Document:

WWW.EXFILE.COM -- 15019 -- MATRITECH, INC. -- EXHIBIT 10.1 TO FORM 8-K

     

    EXHIBIT
      10.1

    MATRITECH,
      INC.

    Restricted
      Stock Award Agreement

    

    Matritech,
      Inc. (the “Company”)
      hereby
      grants to the undersigned employee (“Employee”) all right, title and interest in
      the record and beneficial ownership of the stated number of shares of the
      Company’s Common Stock, par value $0.01, subject to the vesting provisions and
      other terms and conditions contained in this Restricted Stock Award Agreement
      (the “Agreement”)
      and in
      the Company’s 2002 Stock Option and Incentive Plan (the “Plan”) pursuant to
      which this award of restricted stock is made. The terms and conditions attached
      hereto are also a part hereof.

    

    

    
      	
               Name
                of Employee:

            	 
	 	 
	
               Date
                of this restricted stock award:

            	 
	 	 
	
               Number
                of shares of the Company’s Common Stock subject to this restricted stock
                award agreement (“Shares”):

            	 
	 	 
	
               Vesting
                Start Date: one year anniversary of award

            	 

    

    

     Vesting
      Schedule: 

    
      	
               One year
                from Award Date (33 and 1/3% of Shares):

            	 
	 	 
	
               Two years
                from Award Date (Additional 33 and 1/3% of Shares):

            	 
	 	 
	
               Three years
                from Award Date (Final 33 and 1/3% of Shares):

            	 
	 	 
	
               All
                vesting is dependent on the continuation of a Business Relationship
                with
                the Company, as provided herein.

            

    

    

    This
      award of restricted stock satisfies in full all commitments that the Company
      has
      to the Employee with respect to the issuance of stock, stock options or other
      equity securities.

    
      
        

      

    
      	 	
               

              Matritech,
                Inc.

            
	
              ____________________________________

            	 
	
              Signature
                of Employee

            	
              By: 
                ____________________________

            
	
              ____________________________________

            	
              Name
                of Officer:

            
	
              Street
                Address

            	
              Title:

            
	
              ____________________________________

            	 
	
              City/State/Zip
                Code

            	 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Matritech,
      Inc.

    

    Restricted
      Stock Award Agreement -- Incorporated Terms and Conditions

    

    1.    Award
      Under Plan.
      This
      award of restricted stock is made pursuant to and is governed by the Company’s
      2002 Stock Option and Incentive Plan (the “Plan”)
      and,
      unless the context otherwise requires, terms used herein shall have the same
      meaning as in the Plan. The Award is also made pursuant to and is subject to
      the
      terms and conditions of the Company’s Amended and Restated Management Bonus Plan
      as of December 9, 2005 (the “Management Bonus Plan”).

    

    2.    Payment
      of Par Value of Shares.
      The
      Employee, as a condition to this award of restricted stock, agrees to pay to
      the
      Company in cash, contemporaneously with the execution of this Agreement, the
      par
      value of the Shares of restricted stock. The Employee further agrees that the
      Company may, in the absence of receipt of cash from the Employee equal to the
      par value of the Shares, withhold from the Employee’s wages or other
      remuneration the par value amount. The Company agrees, in the event of a
      forfeiture of Shares of restricted stock under Section 6(a) hereof due to
      termination of the Employee’s Business Relationship (as defined below) with the
      Company, the Company will repay to the Employee an amount equal to the par
      value
      of the forfeited Shares. 

    

    3.    Custody
      of Restricted Stock.
      Certificates representing the Shares of restricted stock awarded to the Employee
      shall bear appropriate legends noting the restrictions applicable to the Shares.
      The original certificates shall be held by the Company until such time as the
      underlying Shares are no longer subject to the risk of forfeiture, retention
      obligation and securities law restrictions contained in Sections 5, 6 and 8
      hereof. The Employee will also provide the Company with a stock power endorsed
      in blank. At such time as the shares are no longer subject to the risk of
      forfeiture, retention obligation and securities law restrictions contained
      in
      Sections 5, 6 and 8 hereof, the Company will deliver to the Employee original
      certificates without restrictive legends thereon. 

