EXHIBIT 10.16

EXECUTIVE EMPLOYMENT AGREEMENT

This Agreement is made as of May 3, 2006 (the “Effective Date”) between CNS,
Inc. a Delaware corporation (“CNS”) and Samuel E. Reinkensmeyer (“Employee”).

WHEREAS, CNS considers the establishment and maintenance of a sound and vital
management to be essential to protecting and enhancing the best interests of CNS
and its shareholders; and

WHEREAS, Employee has made and is expected to continue to make, due to
Employee’s experience and knowledge, a significant contribution to the
profitability, growth and financial strength of CNS; and

WHEREAS, CNS, as a publicly held corporation, recognizes that the possibility of
a change in control may exist and that such possibility and the uncertainty and
questions which it may raise among management may result in the departure of
Employee or distraction to the performance of Employee’s duties to the detriment
of CNS and its shareholders; and

WHEREAS, Employee is willing to continue Employee’s employment with CNS upon the
understanding that CNS will provide income security if Employee’s employment is
terminated under certain terms and conditions; and

WHEREAS, it is in the best interests of CNS and its stockholders to employ
Employee and to reinforce and encourage Employee’s continued attention and
dedication to Employee’s assigned duties without distraction and to ensure
Employee’s continued availability to CNS in the event of a Change in Control;
and

WHEREAS, it is in CNS’s best interests to receive certain assurances from
Employee regarding CNS’s confidentiality, competition and other proprietary
business concerns;

THEREFORE, in consideration of the foregoing and of this agreement, certain
change in control protection, continued employment and other benefits hereunder,
as well as other mutual covenants and obligations hereinafter set forth, CNS and
Employee agree as follows:

1.

Employment. CNS agrees to continue to employ Employee as its Vice
President-Finance and Chief Financial Officer (“CFO”) under the terms,
conditions and benefits set forth herein and Employee accepts continued
employment with CNS on said terms, conditions and benefits.

2.

Term. The term of Employee’s employment shall continue until terminated pursuant
to paragraph 6, 7, or 8 herein.

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3.

Duties. In Employee’s position as Vice President-Finance and CFO, Employee will
continue to faithfully and diligently perform such executive management
responsibilities as may be assigned to Employee from time to time by the Chief
Executive Officer, President or Chairman of the Board of Directors of CNS (the
“Board”); devote Employee’s full time, energy and skill to CNS’s business, as is
reasonably necessary to execute fully Employee’s duties hereunder, except for
vacations, absences made necessary because of illness, and service on other
corporate, civic, or charitable boards or committees not significantly
interfering with Employee’s duties hereunder; and promote CNS’s best interests.
The principal place of employment and the location of Employee’s principal
office and normal place of work shall be in the Minneapolis, Minnesota
metropolitan area. Employee will be expected to travel to other locations, as
necessary, in the performance of Employee’s duties during the term of this
Agreement. Employee shall notify the Chief Executive Officer of any other paid
position which Employee is considering accepting, including but not limited to a
board of directors position, a position as an employee or an independent
consultant, or any position, whether or not for pay, which could constitute a
conflict of interest with CNS. The Employee agrees not to accept any such
position without the Chief Executive Officer’s prior approval.

4.

Compensation. For all services rendered by Employee, CNS shall pay Employee the
annualized base salary (“Annual Base Salary”) described in Exhibit A, payable at
such times as salaried employees of CNS are customarily paid. The Board shall,
from time to time during Employee’s employment, review Employee’s Annual Base
Salary in connection with possible increases, giving consideration to inflation
factors, performance of Employee and CNS, salaries paid for positions of similar
responsibility for other companies, and other relevant factors, and shall
provide for such increases when deemed appropriate. Employee shall in addition
be eligible to participate in the annual management incentive bonus program, as
approved by the Board of Directors, the initial amount, as a percentage of
Annual Base Salary, is described in Exhibit A.

5.

Benefits. Employee shall be entitled to Paid Time Off consistent with CNS policy
and such insurance, 401(k) program and other benefits available to all salaried
employees of CNS, subject to any limitations on such benefits to officers,
directors or highly paid employees in order that such benefit programs qualify
under federal or state law for favored tax or other treatment. Such benefit
programs may be changed from time to time by the Board. Employee shall also be
entitled to reimbursement of Employee’s reasonable and necessary expenses
incurred in connection with the performance of Employee’s duties hereunder.

6.

Resignation by Employee. Employee may resign Employee’s employment with CNS
effective upon 30 days’ advance written notice to the Chief Executive Officer.
If Employee resigns under this paragraph, the Chief Executive Officer retains
the right to terminate Employee’s employment, effective upon written notice to
Employee, at any time during the 30-day notice period, provided, however, that
Annual Base Salary and the employer portion of Employee’s health, dental and
life insurance premiums will continue to be paid by CNS for the duration of the
30-day notice period. In connection with Employee’s termination, Employee will
receive any accrued unused Paid Time Off to which Employee is entitled.

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7.

Termination of Employment. Employee’s employment with CNS may be terminated in
any of the following ways:

 

a.

CNS may, by written notice to Employee, terminate Employee’s employment without
Good Cause (as defined in paragraph 7.b.) (i) prior to a Change in Control (as
defined in paragraph 8.a), or (ii) after the terms of paragraph 8.b. are no
longer effective, in which event CNS shall:

 

i.

pay Employee his Annual Base Salary up to the date of termination

 

ii.

pay Employee the Target Bonus in effect for the bonus period in which Employee’s
Date of Termination (as defined in paragraph 8.d.) occurs multiplied by a
fraction, the numerator of which is the number of days worked by Employee in the
bonus period to the Date of Termination, and the denominator of which is the
number of days in the bonus period, less any amount of the Target Bonus that has
been paid. For purposes of this Agreement, “Target Bonus” shall mean the amount
payable in cash under all annual incentive compensation plans of CNS in which
Employee participates, waiving any condition precedent to the payment to
Employee and assuming that the performance goals for the period were achieved at
the 100% level;

 

iii.

