employee which constitutes gross
misconduct or gross negligence and which results in demonstrable material harm
to the Company;
 
(iii)   the Employee’s habitual drug or alcohol abuse;
 
(iv)   the Employee’s willful and continuous failure to perform his duties with
the Company after reasonable notice of such failure;
 
(v)   the Employee’s participation in any act of dishonesty intended to result
in his material personal enrichment at the expense of the Company; or
 
(vi)   the Employee’s failure to substantially comply with the terms set forth
in the Proprietary Information and Inventions Agreement between the Employee and
the Company.
 
No act, or failure to act, by the Employee shall be considered “willful” unless
committed in bad faith and without a reasonable belief that the act or omission
was in the Company’s best interest.
 
(b)  
Good Reason

 
For purposes of this Agreement “good reason” means and shall be deemed to exist
if, without the prior written consent of the Employee,

 
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(i)    the Company permanently relocates the primary place of performance of the
duties specified in Section 3 of this Agreement to a location more than fifty
(50) miles from its current offices located in Branford, Connecticut;
 
  (ii)       the Employee’s rate of Base Salary (as hereinafter defined) is
materially decreased by the Company (other than in connection with an across the
board salary reduction agreed to by the Employee);
 
(iii)        the Company fails to obtain the full assumption of this Agreement
by a successor entity in accordance with Section 12(b) of this Agreement; or
 
(iv)        the Board of Directors of the Company (the “Board”) or the Company’s
stockholders, either or both, as may be required to authorize the same, shall
approve any liquidation or dissolution of the Company, or the sale of all or
substantially all of the assets of the Company.
 
2.  
TERM

 
The term of Employee’s employment under this Agreement shall, unless earlier
terminated under Section 7 herein or extended as hereinafter provided, be for a
period commencing as of (the “Commencement Date”) and terminating on March 26,
2010, subject to the terms and conditions contained in this Agreement (the
“Employment Period”). The Employment Period shall automatically be extended
commencing on March, 27, 2010 and thereafter on the relevant anniversary of the
Commencement Date, for successive one (1) year periods unless, not later than
ninety (90) days prior to March 27, 2010 or any such anniversary, either party
to this Agreement shall give written notice to the other that such party does
not wish to extend or further extend the Employment Period beyond its then
already automatically extended term, if any.
 
3.  
DUTIES AND SERVICES

 
During the Employment Period, the Employee shall devote substantially all of his
business time, during normal business hours, to the business and affairs of the
Company and the Employee shall use his best efforts to perform faithfully and
efficiently the duties and responsibilities contemplated by this Agreement;
provided, however, the Employee may manage his personal, financial and legal
affairs and engage in any activities of a volunteer, civic or business nature,
as long as such activities do not materially interfere with Employee’s
responsibilities.
 
4.  
COMPENSATION AND OTHER BENEFITS

 
(a)  
Salary

 
As compensation for the Employee’s services under this Agreement, beginning on
the Commencement Date and until the termination of the Employment Period, the
Employee shall be paid by the Company a base salary of $205,000 per annum,
payable in equal semi-monthly

 
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installments in accordance with the Company’s normal payroll practices, which
base salary may be increased but not decreased (other than in connection with an
across the board salary reduction agreed to by the Employee) during the
Employment Period at the sole discretion of the Board or the Board’s designee
(the “Base Salary”). Such increased (or decreased) Base Salary shall then
constitute the “Base Salary’ for purposes of this Agreement.
 
(b)  
Annual Bonus

 
In addition to the Base Salary, at the sole discretion of the Board of Directors
or its designee, the Employee is eligible to receive such annual bonuses during
the Employment Period as the Board or its designee, in its sole discretion, may
approve. It is anticipated that annual bonus awards, if any, will be calculated
on the basis of both Company and individual performance and that Employee’s
annual target bonus for complete achievement of all Company and individual
objectives will be targeted at a level equal to twenty  percent (20%) of Base
Salary. Notwithstanding anything in this agreement to the contrary, the Company
reserves the right at the sole discretion of the Board or its designee at any
time and without notice to change or abandon altogether any or all of it’s
incentive compensation policies and practices, including the award of any annual
bonuses or the determination not to make any such awards in any year.
 