    

    4.    Vesting
      of Restricted Stock.
      All
      Shares subject to this Agreement are subject to a substantial risk of forfeiture
      until such Shares have vested in the Employee in accordance with the terms
      of
      this Agreement. If the Employee has continuously maintained a Business
      Relationship (as defined below) with the Company through the date(s) listed
      on
      the vesting schedule set forth on the cover page hereof, the portion of the
      awarded Shares listed on the vesting schedule shall vest in the Employee and
      no
      longer be subject to forfeiture. “Business
      Relationship”
means
      service to the Company or its successor in the capacity of an employee, officer,
      director or consultant. Notwithstanding the foregoing, the Board may, in its
      discretion, accelerate the date that any installment of this award vests.

    

    5.    Retention
      Obligation; Restrictions after Vesting.
      If the
      Employee is an executive officer of the Company at the time of vesting of any
      portion of the restricted stock award, the Employee is obligated to retain
      in
      his/her ownership a minimum of fifty (50%) percent of the Shares of Common
      Stock
      of the Company acquired through this restricted stock award to the extent that
      the Employee does not then hold by himself/herself or through members of his/her
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    -2-

     

    immediate
      family a minimum of 50,000 shares of Common Stock of the Company or shares
      of
      Common Stock of the Company with a value of $50,000, whichever is the lower
      standard; provided, however, that there shall be excluded from the retention
      obligation any Shares the Employee sells to pay withholding taxes due in
      connection with the deferred cash pay-out to the Employee under the Management
      Bonus Plan and on account of the lapse of restrictions on the Shares of
      restricted stock. Certificates representing the shares which remain subject
      to
      the retention obligation shall continue to be held by the Company until they
      are
      no longer subject to the retention obligation. 

     

    6.    Termination
      of Business Relationship.
      

    

    (a)    Termination.
      Except
      as provided in Section 7 hereof, if the Employee’s Business Relationship with
      the Company ceases, voluntarily or involuntarily, with or without cause, no
      further installments of this award shall vest, and the Employee shall forfeit
      all Shares subject to this restricted stock award not vested at the date of
      such
      termination of the Employee’s Business Relationship with the Company. Any
      determination under this Agreement as to the status of a Business Relationship
      or other matters referred to above shall be made in good faith by the Board
      of
      Directors of the Company. 

    

    (b)     Employment
      Status.
      For
      purposes hereof, with respect to employees of the Company, employment shall
      not
      be considered as having terminated during any leave
      of
      absence if such leave of absence has been approved in writing by the Company
      and
      if such written approval contractually obligates the Company to continue the
      employment of the Employee after the approved period of absence; in the event
      of
      such an approved leave of absence, vesting of this restricted stock award shall
      be suspended (and the period of the leave of absence shall be added to all
      vesting dates) unless otherwise provided in the Company’s written approval of
      the leave of absence. For purposes hereof, a termination of employment followed
      by another Business Relationship shall be deemed a termination of the Business
      Relationship with all vesting to cease unless the Company enters into a written
      agreement related to such other Business Relationship in which it is
      specifically stated that there is no termination of the Business Relationship
      under this Agreement. This award shall not be affected by any change of
      employment within or among the Company and its Subsidiaries so long as the
      Employee continuously remains an employee of the Company or any
      Subsidiary.

    

    7.    Death;
      Disability.
      

    

    (a)    Death
      or Disability.
      If the
      Employee ceases to maintain a Business Relationship with the Company by reason
      of his/her disability or death, the Shares of restricted stock subject to this
      Agreement shall fully vest in the Employee (or in his/her estate in the event
      of
      his/her death) and the restrictions (except those contained in Section 8 hereof)
      and substantial risk of forfeiture shall lapse. For purposes hereof,
“disability”
means
      “permanent
      and total disability”
as
      defined in Section 22(e)(3) of the Internal Revenue Code. 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -3-

       

    

    (b)    Retirement
      with Consent of the Company.
      If the
      Employee retires from his/her Business Relationship with the Company with the
      consent of the Company after the Employee has reached age 62, the shares of
      restricted stock subject to this Agreement shall fully vest in the Employee
      and
      the restrictions (except those contained in Section 8 hereof) and substantial
      risk of forfeiture shall lapse. 