pay the Employee Salary Continuation for one (1) year from Employee’s Date of
Termination, as additional consideration for Employee’s obligations under
Sections 9, 10, 11 and 12 of this Agreement. For purposes of this Agreement,
“Salary Continuation” shall mean a total payment by CNS of one times (1X) the
Employee’s Annual Base Salary as of Employee’s Date of Termination, the total
amount to be payable to Employee over the one (1) year period on the same
schedule and in the same amount as the payment of Annual Base Salary prior to
termination of Employee’s employment, until such time as the full Salary
Continuation obligation/non-compete shall be discharged, as provided in this
paragraph 7.a., but subject to earlier termination and the rights as provided in
Section 13.b;

 

iv.

continue to pay the employer’s portion of the premium cost for any group health,
dental and life insurance benefit during the Salary Continuation period or the
applicable continuation period required by law, whichever is shorter, provided,
however, that Employee shall be responsible to pay the employee’s portion of
cost of any such benefits and the continuation period required under applicable
law will not be extended as a result of CNS’s payment provided for in this
clause;

 

v.

pay to Employee any accrued unused Paid Time Off to which Employee is entitled;
and

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vi.

provide qualified outplacement services to Employee through an entity selected
by CNS for a period of up to six months at the sole cost of CNS.

As a condition of receiving the Salary Continuation and other benefits provided
in this paragraph 7.a., Employee shall be required to sign a standard release
agreement in the form of Exhibit B with CNS in which Employee agrees to release
any and all claims and causes of action which Employee might have against CNS
and its releasees, in which Employee affirms and acknowledges Employee’s
obligations under paragraphs 9, 10, 11 and 12 of this Agreement, and which
includes an obligation not to speak negatively about or harm CNS,
confidentiality with regard to the termination process and cooperation with the
transition of responsibilities. Payments under paragraph 7.a. shall begin after
all rescission periods provided in the standard release agreement have run or
have been waived.

 

b.

CNS, by written notice to Employee, may terminate Employee’s employment for Good
Cause, as defined below, (i) prior to a Change in Control or (ii) after the
terms of paragraph 8.b. are no longer effective. In the event of termination
under this paragraph 7.b., CNS shall continue to pay Employee’s Annual Base
Salary up to the Date of Termination. For purposes of this Agreement, “Good
Cause” shall mean one or more of the following:

 

i.

willful and premeditated failure or refusal of Employee to render services to
CNS in accordance with Employee’s obligations under paragraph 3;

 

ii.

the commission by Employee of a willful breach of fiduciary duty to CNS or an
intentional and knowing fraud against CNS or any customer, supplier, client,
agent or employee thereof;

 

iii.

the engaging by Employee in intentional or willful misconduct that violates a
material provision of any written policy, code of conduct or directive of the
Board or that could result in an enforcement action or sanctions against the
Company or Employee by any state or federal agency or department or any foreign
government or agency having jurisdiction over the Company or Employee (it being
understood that mere negligence in performance of duties is not Good Cause under
this Agreement);

 

iv.

the breach by Employee of any provision of this Agreement;

 

v.

the commission of a felony by Employee; or

 

vi.

prior to a Change in Control, Employee’s unsatisfactory performance after
specific notice by CNS of Employee’s performance deficiencies, description of
expectations and a 60-day opportunity to cure.

 

c.

CNS, by written notice to Employee, may terminate Employee’s employment under
this Agreement if Employee becomes physically or mentally disabled (as
determined under the Americans with Disabilities Act) during the term so that
Employee has not been able to substantially perform, for a period of 120
consecutive days, with reasonable accommodation, the usual duties assigned to
Employee hereunder (“Disability”). Upon such determination by CNS of Employee’s
Disability, CNS shall pay to Employee the Annual Base Salary up to the Date of
Termination.

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d.

This Agreement shall terminate upon the Employee’s death during its term, except
that CNS shall pay to the legal representative of Employee’s estate Employee’s
Annual Base Salary due Employee up to the date of Employee’s death.

8.

Termination Following a Change in Control.

 

a.

For purposes of this Agreement, “Change in Control” shall mean the occurrence of
one of the following events:

 

i.

Acquisition of 25% of Stock of CNS. Any “person” [as such term is used in
Section 13(d) and 4(d) of the Securities Exchange Act of 1934, as amended
(“Exchange Act”)], is or becomes the “beneficial owner” (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly of securities representing
25% or more of the combined voting power of CNS’s then outstanding securities,
but shall not include CNS, any direct or indirect subsidiary of CNS or any
employee benefit plan of CNS or of any subsidiary of CNS or any entity holding
shares of common stock of the Company organized, appointed or established for,
or pursuant to the terms of, any such plan.

 

ii.

Change in Board of Directors. During any period of two consecutive years (not
including any period ending prior to the effective date of this Agreement),
individuals who at the beginning of such period constitute the Board of
Directors of CNS, and any new director (other than a director designated by a
person who has entered into agreement with CNS to effect a transaction
constituting a Change in Control under Section 8.a.i., 8.a.iii. or 8.a.iv.)
whose election by the Board of Directors of CNS or nomination for election by
CNS’s stockholders was approved by vote of at least two-thirds of the directors
then still in office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved
(“Continuing Directors”), cease for any reason to constitute at least a majority
of the Board of Directors of CNS.

 

iii.

Merger or Consolidation. Consummation of a merger or consolidation of CNS with
any other corporation, other than (A) a merger or consolidation (1) which would
result in the voting securities of CNS outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the merged or consolidated entity) 50% or more of the
combined voting power of the voting securities of CNS or such merged or
consolidated entity outstanding immediately after such merger or consolidation
and (2) after which at least a majority of the members of the board of directors
of the resulting entity were Continuing Directors at the time of the action of
the Board of Directors of CNS approving the merger or consolidation, or (B) a
merger or consolidation effected to implement a recapitalization of CNS or
similar transaction in which no person (as defined in subparagraph 8.a.i.)
acquires more than 25% of the combined voting power of CNS’s then outstanding
securities.

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iv.