(c)  
Benefits

 
During the Employment Period, the Employee shall be eligible to participate in
all employee and incentive benefit plans and programs maintained from time to
time by the Company for the benefit of senior executives, During the Employment
Period, the Employee, Employee’s spouse, if any, and their eligible dependents,
if any, shall be eligible to participate in and be covered under all the
employee and dependent health and welfare benefit plans or programs maintained
from time to time by the Company. However, the Company shall have no obligations
under this Section 4(c) unless and until the Employee has met any generally
applicable eligibility requirements for participation in such plans and
programs.
 
(d)  
Equity

 
At the sole discretion of the Board of Directors or its designee, the Employee
is eligible to receive such stock option grants during the Employment Period as
the Board or its designee, in its sole discretion, may approve. It is
anticipated that stock option awards, if any, will be calculated on the basis of
both Company and individual performance. Notwithstanding anything in this
agreement to the contrary, the Company reserves the right at the sole discretion
of the Board or its designee at any time and without notice to change or abandon
altogether any or all of it’s incentive compensation policies and practices,
including the award of any stock options or the determination not to make any
such awards in any year.
 
5.  
NON-COMPETITION

 
(a) During the Employment Period and for one year after the date of any such
termination of employment, the Employee agrees that, without the prior express
written consent of the Company, he shall not, directly or indirectly, for his
own benefit or as an employee, owner, shareholder, partner, consultant, (or in
any other representative capacity) for any other person, firm, partnership,
corporation or other entity (other than the Company), (i) engage in the

 
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(b) discovery, research and/or development of therapeutic, diagnostic or
prophylactic products which work through the same biological mechanisms and are
being pursued for the same therapeutic indications as products which at the time
of such termination are under active clinical or pre-clinical development or
have been pre-clinically or clinically developed by the Company and which the
Company has not abandoned (“Related Programs”) or (ii) solicit or hire (or
direct another to solicit or hire) the services of any employee of the Company
or attempt to induce any such employee or any consultant to the Company to leave
the employ of the Company (except when such acts are performed in good faith by
the Employee on behalf of the Company). For clarity, an example of the Company’s
Related Programs as of the date of this Agreement is the development of a
dopamine D2 partial agonist for Parkinson’s disease or Restless Legs
Syndrome.   Notwithstanding the above, this provision shall not be deemed to
prevent or prohibit Employee from being employed during such one year period by
another entity in a managerial role where Employee has overall responsibility
for managing (or assisting in the management of) a research and development
portfolio which includes one or more Related Programs, provided that Employee
does not violate the terms of Section 6 hereof and does not during such one year
term actively advise or direct the discovery, research or development efforts of
such other entity in the Related Program(s). During the Employment Period, the
Employee shall not own more than 2% of the outstanding common stock of any
corporation, The provisions of this Section 5 shall not be deemed to reduce in
any way any other fiduciary, contractual or other legal obligation the Employee
may have to the Company, including without limitation any obligation which may
arise by virtue of any corporation law, securities law, patent or intellectual
property law or right, the common law, other agreements with the Company or
otherwise.
 
For purposes of Section 5 of this Agreement, the term “solicit” shall mean any
communication of any kind whatsoever, regardless of by whom initiated, inviting,
encouraging, or requesting any person or entity to take or refrain from taking
any action.
 
(c) The Employee agrees to comply with the terms of set forth in the Proprietary
Information and Inventions Agreement previously entered into by the Company and
Employee.
 