    

    (c)    Change
      of Control. In
      the
      event of an Acquisition (as defined herein) prior to the full vesting of this
      award, the vesting of the award shall be accelerated and the Shares of the
      restricted stock subject to this Agreement shall fully vest in the Employee,
      and
      the restrictions (except those contained in Section 8 hereof) and substantial
      risk of forfeiture shall lapse, at the moment immediately preceding the
      consummation of the Acquisition. For purposes of this Plan, an “Acquisition”
shall
      mean: (x) the sale of the Company by merger in which the shareholders of the
      Company in their capacity as such no longer own a majority of the outstanding
      equity securities of the Company (or its successor); or (y) any sale of all
      or
      substantially all of the assets or capital stock of the Company (other than
      in a
      spin-off or similar transaction) or (z) any other acquisition of the business
      of
      the Company, as determined by the Board.

    

    8.    Securities
      Laws Restrictions on Resale.
      Until
      registered under the Securities Act of 1933, as amended, or any successor
      statute (the “Securities
      Act”),
      the
      Shares will be illiquid and will be deemed to be “restricted securities” for
      purposes of the Securities Act. Accordingly, such shares must be sold in
      compliance with the registration requirements of the Securities Act or an
      exemption therefrom and may need to be held indefinitely. Unless the Shares
      have
      been registered under the Securities Act, each certificate evidencing any of
      the
      Shares shall bear a restrictive legend specified by the Company. 

    

    9.    Ownership
      Rights.
      Subject
      to the restrictions set forth herein, the Employee is entitled to all voting
      and
      ownership rights applicable to the Shares, including the right to receive any
      dividends that may be paid on the shares, whether or not vested. Each dividend
      payment will be made no later than the end of the calendar year in which the
      dividends are paid to shareholders of that class of stock or, if later, the
      15th
      day of
      the third month following the date of the dividends are paid to shareholders
      of
      that class of stock.

    

    10.    Award
      Not Transferable.
      This
      award is not transferable or assignable except by will or by the laws of descent
      and distribution. 

    

    11.    No
      Obligation to Continue Business Relationship.
      Neither
      the Plan, this Agreement, nor the restricted stock award imposes any obligation
      on the Company to continue the Employee in employment or other Business
      Relationship.

    

    12.    No
      Severance or Termination Rights.
      Awards
      do not form part of an Employee’s contract of employment and do not entitle an
      Employee to any benefit other than that granted under this Agreement. Any
      benefits granted under this Agreement are not part of an Employee’s ordinary
      salary, and shall not be considered as part of such salary for pension purposes
      or in the event of severance, redundancy or resignation. If Employee’s
      employment is terminated for whatever reason the Employee agrees that he/she
      shall not be entitled by way of damages for 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    -4-

     

    breach
      of
      contract, dismissal or compensation for loss of office or otherwise to any
      sum,
      shares or other benefits to compensate for the loss or diminution in value
      of
      any actual or prospective right, benefits or expectation under or in relation
      to
      this Agreement.

    

    13.    Adjustments.
      This
      award is subject to adjustment, as is expressly provided in the Plan, with
      respect to certain changes in the capitalization of the Company.

    

    14.    Withholding
      Taxes.
      If the
      Company in its discretion determines that it is obligated to withhold any tax
      in
      connection with the vesting of any portion of the Shares or the release of
      any
      restrictions applicable to the Shares, the Employee hereby agrees that the
      Company may withhold from the Employee’s wages or other remuneration the
      appropriate amount of tax. At the discretion of the Company, the amount required
      to be withheld may be withheld in cash from such wages or other remuneration
      or
      in kind from the Common Stock or other property otherwise deliverable to the
      Employee on vesting or lapse of restrictions on the Shares. The Employee further
      agrees that, if the Company does not withhold an amount from the Employee’s
      wages or other remuneration sufficient to satisfy the withholding obligation
      of
      the Company, the Employee will make reimbursement on demand, in cash, for the
      amount underwithheld. The Employee further agrees to indemnify the Company
      for
      the Employee’s portion of any social insurance obligations or taxes arising
      under any foreign law with respect to the grant of this restricted stock award,
      the vesting of the restricted stock or the sale or other disposition of the
      restricted stock.