Liquidation or Sale of Assets. Consummation of (A) a plan of complete
liquidation or (B) a sale or disposition by CNS of all or substantially all of
CNS’s assets. “The sale or disposition by CNS of all or substantially all of
CNS’s assets” shall mean a sale or other disposition transaction or series of
related transactions involving assets of CNS or of any direct or indirect
subsidiary of CNS (including the stock of any direct or indirect subsidiary of
CNS) in which the value of the assets or stock being sold or otherwise disposed
of (as measured by the purchase price being paid therefor or by such other
method as the Board of Directors of CNS determines is appropriate in a case
where there is no readily ascertainable purchase price) constitutes more than
75% of the fair market value of CNS. For purposes of the preceding sentence, the
“fair market value of CNS” shall be the aggregate market value of CNS’s
outstanding common stock (on a fully diluted basis) plus the aggregate market
value of CNS’s other outstanding equity securities. The aggregate market value
of CNS’s common stock shall be determined by multiplying the number of shares of
CNS common stock (on a fully diluted basis) outstanding on the date of the
execution and delivery of a definitive agreement (“Transaction Date”) with
respect to the sale or disposition by CNS of all or substantially all of CNS’s
assets by the average closing price for CNS’s common stock for the ten trading
days immediately preceding the Transaction Date. The aggregate market value of
any other equity securities of CNS shall be determined in a manner similar to
that prescribed in the immediately preceding sentence for determining the
aggregate market value of CNS’s common stock or by such other method as the
Board of Directors of CNS shall determine is appropriate.

Employee agrees that, subject to the terms and conditions of this Agreement, in
the event of a Change in Control of CNS occurring after the date hereof,
Employee will remain in the employ of CNS for a period of 30 days from the
occurrence of such Change in Control.

 

b.

Applicability. In the event of a Change in Control, the terms of this paragraph
8.b shall be effective for a period of 24 months following the Change in
Control. Employee shall be entitled to receive the benefits set forth in
paragraph 8.f if, within 24 months following such Change in Control, Employee’s
employment is terminated by CNS or its successor without Good Cause (as defined
in paragraph 7.a above), or by Employee for Good Reason (as defined in
subparagraph 8.b.i. below). As a condition to receiving such benefits, Employee
shall be required to sign a standard release agreement with CNS in the form of
Exhibit B. Payments required under this paragraph 8.b shall begin after all
rescission periods provided in the standard release agreement have run or have
been waived.

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i.

Termination for Good Reason shall be effective immediately upon written notice
from the Employee to the Chief Executive Officer. For purposes of this
Agreement, “Good Reason” shall exist if: (A) CNS has materially breached any of
the terms of this Agreement; (B) Employee is assigned duties which are
materially inconsistent with Employee’s position, duties, responsibilities and
status as Vice President-Finance and CFO; (C) Employee’s Annual Base Salary, or
Target Bonus (as defined below), or the face value of annual equity grants, is
reduced below the amount in effect immediately prior to the Change in Control;
(D) the aggregate monetary value of Employee’s participation in, or payment or
benefit under all benefit plans, arrangements and perquisites, is materially
reduced from the aggregate monetary value of those plans, arrangements or
perquisites that were in effect immediately prior to the Change in Control; or
(E) relocation of CNS would require Employee to relocate Employee’s principal
residence outside reasonable commuting distance of the Twin Cities Metropolitan
area.

 

ii.

Termination without Good Cause shall be effective upon 30 days’ advance notice
by CNS to the Employee. For purposes of this paragraph 8, Good Cause shall be
defined as in paragraph 7.b.

 

c.

Notice of Termination. Any purported termination of employment under this
paragraph 8 and also under paragraphs 6 and 7 shall be communicated by written
Notice of Termination to the other party hereto in accordance with paragraph 22
hereunder. For purposes of this Agreement, a “Notice of Termination” shall mean
a notice that indicates the specific termination provision in this Agreement
relied upon and which sets forth the facts and circumstances claimed to provide
a basis for termination of Employee’s employment.

 

d.

Date of Termination. For purposes of this paragraph 8 and also paragraphs 6 and
7 of this Agreement, “Date of Termination” shall mean:

 

i.

if Employee’s employment is terminated for Disability, as defined in paragraph
7.c. hereunder, 30 days after Notice of Termination is given (provided that
Employee shall not have returned to the full-time performance of Employee’s
duties during such 30 day period); and

 

ii.

if Employee’s employment is terminated pursuant to a provision contained in
paragraph 6, 7 or 8 herein or for any other reason (other than Disability), the
date specified in the Notice of Termination, consistent with the provisions in
said paragraphs.

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e.

Dispute of Termination. If, within ten days after any Notice of Termination is
given under this paragraph 8, the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the termination, the
Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, or as provided in
paragraph 16, (which is not appealable or the time for appeal therefrom having
expired and no appeal having been perfected); provided, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the pendency of any such
dispute, CNS shall continue to pay Employee full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to,
Annual Base Salary) and continue Employee as a participant in all compensation,
benefit and insurance plans in which Employee was participating when the notice
giving rise to the dispute was given, to the extent permissible under the terms
of the applicable group plans and state and federal law, until the dispute is
finally resolved in accordance with this subparagraph. Amounts paid under this
subsection are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts under this Agreement.

 

f.

