Document:

exhibit10_1.htm

    Amended
and Restated

    Non-Statutory
Stock Option Award Agreement

    

    

    April 22,
2008

    

    

    William
R. McLaughlin

    President
& CEO

    Select
Comfort Corporation

    9800
59th
Avenue North

    Plymouth,
MN 55442

    

    

    
      	
              Re:

            	
              Non-Statutory
      Options to Purchase Shares of Common Stock of Select Comfort Corporation
      (the “Company”)

            

    

    

    This
letter agreement amends and restates in its entirety the terms of the
non-statutory stock option award granted to you on March 2, 2006.  As
of such date (and after giving effect to a 3-for-2 stock split of the Company’s
common stock effected as of June 8, 2006), you were granted non-statutory stock
options under the Company’s 2004 Stock Incentive Plan (the “Plan”) giving you
the right to purchase up to five hundred sixty two thousand five hundred
(562,500) shares of the Company’s common stock at a price of $24.65 per share
(the “Options”), all of which Options were scheduled to become fully
exercisable, or to “vest,” as of March 2, 2011, so long as you remain
continuously employed by the Company and subject to the applicable terms and
conditions of the Plan.

    

    For good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, you and the Company have agreed to extend the vesting date such
that all of the Options will become fully exercisable only as of December 2,
2015, so long as you remain continuously employed by the Company and subject to
earlier vesting only pursuant to the terms applicable upon (i) termination of
your employment due to death or disability or (ii) a change in control of the
Company, as described below.

    

    Your
rights to exercise the Options will terminate as to all unexercised options at
5:00 p.m. (Minneapolis, Minnesota time) on March 1, 2016 (the “Expiration
Date”), subject to earlier termination as described below or in the
Plan.

    

    The
vesting and termination provisions of the Options will be impacted by the
termination of your employment, depending on the reason for termination of your
employment, or by a change in control of the Company, as described
below:

    

    Voluntary Termination or
Retirement.  If your employment is terminated voluntarily by
you (whether upon retirement or otherwise), Options that are vested as of the
date of termination of employment will remain exercisable for up to three (3)
months after your employment ends, but not beyond the Expiration
Date.

    

    
      
        1

      

      
         

        
          

        

      

      
         

      

    

    Termination by the Company
other than for Cause.  If your employment is terminated by the
Company (other than for “cause,” as defined in the Plan), Options that are
vested as of the date of termination of employment will remain exercisable for
up to three (3) months after your employment ends, but not beyond the Expiration
Date.

    

    Termination by the Company
for Cause.  If your employment is terminated by the Company for
“cause,” as defined in the Plan, all of your rights under this letter agreement
and the Options will immediately terminate without notice of any
kind.

    

    Termination due to Death or
Disability.  If your employment is terminated due to death or
“disability,” as defined in the Plan, all of the Options will become immediately
exercisable in full and will remain exercisable for up to two (2) years after
termination of employment, but not beyond the Expiration Date.

    

    Change in
Control.  Pursuant to the standard terms of the Plan, if a
Change in Control of the Company (as defined by the Plan) occurs, then all of
the Options will become immediately exercisable in full and will remain
exercisable until the Expiration Date, regardless of whether you remain in
employment or service with the Company.

    

    The
Company is not required to give you notice of the termination of the Options
under any of the foregoing circumstances.

    

    Following
the exercise by you of the Options, the shares purchased by you will be freely
tradable, subject to the Company’s policies and SEC rules regarding insider
trading.  Executive officers and members of the Board of Directors are
required to comply with SEC Rule 144 in connection with any sale of shares
received upon the exercise of any stock options.

    

    Withholding
Taxes.  The Company is entitled to (a) withhold and deduct from
your future wages (or from other amounts that may be due and owing to you from
the Company), or make other arrangements for the collection of all legally
required amounts necessary to satisfy any federal, state or local withholding
and employment-related tax requirements attributable to the exercise of the
Options, or (b) require you to promptly remit the amount of such withholding to
the Company.  In the event that the Company is unable to withhold such
amounts, for whatever reason, you agree to pay to the Company an amount equal to
the amount the Company would otherwise be required to withhold under federal,
state or local law.