    

    15.    Provision
      of Documentation to Employee.
      By
      signing this Agreement the Employee acknowledges receipt of a copy of this
      Agreement and a copy of the Plan.

    

    16.    Transfer
      of Data Waiver.
      By
      signing this Agreement the Employee acknowledges that in order to perform its
      requirements under this Award, the Company may process personal data and/or
      sensitive personal data about the Employee. Such data includes, but is not
      limited to, the information provided in this award package and any changes
      thereto, other appropriate personal and financial data about the Employee,
      and
      information about the Employee’s participation in the Plan and shares acquired
      under the Plan from time to time. The Employee hereby gives explicit consent
      to
      the Company to process any such personal data and/or sensitive personal data.
      The Employee also gives explicit consent to the Company to transfer any such
      personal data and/or sensitive personal data outside the country in which the
      Employee works and to the United States. The legal persons for whom the personal
      data is intended include the Company and any of its subsidiaries, the outside
      plan administrator as selected by the Company from time to time, and any other
      person that the Company may find in its administration of the Plan appropriate.
      By signing this Agreement, the Employee acknowledges that s/he has been informed
      of his/her right of access and correction to personal data by contacting the
      local Human Resources Representative. The Employee further acknowledges that
      the
      transfer of the information outlined here is important to the administration
      of
      the Plan and failure to consent to the transmission of such information may
      limit or prohibit participation under the Plan.

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    -5-

     

    17.    Miscellaneous.

    

    (a)    Notices.
      All
      notices hereunder shall be in writing and shall be deemed given when sent by
      mail, if to the Employee, to the address set forth above or at the address
      shown
      on the records of the Company, and if to the Company, to the Company’s principal
      executive offices, attention of the Corporate Secretary.

    

    (b)    Entire
      Agreement; Modification.
      This
      Agreement constitutes the entire agreement between the parties relative to
      the
      subject matter hereof, and supersedes all proposals, written or oral, and all
      other communications between the parties relating to the subject matter of
      this
      Agreement. This Agreement may be modified, amended or rescinded only by a
      written agreement executed by both parties. 

    

    (c)    Fractional
      Shares.
      If,
      because of the adjustment provisions contained in the Plan, the number of shares
      subject to this award includes a fraction of a share, such fraction shall be
      rounded down.

    

    (d)    Issuances
      of Securities; Changes in Capital Structure.
      Except
      as expressly provided herein or in the Plan, no issuance by the Company of
      shares of stock of any class, or securities convertible into shares of stock
      of
      any class, shall affect, and no adjustment by reason thereof shall be made
      with
      respect to, the number of Shares subject to this award. If there shall be any
      change in the Common Stock of the Company through merger, consolidation,
      reorganization, recapitalization, stock dividend, stock split, combination
      or
      exchange of shares, spin-off, split-up or other similar change in capitalization
      or event, the restrictions contained in this Agreement shall apply with equal
      force to additional and/or substitute securities, if any, received by the
      Employee in exchange for, or by virtue of his/her ownership of, Shares, except
      as otherwise determined by the Board.

    

    (e)    Severability.
      The
      invalidity, illegality or unenforceability of any provision of this Agreement
      shall in no way affect the validity, legality or enforceability of any other
      provision. 

    

    (f)    Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties hereto
      and their respective successors and assigns, subject to the limitations set
      forth in Section 10 hereof.

    

    (g)    Governing
      Law.
      This
      Agreement shall be governed by and interpreted in accordance with the laws
      of
      the State of Delaware, without giving effect to the principles of the conflicts
      of laws thereof.EXHIBIT 10.18
                                                                   -------------

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT, entered into this 16th day of March, 2007,
by and between CAS Medical Systems, Inc., a Delaware corporation (the
"Company"), and Andrew Kersey (hereinafter called the "Employee").