Compensation Upon Termination. Following a Change in Control, as defined in
paragraph 8.a. above, to the extent provided in paragraph 8.b. above, and
subject to the limitation under paragraph 8.j., CNS shall pay or provide
Employee the following benefits in lieu of any benefits which would otherwise be
available to Employee upon termination under paragraphs 6 or 7 hereunder:

 

i.

pay Employee through the Date of Termination Employee’s Annual Base Salary at
the rate in effect at the time the Notice of Termination is given, and any other
form or type of compensation otherwise payable for such period, including any
applicable incentive bonus, commensurate with his performance and the
performance of CNS;

 

ii.

in lieu of any further salary payments for periods subsequent to the Date of
Termination, CNS shall pay a severance payment (the “Severance Payment”) equal
to 24 months of Employee’s Compensation, as defined below, based on the average
monthly Compensation paid to Employee during the 24-month period ending
immediately prior to the Date of Termination (without giving effect to any
reduction in such Compensation which would constitute a breach of this
Agreement). If the Employee has not been employed by CNS for 24 months as of the
Date of Termination, average monthly Compensation shall be the Employee’s
average monthly Compensation for the number of months during which the Employee
has been employed at CNS. For purposes of this subparagraph, Compensation shall
mean and include every type and form of compensation paid to Employee by CNS (or
any corporation (“Affiliate”) affiliated with CNS within the meaning of
Section 1504 of the Internal Revenue Code of 1986, as may be amended from time
to time (the “Code”)) and included in Employee’s gross income for federal income
tax purposes, but excluding compensation income arising from (1) hiring bonuses,
and (2) compensation income recognized as a result of the exercise of stock
options or sale of the stock so acquired. All of Employee’s contributions to any
qualified plan pursuant to Section 401(k) of the Code or any flexible benefit
plan pursuant to Section 125 of the Code shall be deemed to be included in gross
income for federal tax purposes for purposes of this subparagraph. The Severance
Payment shall be made: (A) as to one-half in a single lump sum within 60 days
after the Date of Termination; and (B) as to the remaining one-half in 12 equal
monthly installments beginning on the first of the month following the Date of
Termination (as additional consideration for Employee’s obligations under
Sections 9, 10, 11 and 12 of this Agreement), subject to earlier termination and
the rights as provided in Section 13.b;

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iii.

continue to pay the employer’s portion of the premium cost for any group health,
dental and life insurance benefit during the applicable continuation period
required by law, provided, however, that Employee shall be responsible to pay
the employee’s portion of cost of any such benefits and the continuation period
required under applicable law will not be extended as a result of CNS’s payment
provided for in this clause; and

 

iv.

pay to Employee all legal fees and expenses incurred by Employee as a result of
such termination (including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this paragraph, but only if such contest,
dispute or enforcement is conducted in accordance with the terms of Section 16
of this Agreement).

 

g.

Employee shall not be required to mitigate the amount of any payment provided
for in paragraph 8.b or 8.f. by seeking other employment or otherwise, nor shall
the amount of any payment or benefit provided for in paragraph 8.b. or 8.f. be
reduced by any compensation earned by Employee as the result of employment by
another employer or by retirement benefits after the Date of Termination, or
otherwise except as specifically provided in paragraph 8.f.

 

h.

In order to assure the performance of CNS or its successor of its obligations
under this paragraph, CNS may deposit in trust an amount equal to the maximum
payment that will be due Employee under the terms hereof. Under a written trust
instrument, the Trustee shall be instructed to pay to Employee (or Employee’s
legal representative, as the case may be) the amount to which Employee shall be
entitled under the terms hereof, and the balance, if any, of the trust not so
paid or reserved for payment shall be repaid to CNS. If CNS deposits funds in
trust, payment shall be made no later than the occurrence of a Change in
Control. If and to the extent there are not amounts in trust sufficient to pay
Employee under this Agreement, CNS shall remain liable for any and all payments
due to Employee. In accordance with the terms of such trust, at all times during
the term of this Agreement, Employee shall have no rights, other than as an
unsecured general creditor of CNS, to any amounts held in trust and all trust
assets shall be general assets of CNS and subject to the claims of creditors of
CNS. Failure of CNS to establish or fully fund such trust shall not be deemed a
revocation or termination of this Agreement by CNS.

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i.

As a condition of receiving the Severance Payment and other benefits provided in
paragraph 8.f., Employee shall be required to sign a standard release agreement
in the form of Exhibit B with CNS in which Employee agrees to release any and
all claims and causes of action which Employee might have against CNS and its
releasees, in which Employee affirms and acknowledges Employee’s obligations
under paragraphs 9, 10, 11 and 12 of this Agreement, and includes an obligation
not to speak negatively about or harm CNS, confidentiality with regard to the
termination process and cooperation with the transition of responsibilities.
Payments under paragraph 8.f. shall begin after all rescission periods provided
in the standard release agreement have run or have been waived.

 

j.

Immediately prior to a Change in Control, Employee shall vest in all stock
options which have been granted to Employee and Employee shall be entitled to
exercise all rights to receive all benefits accruing to Employee under any and
all CNS stock purchase and stock option plans and programs. Approval of this
Agreement by the Compensation Committee shall be deemed approval of the vesting
of options as provided in the immediately preceding sentence for all purposes
under CNS stock purchase and stock option plans and programs. In the event that
the vesting of the options, together with all other payments and the value of
any benefit received or to be received by Employee would result in all or a
portion of such payments and benefits being subject to excise tax under Section
4999 of the Code, then Employee’s payments shall be either (A) the full payment
or (B) such lesser amount that would result in no portion of such payments and
benefits being subject to excise tax under Section 4999 of the Code (the “Excise
Tax”), whichever of the foregoing amounts, taking into account the applicable
federal, state, and local employment taxes, income taxes, and the Excise Tax,
results in the receipt by Employee, on an after-tax basis, of the greatest
amount of the payment notwithstanding that all or some portion of such payments
and benefits may be taxable under 4999 of the Code. All determinations required
to be made under this paragraph 8.j. be made by a nationally recognized
accounting firm which is CNS’s outside auditor immediately prior to the event
triggering the payments that are subject to the Excise Tax, which firm must be
reasonably acceptable to Employee (the “Accounting Firm”). CNS shall cause the
Accounting Firm to provide detailed supporting calculations of its
determinations to CNS and Employee. Notice must be given to the Accounting Firm
within fifteen (15) business days after an event entitling Employee to a payment
under this paragraph 8. All fees and expenses of the Accounting Firm shall be
borne solely by CNS. The Accounting Firm’s determinations must be made with
substantial authority (within the meaning of Section 6662 of the Code).

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9.