(d) If at any time within twelve (12) months after the date on which the
Employee exercises a Company stock option or stock appreciation right, or on
which Company restricted stock vests, or on which income is realized by the
Employee in connection with any other Company equity-based award (each of which
events is a “Realization Event”), the Employee breaches any provision of Section
5(a) or 5(b) of the Agreement in more than a minor, deminimus or trivial manner
that causes or is likely it cause, more than deminimus financial or reputational
harm to the Company (and, if such breach is susceptible to cure, the Employee
does not cure such breach and harm within ten (10) days after the Employee’s
receipt of written notice of such breach of the Company which specifies in
reasonable detail the facts and circumstances claimed to be the basis for such
breach), then (i) the Employee shall forfeit all of Employee’s unexercised
(including unvested) Neurogen Corporation stock options and restricted stock and
(ii) any gain realized within the twelve (12) months prior to such breach from
the exercise of any Company stock options or the vesting of any Company
restricted stock or other equity-based awards by the Employee from the
Realization Event shall be paid by the Employee to the Company upon written
notice from the Company within ninety (90) days of such notice (such payments
may be made in increments over such period). Such gain shall be determined after
reduction for any
 

 
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(e) taxes paid (or, if such gain is determined before such taxes are paid,
owing, provided that such taxes are actually paid in a timely manner) by the
Employee which are attributable to such gain as of the date of the Realization
Event, and without regard to any subsequent change in the Fair Market Value (as
defined below) of a share of Company common stock; provided that any federal or
state income tax benefit actually realized by the Employee as a result of making
payments to the Company under this Section 5(c) (relating to any of the next ten
(10) tax year periods) shall also be paid to the Company within fifteen (15)
days of such realization. Such gain shall be paid by the Employee delivering to
the Company shares of Company Common Stock with a Fair Market Value on the date
of delivery equal to the amount of such gain. To the extent permitted by
applicable law, the Company shall have the right to offset such gain against any
amounts otherwise owed to the Employee by the Company (whether as wages,
vacation pay, or pursuant to any benefit plan or other compensatory
arrangement). For purposes of this Section 5(c), the “Fair Market Value” of a
share of Company Common Stock on any date shall be (i) the closing sale price
per share of Company Common Stock during normal trading hours on the national
securities exchange on which the Company Common Stock is principally traded for
such date or the last preceding date on which there was a sale of such Company
Common Stock on such exchange or (ii) if the shares of Company Common Stock are
then traded on the NASDAQ Stock Market or any other over-the-counter market, the
average of the closing bid and asked prices for the shares of Company Common
Stock during normal trading hours in such over-the-counter market for such date
or the last preceding date on which there was a sale of such Company Common
Stock in such market, or (iii) if the shares of Company Common Stock are not
then listed on a national securities exchange or traded in an over-the-counter
market, such value as the Compensation Committee, in its sole discretion, shall
reasonably determine. In the event that the Company seeks to enforce the
provisions of this Section 5(c), and such enforcement is contested by the
Employee, and it is finally determined that the Employee is not subject to the
provisions of this Section 5(c), then the Company shall (i) reimburse the
Employee for reasonable attorneys’ fees incurred by the Employee in connection
with such contest; and (ii) pay to the Employee an additional amount equal to
one (1) times the amount in clause (i); provided that such payment under this
clause (ii) shall not exceed $250,000.
 
(f) Any termination of the Employee’s employment or of this Agreement shall have
no effect on the continuing operation of this Section 5.
 
(g) The Employee acknowledges and agrees that the Company will have no adequate
remedy at law, and could be irreparably harmed, if the Employee breaches or
threatens to breach any of the provisions of this Section 5. The Employee agrees
that the Company shall be entitled to equitable and/or injunctive relief to
prevent any breach or threatened breach of this Section 5, and to specific
performance of each of the terms hereof in addition to any other legal or
equitable remedies that the Company may have. The Employee further agrees that
Employee shall not, in any equity proceeding relating to the enforcement of the
terms of this Section 5, raise the defense that the Company has an adequate
remedy at law.
 