WITNESSETH:

         WHEREAS, the Company desires that the Employee serve as the President
and Chief Executive Officer of the Company and the Employee is willing to serve
the Company in such capacities.

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

SECTION 1.    EMPLOYMENT

         Effective as of April 1, 2007, the Company will employ the Employee and
the Employee will perform services for the Company and its subsidiaries on the
terms and conditions set forth in this Agreement and for the period specified in
Section 3 hereof ("Term of Employment").

SECTION 2.    DUTIES

         The Employee, during the Term of Employment, will serve the Company as
its President and Chief Executive Officer. The Employee will have such duties
and responsibilities as are assigned to him by the Board of Directors of the
Company commensurate with his positions as President and Chief Executive Officer
of the Company. The Employee will perform his duties hereunder faithfully and to
the best of his abilities and in furtherance of the business of the Company and
its subsidiaries, and will devote his full business time, energy, attention and
skill to the business of the Company and its subsidiaries and to the promotion
of its interests, except as otherwise agreed by the Company. The Employee
warrants and represents that he is free to enter into this Agreement and is not
restricted by any prior or existing agreement and the Company may rely on such
representation in entering into this Agreement.

SECTION 3.    TERM OF EMPLOYMENT

         The Employee's employment hereunder shall be "at will" and is
terminable at any time by either party, subject to the provisions of Sections 9
and 10 hereof.

SECTION 4.    SALARY

         The Employee will receive, as compensation for his duties and
obligations to the Company pursuant to this Agreement, a base salary at the
annual rate of Two Hundred Fifty Thousand Dollars ($250,000), payable in
substantially equal installments in accordance with the Company's payroll
practice. It is agreed between the parties that the Company will review the base
annual salary annually and in light of such review may (but will not be
obligated to), in the discretion of the Compensation Committee of the Board of
Directors of the Company, increase such annual base salary taking into account
any change in the Employee's responsibilities, increases in the cost of living,
performance by the Employee, and other pertinent factors.

SECTION 5.    BONUS

         During the Term of Employment, the Employee will be eligible for an
annual bonus in the form of cash or Company common stock as determined at the
sole discretion of the Compensation Committee of the Board of Directors.

SECTION 6.    EMPLOYEE BENEFITS

         Subject to any applicable probationary or similar periods, during the
Term of Employment, the Employee will be entitled to participate in all employee
benefit programs of the Company, as such programs may be in effect from
<PAGE>
time to time. Subject to any applicable probationary or similar periods, during
the Term of Employment, the Employee will also be entitled to participate in all
retirement programs of the Company for which current employees are eligible, as
such programs may be in effect from time to time (including the Company's 401(k)
plan).

SECTION 7.    BUSINESS EXPENSES

         All reasonable travel and other out-of-pocket expenses incidental to
the rendering of services by the Employee hereunder will be paid by the Company
and if expenses are paid in the first instance by the Employee, the Company will
reimburse him therefor upon presentation of proper invoices; subject in each
case to compliance with the Company's reimbursement policies and procedures.

SECTION 8.    VACATIONS AND SICK LEAVE

         The Employee will be entitled to holidays, reasonable vacation and
reasonable sick leave each year, in accordance with policies of the Company, as
determined by the Board of Directors, provided, however, that the Employee will
be entitled to a minimum of four (4) weeks vacation per year.

SECTION 9.    TERMINATION

         (a) Termination by the Company for Serious Cause. In the event of
Serious Cause (as defined below), the Company may terminate the Employee's
employment and the Term of Employment upon written notice of such termination
stating the Serious Cause upon which the Company relies for its termination. The
Employee's employment and the Term of Employment will be terminated effective as
of the date specified in such notice, which will in no event be earlier than the
effective date of such notice as provided in Section 18.

         "Serious Cause" means (i) the willful and continued failure by the
Employee to perform substantially his duties hereunder, other than by reasons of
health, after demand for substantial performance is delivered by the Company
that identifies the manner in which the Company believes the Employee has not
substantially performed his duties; (ii) the Employee will have been indicted by
any federal, state or local authority in any jurisdiction for, or will have
pleaded guilty or nolo contendere to, an act constituting a felony, (iii) the
Employee will have habitually abused any controlled substance (such as narcotics
or alcohol), or (iv) the Employee will have (A) engaged in acts of fraud,
material dishonesty or gross misconduct in connection with the business of the
Company, or (B) committed a material breach of this Agreement.