Confidential Information. All knowledge and information not already available to
the public which Employee may acquire or has acquired with respect to product
development, improvements, modifications, discoveries, designs, methods,
systems, computer software, programs, codes and documentation, research,
designs, formulas, instructions, methods, inventions, trade secrets, services or
other private or confidential matters of CNS (such as those concerning sales,
costs, profits, organizations, customer lists, pricing methods, etc.), or of any
third party which CNS is obligated to keep confidential, shall be regarded by
Employee as strictly confidential and shall not be used by Employee directly or
indirectly or disclosed to any persons, corporations or firms. All of the
foregoing knowledge and information are collectively termed “Confidential
Information” herein. Employee’s obligations under this paragraph will not apply
to any information which (a) is or becomes known to the general public under
circumstances involving no breach by Employee of the terms of this paragraph,
(b) is generally disclosed to third parties by CNS as a continuing practice
without restriction on such third parties, (c) is approved for release by
written authorization of CNS’s Board, or (d) Employee is obligated by law to
disclose.

10.

Disclosure and Transfer of Product Developments, etc.

 

a.

Employee will make full and prompt disclosure to CNS or all product
developments, improvements, modifications, discoveries, computer software,
programs, codes and documentation, research, designs, formulas, configurations,
instructions, methods and inventions (all of which are collectively termed
“Developments” herein), whether patentable or not, made, discovered, conceived
or first reduced to practice by Employee or under Employee’s direction during
Employee’s employment, alone or with others, whether or not made or conceived
during normal working hours or on the premises of CNS which relate in any
material way to the business or to research or development work of CNS. Employee
confirms by Employee’s acceptance of this Agreement that CNS owns and shall own
all of the Developments.

 

b.

Employee also agrees on behalf of himself and Employee’s heirs and legal
representatives that Employee will promptly communicate, disclose and transfer
to CNS, free of encumbrances and restrictions, all of Employee’s right, title
and interest in the Developments covered by paragraph 10.a. and any patents or
patent applications covering such Developments and to execute and deliver such
assignments, patents and applications, and any other documents as CNS may
direct, and to cooperate fully with CNS to enable it to secure any patents or
otherwise protect such Developments in any and all countries. Employee shall
assign to CNS any and all copyrights and reproduction rights to all material
prepared by Employee in connection with Employee’s employment.

 

c.

Notwithstanding paragraphs 10.a. and b., however, this paragraph 10 shall not
apply to Developments for which no equipment, supplies, facility or trade secret
information of CNS was used and which was developed entirely on the Employee’s
own time, and (A) which do not relate (1) directly to the business of CNS or
(2) to CNS’s actual or demonstrably anticipated research or development, or
(B) which does not result from any work performed by Employee for CNS.

This will confirm that Employee’s obligations to CNS under paragraphs 9, 10, 11
and 12 will continue after the termination of Employee’s employment.

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11.

Non-competition. During the term of Employee’s employment by CNS and for twelve
(12) months thereafter, Employee shall not directly or indirectly engage in,
enter into or participate in the business of CNS or in any business or
commercial activity which does or is reasonably likely to compete with or
adversely affect the Business (as defined below) or products of CNS, either as
an individual for Employee’s own account, as a partner or a joint venturer, or
as an officer, director, consultant or holder of more than five percent (5%) of
the entity interest in, any other person, firm, partnership or corporation, or
an employee, agent or salesman for any person. In addition, during such period
Employee shall not: avail himself of any advantages or acquaintances Employee
has made with any person who has, within the twelve (12) month period ended on
the Employee’s Date of Termination, been a customer of CNS or its affiliates,
and which would, directly or indirectly, materially divert business from or
materially and adversely affect the Business of CNS; interfere with the
contractual relations between CNS and any of its employees. For purposes of this
Agreement, the “Business of CNS” or “Business” means and includes the business
of the manufacture, production, sale, marketing and distribution of the Breathe
Right strip and any other products currently offered or currently under
development by CNS or offered or currently under development by CNS during one
(l) year prior to the Employee’s Date of Termination.

Employee acknowledges that CNS directly, or indirectly through its affiliates,
currently is engaged in business on a worldwide basis. Consequently, Employee
agrees that the obligations under this Section 11 shall apply in any market,
foreign or domestic, in which (a) CNS or, as applicable, a CNS affiliate(s),
operates during the one (1) year period prior to the Employee’s Date of
Termination, and (b) CNS or, as applicable, a CNS affiliate(s), has plans to
enter on the Employee’s Date of Termination.

12.

Non-Solicitation. During the term of Employee’s employment by CNS and for twelve
(12) months thereafter, Employee shall not directly or indirectly solicit any
current or prospective CNS customer, broker, vendor or distributor for the
purpose of providing products or services for or on behalf of said customer,
broker, vendor or distributor which are competitive with the products or
services being provided by CNS, which are in the development stages of being
competitive with the products or services being provided by CNS, or which would
in any way cause said customer, broker, vendor or distributor to discontinue or
reduce its business relationship with CNS. Current CNS customers, brokers,
vendors or distributors include those customer, brokers, vendors or distributors
with whom CNS has had a business relationship at any time within one (1) year
immediately preceding Employee’s Date of Termination. Prospective CNS customers,
brokers, vendors and distributors include those with whom (a) a CNS
representative has been in direct personal contact and (b) CNS has a reasonable
opportunity of entering into a business relationship within six (6) months
following Employee’s Date of Termination. Employee also agrees that during
Employee’s employment and in the one (1) year period following Employee’s
employment, Employee will not directly or indirectly solicit any CNS employees
to terminate his employment with CNS. This Employee non-solicitation obligation
applies to employees of CNS during Employee’s employment and as of Employee’s
Date of Termination.

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13.

Remedies.

 

a.