(h) The terms and provisions of this Section 5 are intended to be separate and
divisible provisions and if, for any reason, any one or more of them is held to
be invalid or unenforceable, neither the validity nor the enforceability of any
other provision of this Agreement shall thereby be affected. The parties hereto
acknowledge that the potential restrictions on the Employee’s future employment
imposed by this Section 5 are reasonable in both duration and geographic

 
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(i) scope and in all other respects. If for any reason any court of competent
jurisdiction shall find any provisions of this Section 5 unreasonable in
duration or geographic scope or otherwise, the Employee and the Company agree
that the restrictions and prohibitions contained herein shall be effective to
the fullest extent allowed under applicable law in such jurisdiction.
 
(j) The parties acknowledge that this Agreement would not have been entered into
and the benefits described in Section 4 of this Agreement would not have been
promised in the absence of the Employee’s promises under this Section 5.
 
6.  
CONFIDENTIAL INFORMATION

 
The Employee agrees to substantially comply with the terms set forth in the
Proprietary Information and Inventions Agreement between the Employee and the
Company, a copy of which is attached hereto as Exhibit A and incorporated by
reference herein.
 
7.  
TERMINATION

 
(a)  
Termination by the Company for Cause

 
The Company may terminate the Employee’s employment hereunder for cause. If the
Company terminates the Employee’s employment hereunder for cause, the Employment
Period shall end and the Employee shall only be entitled to any Base Salary
accrued or annual bonus awarded and earned but not yet paid as of the date of
termination of the Employee’s employment with the Company.
 
If the Employee’s employment is to be terminated for cause, the Company shall
give written notice of such termination to the Employee. Such notice shall
specify the particular act or acts, or failure to act, which is or are the basis
for the decision to so terminate the Employee’s employment for cause.
 
(b)  
Termination Without Cause or Termination For Good Reason

 
The Company may terminate the Employee’s employment hereunder without cause and
the Employee may terminate Employee’s employment hereunder for good reason. If
the Company terminates the Employee’s employment hereunder without cause, or if
the Employee terminates Employee’s employment hereunder for good reason, the
Employment Period shall end and the Employee shall only be entitled to (i) any
Base Salary accrued or annual bonus awarded and earned but not yet paid as of
the actual date of termination of the Employee’s employment with the Company;
(ii) a lump sum payment in an amount equal to seventy five percent (75%) of the
Employee’s annual Base Salary as provided in Section 4(a) above; (iii)
continuation of the health and welfare benefits of the Employee, Employees’
spouse and their eligible dependents, if any, as set forth in Section 4(c) above
(except for Disability Insurance), or the economic equivalent thereof, at the
same cost and level in effect on the date of termination of the Employee’s
employment with the Company for nine months after such date of termination; and
(iv) the right to exercise immediately any stock options and to freely trade any
restricted stock granted to the Employee which, but for such termination, would
have become exercisable or tradable, as the case may be, within nine months of
the date of such termination without cause or for good reason.  Notwithstanding
any other provision of this Agreement, in addition to the

 
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benefits described above, if Employee is terminated without cause or terminates
his employment for good reason as a result of a Change in Control of the Company
(including without limitation any termination within two (2) years of a Change
in Control which shall be deemed to be as a result of a Change in Control) then
Employee shall also be entitled to a lump sum payment in an amount equal to the
greater of (i) the Employee’s then targeted annual bonus or (ii) the Employee’s
targeted annual bonus immediately prior to the Change in Control. For purposes
of this Agreement, the term “Change in Control” shall have the same meaning
given to that term in Section 2.4 of the Amended and Restated Neurogen
Corporation 2001 Stock Option Plan.
 
If the Employee’s employment is to be terminated without cause, the Company
shall give the Employee thirty (30) days prior written notice of its intent to
so terminate the Employee’s employment. If the Employee intends to terminate
Employee’s employment for good reason, the Employee agrees to give the Company
at least thirty (30) days prior written notice.
 