         (b) Termination by Employee for Good Reason. The Employee may terminate
his employment and the Term of Employment in the event of Good Reason (as
defined below) upon thirty (30) days' prior written notice of such termination
stating the Good Reason upon which the Employee relies for his termination. The
Employee's employment and the Term of Employment will be terminated effective as
of the date specified in such notice, which in no event will be earlier than the
effective date of such notice as provided in Section 18.

         "Good Reason" means a material breach of this Agreement by the Company,
such as (i) a reduction in the Employee's salary or benefits other than an
across-the-board reduction of benefits affecting all members of senior
management, (ii) a material reduction of the Employee's duties and significant
responsibilities hereunder (not including reasonable changes in title or in
corporate structure), or (iii) other material breach of this Agreement by the
Company.

         (c) Effect of Termination for Serious Cause or Without Good Reason. In
the event of termination of the Employee's employment and the Term of Employment
by the Company for Serious Cause or by the Employee without Good Reason, the
Employee will forfeit all bonus amounts for the then current fiscal year, and
the Company will be liable to the Employee only for (i) any accrued but unpaid
base salary and vacation, (ii) any earned but unpaid bonus from a prior fiscal
year (subject, if applicable, to the terms of any deferred compensation
arrangements), and (iii) reimbursement of business expenses incurred prior to
the date of termination.

         (d) Death, Retirement, Disability. In the event of the death,
Retirement or Disability of the Employee, the Employee's employment and Term of
Employment will be terminated as of the date of such death, Retirement or
Disability and the Company will pay the Employee, or the Employee's estate or
legal representative, as appropriate, (i) any accrued but unpaid base salary and
vacation, (ii) any earned but unpaid bonus from a prior fiscal year (subject, if
applicable, to the terms of any deferred compensation arrangements), and (iii)
reimbursement of business expenses
<PAGE>
incurred prior to the date of termination.

         "Disability" means the Employee's inability, for reasons of health, to
carry out the functions of his position for a total of one hundred eighty (180)
days during any twelve (12) month period. "Retirement" will mean retirement from
employment upon or after attaining age sixty-five (65) or such earlier age
agreed to by the Company.

         (e) Effect of Termination Without Serious Cause or With Good Reason. If
(i) the Company terminates the Term of Employment and the Employee's employment
herein without Serious Cause, or (ii) the Employee terminates the Term of
Employment and his employment hereunder for Good Reason, the Company will
continue to pay the Employee his then-current base salary provided under this
Agreement for a period of six (6) months from the date of such termination. In
addition, the Employee will be entitled to prompt payment of (A) any accrued but
unpaid salary and vacation, (B) any earned but unpaid bonus from a prior fiscal
year (subject, if applicable, to the terms of any deferred compensation
arrangements), (C) the Company's health benefit plans (with standard employee
payment in an amount not to exceed the payment level immediately prior to
termination) for the period of six (6) months, and (D) reimbursement of business
expenses incurred prior to the date of termination. In addition if the Company
terminates the Term of Employment and the Employee's employment herein without
Serious Cause or the Employee terminates the Term of Employment and his
employment hereunder for Good Reason, all of the Employee's equity-linked grants
(e.g. stock options, restricted stock) shall thereupon immediately accelerate
and vest in full.

         (f) No Other Obligations. In the event of the termination of the
Employee's employment and the Term of Employment pursuant to Sections 9 or 10
herein, the Company will have no obligations to the Employee other than those
set forth in Sections 9 and 10 herein.