Employee acknowledges that the restrictions set forth in paragraphs 9, 10, 11
and 12 hereof are reasonably necessary to protect legitimate business interests
of CNS. It is understood that if Employee violates Employee’s obligations under
any of these paragraphs, CNS would suffer irreparable harm for which a recovery
of money damages would be an incomplete and inadequate remedy. It is therefore
agreed that CNS, in addition to any remedies at law and as provided in (b)
below, shall be entitled, as a matter of right, in any court of competent
jurisdiction, to a mandatory injunction restraining Employee pending litigation,
as well as upon final determination thereof, from violating this Agreement. In
addition, CNS will discontinue payment to Employee of any Severance Payment or
Salary Continuation, benefits or bonus which Employee may be entitled to receive
or is receiving under paragraphs 6, 7 or 8 hereunder or otherwise, in the event
of Employee’s violation of any of Employee’s obligations under this Agreement.
In the event of cessation of payments and benefits, Employee’s release of
Employee’s claims against CNS shall remain valid and fully enforceable in
consideration of the benefits that Employee received prior to said breach.

 

b.

Employee acknowledges and agrees that the Salary Continuation (under
Section 7.a) or the installments of Severance Payments (under Section 8.f.ii.B)
shall constitute additional consideration for Employee’s obligation under
Sections 9, 10, 11 and 12. Therefore, in the event Employee breaches any of the
terms of Sections 9, 10, 11 and 12 in any material respect, which breach is not
cured by Employee within ten days after written notice from CNS specifying the
breach, in addition to any other remedy available to CNS, CNS may discontinue
any Salary Continuation payments and any installments of Severance Payments
otherwise payable to Employee under Section 8.f.ii.B and Employee shall
immediately repay CNS all Salary Continuation payments described in Section 7.a.
and Severance Payment installments described in Section 8.f.ii.B previously
received by Employee. Any unpaid portion of such Salary Continuation or
Severance Payment installment shall, until paid, bear interest from the first
day repayment is due at the rate set forth in Section 24.a.

14.

Severability. The parties intend that the covenants and agreements contained
herein shall be deemed to be a series of separate covenants and agreements, one
for each and every state of the United States and political subdivision outside
the United States where the business described is conducted. If, in any judicial
proceeding, a court shall refuse to enforce any of the separate covenants deemed
included in such action, then such unenforceable covenants shall be deemed
eliminated from the provisions of this Agreement for the purpose of such
proceeding to the extent necessary to permit the remaining covenants to be
enforced in such proceeding. Further, in the event that any provision is held to
be overbroad as written, such provision shall be deemed amended to narrow its
application to the extent necessary to make the provision enforceable according
to applicable law and enforced as amended.

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15.

Cooperation. For a reasonable period after termination of employment, Employee
agrees to be available to, cooperate with and assist CNS as it may reasonably
request in connection with any litigation or other legal proceeding, claims or
potential claims or any internal or governmental investigation with respect to
matters about which Employee has or may have knowledge as a result of Employee’s
employment with CNS. Employee also agrees to promptly inform CNS if Employee is
asked to assist in any investigation of CNS (or its actions) that may relate to
services performed by Employee for CNS, regardless of whether a lawsuit has then
been filed against CNS with respect to such investigation. In the event CNS
requests Employee’s assistance in any litigation or regulatory matter after
Employee’s employment termination, CNS will pay or reimburse Employee for any
out-of-pocket costs and for any time Employee spends on such matter as requested
by CNS, at a daily rate based on Employee’s Annual Base Salary at the time of
termination.

16.

Dispute Resolution Procedure.

 

a.

CNS and Employee desire to establish a reasonable and confidential means of
resolving any dispute, question or interpretation arising out of or relating to:

 

i.

this Agreement or the alleged breach or threatened breach of it;

 

ii.

the making of this Agreement, including claims of fraud in the inducement;

 

iii.

Employee’s employment by CNS pursuant to this Agreement, including claims of
wrongful termination or discrimination; or

 

iv.

any activities by Employee following the cessation of employment with CNS (each
such dispute to be referred to herein as a “Dispute”).

 

b.

In furtherance of the parties’ mutual desire, CNS and Employee agree that if
either party believes a Dispute exists, that party shall provide the other with
written notice of the claimed Dispute. Upon receipt of that written notice,
except as provided in paragraph 13, the following procedure shall be the
exclusive means of fully and finally resolving the Dispute. First, within ten
(10) days of the other party receiving that notice, Employee and appropriate
representatives of CNS and/or Board will meet to attempt to resolve amicably the
Dispute. Second, if a mutually agreeable resolution is not reached within ten
(10) days following the parties’ first meeting, the parties will engage in
mediation with a neutral mediator mutually agreeable to the parties, said
mediation to be held within thirty (30) days of the final meeting between
Employee and representatives of CNS and/or Board. Third, if the Dispute is not
resolved through mediation within ten (10) days of such mediation, the Dispute
shall be resolved exclusively by final and binding arbitration held in
accordance with the provisions of this Agreement and the American Arbitration
Association (“AAA”) National Rules for the Resolution of Employment Disputes
then in effect, unless such rules are inconsistent with the provisions of this
Agreement. In connection with such arbitration:

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i.

any such arbitration shall be conducted: (A) by a neutral arbitrator appointed
by mutual agreement of the parties; or (B) failing such agreement, by a neutral
arbitrator appointed in accordance with said AAA rules;

 

ii.

CNS shall pay the fees and expenses of the arbitrator;

 

iii.

the parties shall be permitted reasonable discovery in accordance with the
provisions of the Minnesota Rules of Civil Procedure, including the production
of relevant documents by the other party, the exchange of witness lists, and a
limited number of depositions, including depositions of any expert who will
testify at the arbitration;

 

iv.

the summary judgment procedure applicable under Rule 56 of the Minnesota Rules
of Civil Procedure shall be available and apply to any arbitration conducted
pursuant to this Agreement;

 

v.

the arbitrator’s award shall include findings of fact and conclusions of law
showing the legal and factual bases for the arbitrator’s decision;

 

vi.

except as provided in Section 8.f.(iv), the arbitrator shall have the authority
to award to the prevailing party any remedy or relief that a United States
District Court or court of the State of Minnesota could order or grant if the
dispute had first been brought in that judicial forum, including costs (other
than the arbitrator’s fees and expenses and attorneys’ fees);

 

vii.

the arbitrator’s award may be entered by any court of competent jurisdiction;
and

 

viii.

unless otherwise agreed by the parties, the place of any arbitration proceeding
shall be Minneapolis, Minnesota.

 

c.