(c)  
Termination Due to Death or Disability

 
The Company may terminate the Employee’s employment hereunder due to the
Employee’s inability to render, for a period of three consecutive months or an
aggregate of any one hundred twenty (120) days within any six (6) month period,
services hereunder by reason of permanent disability, as determined by the
written medical opinion of an independent medical physician selected in good
faith by the Company (“Disability”). In the event of the Employee’s death or a
termination of the Employee’s employment by the Company due to Disability, the
Employment Period shall end and the Employee, Employee’s estate or Employee’s
legal representative, as the case may be, shall only be entitled to (i) (a) any
Base Salary accrued or annual bonus awarded and earned but not yet paid as of
the actual date of termination of the Employee’s employment with the Company,
and (b) any other compensation and benefits as may be provided in accordance
with the terms and provisions of any applicable plans and programs of the
Company; and (ii) in the case of Disability, (a) continuation of payment of the
Employee’s Base Salary if any, as set forth in Section 4(a) above, until the
Employee commences to receive payments under the Company’s long-term disability
plan, (b) continuation of the health and welfare benefits of the Employee, as
set forth in Section 4(c) above (except for Disability Insurance), or the
economic equivalent thereof, at the same cost and level in effect on the date of
termination for nine months after the date of termination and (c) the right to
exercise immediately that proportion of the stock options (rounded up to the
nearest whole number of shares) granted to the Employee which would become
exercisable on or before the next scheduled anniversary date of this Agreement
immediately following the date of termination of the Employee’s employment with
the Company due to Disability which is equal to the number of days worked by the
Employee from, but excluding, the anniversary date immediately preceding such
termination date to, and including, such termination date divided by 365 days.
 
(d)  
Voluntary Termination

 
The Employee may affect a Voluntary Termination of Employee’s employment with
the Company hereunder. A “Voluntary Termination” shall mean a termination of
employment by the Employee on Employee’s own initiative other than a termination
due to death or Disability or a termination for good reason. A Voluntary
Termination shall not be, and shall not be deemed to
 

 
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be, a breach of this Agreement and shall result in the end of the Employment
Period and only entitle the Employee to all of the rights and benefits which the
Employee would be entitled in the event of a termination of the Employee’s
employment by the Company for cause.
 
(e)  
Termination by the Company at End of Employment Period

 
Notwithstanding any provision of this Agreement to the contrary, if (a) the
Employment Period is not terminated early under Sections 7(a), 7(b), 7(c) or
7(d) above and (b) the Company provides written notice to the Employee, pursuant
to Section 2 above, that it does not wish to extend or further extend the
Employment Period, then the Employee’s employment with the Company shall end on
the last day of the Employment Period and the Employee shall be entitled to (x)
continuation of payment of the Employee’s Base Salary, as provided in Section
4(a) above, as of the date of termination of the Employee’s employment with the
Company for a period equal to nine months less the number of days notice given
by the Company to the Employee that it does not wish to extend or further extend
the Employment Period (such notice period shall be deemed to commence as of the
date of such written notice by the Company); (y) continuation of the health and
welfare benefits of the Employee, Employee’s spouse and their eligible
dependent’s if any, as set forth in 4(c) above (except for Disability
Insurance), or the economic equivalent thereof, at the same cost and level in
effect on the date of termination of the Employee’s employment with the Company
for nine months after such termination; and (z) the right to exercise
immediately any stock options and to trade freely any restricted stock granted
to the Employee which, but for such termination, would have become exercisable
or freely tradable, as the case may be, on or before the anniversary date of
this Agreement  immediately following the date on which the Nine month period
referred to the preceding subclause (x) ends; provided, however, that the
severance payment by the Company to the Employee under subclause (x) of this
Section 7(e) shall be offset on a dollar for dollar basis by any cash, or the
fair market value of any non-cash, remuneration, benefit or other entitlement
earned, received or receivable by the Employee in connection with the employment
of such Employee in any capacity, other than dividends, interest income or other
passive investment income earned as a result of an interest in a business or
entity of which the Employee owns less than 2% of the beneficial ownership. If
the Employee shall be entitled to any such severance payment from the Company
after the termination of the Employment Period, the Employee shall have the
obligation to notify the Company of any employment, consultation or other
activity which may involve any remuneration, benefits or other entitlements as
described above, and as to which the Company may be entitled to an offset.
 