SECTION 10.   CHANGE OF CONTROL

         (a) Effect of Termination. If (i) the employment of the Employee is
terminated by the Company (or successor thereto) without Serious Cause or (ii)
the Employee terminates employment with the Company (or successor thereto) for
Good Reason, within the period commencing on the date that a Change of Control
is formally proposed to the Company's Board of Directors and ending on the
second anniversary of the date on which such Change of Control occurs, then the
Employee will be entitled to receive his then-current base salary provided under
this Agreement for a period of one (1) year from the date of such termination
and in addition, the Employee will be entitled to prompt payment of (A) any
accrued but unpaid salary and vacation, (B) any earned but unpaid bonus from a
prior fiscal year (subject, if applicable, to the terms of any deferred
compensation arrangements), (C) the Company's health benefit plans (with
standard employee payment in an amount not to exceed the payment level
immediately prior to the Change of Control) for the period of one (1) year, and
(D) reimbursement of business expenses incurred prior to the date of
termination.

         If any portion of the payments which the Employee has the right to
receive from the Company, or any affiliated entity or successor, hereunder would
constitute "excess parachute payments" (as defined in Section 280G of the
Internal Revenue Code) subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code, such excess parachute payments shall be reduced to the
largest amount that will result in no portion of such excess parachute payments
being subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code.

         The Employee will not be entitled to any benefits or other entitlements
under this section unless a Change of Control actually occurs. Any amounts
payable pursuant to this Section 10 shall not duplicate amounts payable under
Section 9 and vice versa.

         (b) Change of Control. A "Change of Control" of the Company will be
deemed to have occurred if (i) any "person" (as such term is defined in Section
3(a)(9) and as used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934 (the "Exchange Act"), excluding the Company or any of its subsidiaries,
a trustee or any fiduciary holding securities under an employee benefit plan of
the Company or any of its subsidiaries, an underwriter temporarily holding
securities pursuant to an offering of such securities or a corporation owned,
directly or indirectly, by shareholders of the Company in substantially the same
proportion as their ownership of the Company, becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing an increase from less than Twenty Percent
(20%) to Fifty Percent (50%) or more of the combined voting power of the
Company's then outstanding securities ("Voting Securities"); (ii) during any
period of not more than two (2) years, individuals who constitute the Board of
Directors of the Company (the "Board") as of the beginning of the period and any
new director (other than a director designated by a person who has entered into
an
<PAGE>
agreement with the Company to effect a transaction described in clause (i) or
(iii) of this sentence) whose election by the Board or nomination for election
by the Company's shareholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at such
time or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof; (iii) the stockholders of
the Company approve a merger, consolidation or reorganization or a court of
competent jurisdiction approves a scheme or arrangement of the Company, other
than a merger, consolidation, reorganization or scheme which would result in the
Voting Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least Fifty Percent (50%) of
the combined voting power of the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger, consolidation,
reorganization or scheme or arrangement, and such transaction is completed; or
(iv) the stockholders of the Company approve a plan of complete liquidation of
the Company or any agreement for the sale of substantially all of the Company's
assets, and such transaction is completed.

SECTION 11.   AGREEMENT NOT TO COMPETE OR SOLICIT

         (a) Covenant Not to Compete. The Employee hereby covenants and agrees
that at no time during the Term of Employment nor for a period of six (6) months
(such period to be one (1) year in the case of a termination resulting in
payments pursuant to Section 10) immediately following the termination of the
Employee's employment will he for himself or on behalf of any other person,
partnership, company or corporation, directly or indirectly, acquire any
financial or beneficial interest in (except as provided in the next sentence),
provide consulting or other services to, be employed by, or own, manage, operate
or control any entity engaged in the medical device business substantially
similar to the business engaged in by the Company or its subsidiaries at the
time of such termination of employment. Notwithstanding the preceding sentence,
the Employee will not be prohibited from owning less than one percent (1%) of
any publicly traded corporation, whether or not such corporation is in
competition with the Company.

         (b) Non-Solicitation. The Employee hereby covenants and agrees that, at
all times during the Term of Employment and for a period of six (6) months (such
period to be one (1) year in the case of a termination resulting in payments
pursuant to Section 10) immediately following the termination thereof, the
Employee will not directly or indirectly employ or seek to employ any person or
entity employed at that time by the Company or any of its subsidiaries, or
otherwise encourage or entice such person or entity to leave such employment.