Except as the parties shall agree in writing, upon court order, or as required
by law, neither CNS nor Employee will disclose to any third party, except for
their counsel, retained experts and other persons directly serving counsel or
retained experts, any fact or information in any way pertaining to the process
of resolving a Dispute under this paragraph 16, or to the fact of or any term
that is part of a resolution or settlement of any Dispute. This prohibition on
disclosure specifically includes, without limitation, any disclosure of an oral
statement or of a written document made or provided by either Employee or CNS,
or by any of CNS’s or Employee’s representatives, counsel or retained experts,
or other persons directly serving any representatives, counsel or retained
experts.

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17.

Binding Effect.

 

a.

CNS will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of CNS (as defined in paragraph 8.a.) to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that CNS would
be required to perform it if no such succession had taken place, in which case,
the term “CNS” as used in this Agreement shall instead refer to CNS’ successor;
provided, however, that the provisions of paragraph 8.b. shall apply and be of
no further effect at the end of the 24 month period following a Change in
Control, except as provided in paragraph 23. Failure of CNS to obtain such
assumption and agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle Employee to compensation from
CNS in the same amount and on the same terms as Employee would be entitled
hereunder if Employee terminated Employee’s employment for Good Reason following
a Change in Control, except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be deemed the Date of
Termination.

 

b.

This Agreement shall inure to the benefit of and be enforceable by Employee’s
personal or legal representatives, successors, heirs, and designated
beneficiaries. If Employee should die while any amount would still be payable to
Employee hereunder if Employee had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Employee’s designated beneficiaries, or, if there is no such
designated beneficiary, to Employee’s estate.

18.

Entire Agreement. From and after the date of this Agreement the terms and
provisions of this Agreement constitute the entire agreement between the parties
and this Agreement supersedes any previous oral or written communications,
representations, or agreements with respect to any subject, including the
subject matter of compensation, bonus, participation and profit sharing and
termination compensation, including but not limited to, the prior Employment
Agreement dated as of October 15, 2003 and the letter agreement dated September
18, 2003.

19.

Waiver and Interpretation. The waiver by either party of a breach of any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any subsequent breach by the breaching party. No waiver shall be
valid unless in writing and signed by the party providing such waiver. If any
provision of this Agreement is held by any court to be unenforceable, then such
provision shall be deemed to be eliminated from the Agreement to permit
enforceability of the remaining provisions. If any provision is held to be
overbroad, such provision shall be amended to narrow its application to the
extent necessary for enforceability. For purposes of the release agreement which
Employee shall be required to execute as a condition of receiving any payments
and benefits hereunder, “CNS”, as referred to in this Agreement, shall include
CNS and all its affiliates, shareholders, officers, directors, employees,
agents, attorneys, insurers and indemnitors.

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20.

Applicable Law. All questions pertaining to the validity, construction,
execution and performance of this Agreement shall be construed and governed in
accordance with the laws of the State of Minnesota. The parties consent to the
personal jurisdiction of the State of Minnesota, waive any argument that such a
forum is not convenient, and agree that any litigation relating to this
Agreement shall be venued in Minneapolis, Minnesota.

21.

Tax Withholding. CNS may withhold from any payment of benefits under this
Agreement (and forward to the appropriate taxing authority) any taxes required
to be withheld under applicable law.

22.

Notice. Any notice required or desired to be given under this Agreement shall be
deemed given if in writing sent by certified mail to Employee’s residence in the
case of Employee, or to its principal office in the case of CNS.

23.

Survival of Rights and Obligations. All of Employee’s rights and CNS’s
obligations hereunder, including Employee’s rights to compensation and benefits
(including under paragraphs 6, 7 and 8 hereof), and Employee’s obligations under
paragraphs 9, 10, 11 and 12 hereof shall survive the termination of Employee’s
employment and/or the termination of this Agreement.

24.

Payment of Compensation. Notwithstanding anything in this Agreement or elsewhere
to the contrary:

 

a.

If payment or provision of any amount or other benefit that is “deferred
compensation” subject to Section 409A of the Code at the time otherwise
specified in this Agreement or elsewhere would subject such amount or benefit to
additional tax pursuant to Section 409A(a)(1)(B) of the Code, and if payment or
provision thereof at a later date would avoid any such additional tax, then the
payment or provision thereof shall be postponed to the earliest date on which
such amount or benefit can be paid or provided without incurring any such
additional tax. In the event this paragraph 24 requires a deferral of any
payment, such payment shall be accumulated and paid in a single lump sum on such
earliest date, together with interest for the period of delay, compounded
annually, equal to the prime rate (as published in the Wall Street Journal) and
in effect as of the date the payment should otherwise have been provided.

 

b.

If any payment under this Agreement is subject to Code Section 409A, payment of
such amounts shall not be made prior to separation from service, disability or
death as permitted under Section 409A(a)(2)(A)(i), (ii), (iii), (v) or (vi) of
the Code, subject to the six-month delayed payment requirement of
Section 409A(a)(2)(B) in the event that the Employee is a specified employee
within the meaning of such subsection (using December 31 as the “identification
date” for specified employee status), and subject further to the early payout
provisions of paragraphs 2 and 5 of this Agreement.

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c.

Payment of amounts deferred under the Plan may not be accelerated in a manner
inconsistent with Section 409A(a)(3) of the Code, subject to the early payout
provision of paragraphs 2 and 5 of this Agreement.

 

d.

Any deferral elections permitted by this Agreement shall be made in a manner
consistent with Section 409A(a)(4) of the Code.

 

e.

If any payment or benefit permitted or required under this Agreement, or
otherwise, is reasonably determined by either party to be subject for any reason
to a material risk of additional tax pursuant to Section 409A(a)(1)(B) of the
Code, then the parties shall promptly agree in good faith on appropriate
provisions to avoid such risk without materially changing the economic value of
this Agreement to either party.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first set forth above.

 

 

 

 

CNS, INC.