8.  
SURVIVAL

 
The rights and obligations of the parties hereunder shall survive the
termination of the Employee’s employment hereunder and the termination of this
Agreement to the extent necessary to the intended preservation of such rights
and obligations.

WHOLE AGREEMENT AND MODIFICATION
 
This Agreement, including the “Proprietary Information and Inventions
Agreement”, sets forth the entire agreement and understanding of the parties
with respect to the subject matter contained herein, and supersedes all prior
and existing agreements except as set forth above, whether written or oral,
between them concerning the subject matter contained herein. This Agreement may
be modified only by a written agreement executed by each party to this
Agreement.
 

 
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9.  
NOTICES

 
Any notice or other communication required or permitted to be given under this
Agreement shall be in writing and shall be mailed by certified mail, return
receipt requested, or delivered against receipt to the party to whom it is to be
given at the address of such party set forth above or to such other address as
the party shall have furnished in writing in accordance with this provision.
Notice to the estate of the Employee shall be sufficient if addressed to the
Employee in accordance with this provision. Any notice or other communication
given by certified mail shall be deemed given three (3) days after posting.
However, a notice changing a party’s address shall be deemed given at the time
of the receipt of the notice.
 
10.  
WAIVER

 
Any waiver by either party of a breach of any provision of this Agreement shall
not operate as or be construed to be a waiver of any other breach of such
provision or of any breach of any other provision of this Agreement. The failure
of a party to insist upon strict adherence to any term of this Agreement on one
or more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Agreement. Any waiver must be in writing, signed by the party giving
such waiver.
 
11.  
SUCCESSORS

 
(a)  
Effect on Employee

 
This Agreement is personal to the Employee and, without the prior express
written consent of the Company, shall not be assignable by the Employee, except
that the Employee’s rights to receive any compensation or benefits under this
Agreement may be transferred or disposed of pursuant to testamentary
disposition, intestate succession or pursuant to a domestic relations order of a
court of competent jurisdiction. This Agreement shall inure to the benefit of
and be enforceable by the Employee’s heirs, beneficiaries and/or legal
representatives.
 
(b)  
Effect on Company

 
This Agreement shall inure to the benefit of and be binding on the Company and
its successors and assigns. The Company shall reasonably require any successor
to all or substantially all of the business and/or assets of the Company,
whether direct or indirect, by purchase, merger, consolidation, acquisition of
stock, or otherwise, by an agreement in form and substance reasonably
satisfactory to the Employee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent as the Company would be
required to perform if no such succession had taken place.
 
12.  
NO THIRD PARTY BENEFICIARIES

 
This Agreement does not create, and shall not be construed as creating, any
rights enforceable by any person not a party to this Agreement except as
provided in Section 12 of this Agreement.
 

 
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COUNTERPARTS
 
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
 
13.  
GOVERNING LAW

 
This Agreement shall be governed by and construed in accordance with the laws of
the State of Connecticut, without giving effect to the principles of conflict of
laws thereof.
 
14.  
SEVERABILITY

 
The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.
 
15.  
NO VIOLATION OF OUTSTANDING AGREEMENT(S)

 
Employee hereby warrants that the execution of this Agreement and the
performance of his duties hereunder do not and will not violate any agreement
with any other person or entity.
 
IN WITNESS WHEREOF, the parties have duly executed this Agreement which shall be
effective as of the effective date noted above.
 

           NEUROGEN CORPORATION      EMPLOYEE            
/s/Stephen R. Davis
   
/s/ George Maynard
 
Name:  Stephen R. Davis
   
Name:  George Maynard 
 
Title     President and Chief Executive Officer
   
Title; Vice President, Earch Development