SECTION 12.   CONFIDENTIAL INFORMATION

         The Employee agrees to keep secret and retain in the strictest
confidence all confidential matters which relate to the Company or any affiliate
of the Company, including, without limitation, customer lists, client lists,
trade secrets, pricing policies and other business affairs of the Company and
any affiliate of the Company learned by him from the Company or any such
affiliate or otherwise before or after the date of this Agreement, and not to
disclose any such confidential matter to anyone outside the Company, or any of
its affiliates, whether during or after his period of service with the Company,
except as may be required in the course of a legal or governmental proceeding.
Upon request by the Company, the Employee agrees to deliver promptly to the
Company upon termination of his services for the Company, or at any time
thereafter as the Company may request, all Company or affiliate memoranda,
notes, records, reports, manuals, drawings, designs, computer files in any media
and other documents (and all copies thereof) relating to the Company's or any
affiliate's business and all property of the Company or any affiliate associated
therewith, which he may then possess or have under his control.

SECTION 13.   REMEDY

         (a) Should the Employee engage in or perform, either directly or
indirectly, any of the acts prohibited by Sections 11 or 12 hereof, it is agreed
that any and all severance payments and related benefits hereunder shall
immediately terminate and the Company will also be entitled to full injunctive
relief, to be issued by any competent court of equity, enjoining and restraining
the Employee and each and every other person, firm, organization, association,
or corporation concerned therein, from the continuance of such violative acts.
The foregoing remedies available to the Company will not be deemed to limit or
prevent the exercise by the Company of any or all further rights and remedies
which may be available to the Company hereunder or at law or in equity.
<PAGE>
         (b) The Employee acknowledges and agrees that the covenants contained
in this Agreement are fair and reasonable in light of the consideration paid
hereunder, and the invalidity or unenforceability of any particular provision,
or part of any provision, of this Agreement will not affect the other provisions
or parts hereof. If any provision hereof is determined to be invalid or
unenforceable and if any such provision will be so determined to be invalid or
unenforceable by reason of the duration or geographical scope of the covenants
contained therein, such duration or geographical scope, or both, will be reduced
to a duration or geographical scope solely to the extent necessary to cure such
invalidity.

SECTION 14.   SUCCESSORS AND ASSIGNS

         This Agreement will be binding upon and inure to the benefit of the
Employee, his heirs, executors, administrators and beneficiaries, and the
Company and its successors and assigns.

SECTION 15.   GOVERNING LAW

         This Agreement will be governed by and construed and enforced in
accordance with the laws of the State of Connecticut, without reference to rules
relating to conflicts of law.

SECTION 16.   ENTIRE AGREEMENT

         This Agreement constitutes the full and complete understanding and
agreement of the parties and supersedes all prior understandings and agreements
as to employment of the Employee. This Agreement cannot be amended, changed,
modified or terminated without the written consent of the parties hereto.

SECTION 17.   WAIVER OF BREACH

         The waiver of either party of a breach of any term of this Agreement
will not operate nor be construed as a waiver of any subsequent breach thereof.

SECTION 18.   NOTICES

         Any notice, report, request or other communication given under this
Agreement will be written and will be effective upon delivery when delivered
personally, by overnight courier or by fax. Unless otherwise notified by any of
the parties, notices will be sent to the parties as follows: (i) if to the
Employee, at the address set forth in the Company's records, and (ii) if to the
Company, to CAS Medical Systems, Inc., 44 East Industrial Road, Branford, CT
06405, Attention: Board of Directors.

SECTION 19.   SEVERABILITY

         If any one or more of the provisions contained in this Agreement will
be invalid, illegal or unenforceable in any respect under any applicable law,
the validity, legality and enforceability of the remaining provisions contained
herein will not in any way be affected or impaired thereby.

SECTION 20.   COUNTERPARTS

         This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original but all of which together will constitute
one and the same instrument. Delivery of signatures by facsimile or electronic
image shall be valid for all purposes hereunder.
<PAGE>
         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

The Company:

CAS MEDICAL SYSTEMS, INC.

/s/ Louis P. Scheps
-----------------------------
Name:  Louis P. Scheps
Title: President and Chief Executive Officer

Employee:

/s/ Andrew E. Kersey
------------------------------------
Andrew E. Kersey

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