 

By:   

/s/   Marti Morfitt

 

 

 

 

 

 

Its:   

President and Chief Executive Officer

 

 

 

 

 

EMPLOYEE

 

By:   

/s/   Samuel E. Reinkensmeyer

 

 

 

Samuel E. Reinkensmeyer

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EXECUTIVE EMPLOYMENT AGREEMENT

EXHIBIT A

 

Name:

Samuel E. Reinkensmeyer

 

Position:

Vice President-Finance and Chief Financial Officer

 

Annual Base Salary:

$220,110

 

Management Incentive Plan Level:

17.5 %  at Threshold

 

 

35 %

at Plan

 

 

70 %

at Maximum

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RELEASE AGREEMENT

 

EXHIBIT B

 

In consideration of the benefits to be afforded to the undersigned under that
certain Executive Employment Agreement dated May 3, 2006 between CNS, Inc., a
Delaware corporation (“CNS”) and the undersigned (the “Employment Agreement”),
the undersigned agrees to do the following things:

 

1.

The undersigned hereby releases CNS, its past and present affiliates, and its
and their past and present officers, directors, agents, shareholders, employees,
attorneys, insurers and indemnitors (collectively, the “Releasees”) from any and
all claims and causes of action, known or unknown, which the undersigned may
have against any and all of them. Through this release, the undersigned
extinguishes all causes of action against the Releasees occurring up to the date
on which the undersigned signs this release agreement, including but not limited
to any contract, compensation or benefit claims; intentional infliction of
emotional distress, defamation or any other tort claims; and all claims arising
from any federal, state or municipal law or ordinance, including the Employee
Retirement Income Security Act and the Family and Medical Leave Act. This
release extinguishes any potential claims of employment discrimination arising
from the undersigned’s employment with and termination of employment with or
resignation from CNS, including specifically any claims under the Minnesota
Human Rights Act, the Americans With Disabilities Act, Title VII of the Civil
Rights Act of 1964, the Older Workers Benefit Protection Act, and the Age
Discrimination in Employment Act. This release does not extinguish any claims:
(i) that arise against CNS after the undersigned signs this release agreement;
(ii) arising under this release agreement; (iii) to any benefits to which the
undersigned is otherwise entitled under any CNS benefit plan as of the date of
this release agreement; (iv) related to workers’ compensation; (v) arising under
unemployment compensation law; (vi) to the right to indemnification under CNS
bylaws or insurance; or (vii) compensation or benefits owing the undersigned in
connection with the termination of his employment under the Employment
Agreement. The undersigned certifies that he (a) has not filed any claims,
complaints or other actions against any Releasee; and (b) is hereby waiving any
right to recover from any Releasee under any lawsuit or charge filed by the
undersigned or any federal, state or local agency on the undersigned’s behalf
based upon any event occurring up to the date on which the undersigned signs
this release agreement. The undersigned acknowledges that he has been advised by
CNS to review his rights and responsibilities under this release agreement with
his own lawyer.

 

The undersigned has 21 days to review and consider this release agreement. If
the undersigned signs this release agreement before 21 days have elapsed from
the date on which the undersigned first receives it, then the undersigned will
be voluntarily waiving his right to the full 21-day review period. The
undersigned also has the right to rescind this release agreement within 15
calendar days of the date upon which the undersigned signs it. The undersigned
understands that if the undersigned desires to rescind this release agreement,
the undersigned must put the rescission in writing and deliver it to Nicole
Strait, CNS, Inc., 7615 Smetana Lane, P.O. Box 39802, Minneapolis, MN 55439-0802
by hand or by mail within 15 calendar days of the date on which the undersigned
signs this release agreement. If the undersigned delivers the rescission by
mail, it must be postmarked within 15 calendar days of the date on which the
undersigned signs this release agreement and sent by certified mail, return
receipt requested. If the undersigned rescinds this release agreement, all of
CNS’s obligations to the undersigned under the Employment Agreement, other than
payment of accrued unused paid time off, will immediately cease and CNS will owe
the undersigned nothing under the Employment Agreement.

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2.

At CNS’s specific request and at mutually convenient times while the undersigned
is receiving payments under the Employment Agreement, the undersigned agrees to
consult with CNS without additional compensation with respect to a limited
amount of transitional CNS business matters. The undersigned also agrees to
cooperate with CNS in any current or future claims or lawsuits involving CNS
where the undersigned has knowledge of the underlying facts, and CNS will pay or
reimburse the undersigned for any pre-approved travel or similar expenses
related to any such litigation and for such other expenses as agreed to by CNS.
In addition, the undersigned agrees that he will not voluntarily aid, assist, or
cooperate with any claimants or plaintiffs or their attorneys or agents in any
claims or lawsuits commenced in the future against CNS, provided, however, that
nothing in this release agreement will be construed to prevent the undersigned
from testifying truthfully as required by valid legal or administrative process.

 

3.

The undersigned agrees that he will continue to speak positively and with
respect towards CNS as he has in the past.

 

4.

The undersigned agrees to maintain the confidentiality of the terms of this
release agreement and the terms of the Employment Agreement related hereto, to
the extent not publicly disclosed by CNS, and agrees not to disclose such terms
to anyone other than his family members, tax and legal advisors or as otherwise
required by law.

 

5.

The undersigned affirms and acknowledges his obligations under paragraphs 9, 10,
11 and 12 of the Employment Agreement.

 

This release agreement shall not in any way be construed as an admission of
liability by CNS or as an admission that CNS has acted wrongfully with respect
to the undersigned. CNS specifically denies and disclaims any such liability or
wrongful acts.

 

The undersigned understands that if he violates any obligation that he has to
CNS under this release agreement or the Employment Agreement, all payments and
benefits to him hereunder will immediately cease. In such event, the
undersigned’s release of his claims shall remain fully in effect in
consideration of the payments and benefits that the undersigned received prior
to any such breach.

 

The undersigned hereby declares that he has entered into this release agreement
voluntarily, without coercion, duress, or reliance on any representations by any
CNS employee, agent or lawyer.

 

 

Acknowledged and agreed to, with declarations confirmed, this _____ day of
___________, 200_.

 

 

 

 

 

Samuel E. Reinkensmeyer

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