    

    There may
be income tax consequences resulting from the exercise of the Options or sale of
the shares received upon the exercise of the Options.  You are urged
to consult with your individual tax advisor regarding any tax
consequences.

    

    The
Options are granted under the Company’s 2004 Stock Incentive Plan, and are
subject to all of the terms and conditions applicable to stock options granted
under the Plan, except as may be otherwise expressly provided
herein.

    

    
      
        2

      

      
         

        
          

        

      

      
         

      

    

    Please
note that your rights to exercise the Options will become void and will expire
as to all unexercised Options at 5:00 p.m. (Minneapolis, Minnesota time) on
March 1, 2016, subject to earlier termination as set forth above or in the
Plan.

    

    Please
indicate your acceptance of the terms and conditions of this Amended and
Restated Non-Statutory Stock Option Award Agreement by signing a copy of this
letter agreement where indicated below.

    

    Very
truly yours,

    

    /s/
Michael A. Peel

    

    Michael
A. Peel

    Chair,
Management Development and Compensation Committee

    

    By
signing this letter, I acknowledge the amended and restated terms of the Options
as set forth in this Amended and Restated Non-Statutory Stock Option Award
Agreement.

    

    /s/ William R.
McLaughlin                                                                                                           

    William R. McLaughlin

    
      
         
3exhibit101.htm

    EMPLOYMENT
AGREEMENT

     

    This
EMPLOYMENT AGREEMENT, effective as of April 14, 2008 (the “Commencement Date”),
is made by and between Neurogen Corporation, a Delaware corporation (the
“Company”) with offices at 35 Northeast Industrial Road, Branford, Connecticut
06405, and Srdjan Stankovic,
who currently resides at 15 Alexander Drive, Flemington, NJ  08822
(the “Employee”).

    WHEREAS,
the Company and the Employee desire to maintain an employment relationship;
and

     

    WHEREAS,
the Company and the Employee desire to enter into this Agreement to address, on
the terms and conditions hereinafter set forth, certain matters relating to such
employment.

     

    NOW,
THEREFORE, the Company and the Employee agree as follows:

     

    
      	
              1.  

            	
              DEFINITIONS

            

    

     

    
      	
              (a)  

            	
              Cause

            

    

     

    For
purposes of this Agreement “cause” means:

     

    (i) the
Employee is convicted of a felony or entry of a plea of nolo contendere (or
similar plea) in a criminal proceeding for commission of a felony or serious
misdemeanor;

     

    (ii) any
willful act or omission by the Employee which constitutes gross misconduct or
gross negligence and which results in demonstrable material harm to the
Company;

     

    (iii) the
Employee’s habitual drug or alcohol abuse;

     

    (iv) the
Employee’s willful and continuous failure to perform his duties with the Company
after reasonable notice of such failure;

     

    (v) the
Employee’s participation in any act of dishonesty intended to result in his
material personal enrichment at the expense of the Company; or

     

    (vi) the
Employee’s failure to substantially comply with the terms set forth in the
Proprietary Information and Inventions Agreement between the Employee and the
Company.

     

    No act,
or failure to act, by the Employee shall be considered “willful” unless
committed in bad faith and without a reasonable belief that the act or omission
was in the Company’s best interest.

     

    
      	
              (b)  

            	
              Good
      Reason

            

    

     

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

     

    (i) the
Company permanently relocates the primary place of performance of the duties
specified in Section 3 of this Agreement to a location more than fifty (50)
miles from its current offices located in Branford, Connecticut;

     

    (ii)           the
Employee’s rate of Base Salary (as hereinafter defined) is materially decreased
by the Company (other than in connection with an across the board salary
reduction agreed to by the Employee);

     

    (iii)           the
Company fails to obtain the full assumption of this Agreement by a successor
entity in accordance with Section 12(b) of this Agreement; or

     

    (iv)           the
Board of Directors of the Company (the “Board”) or the Company’s stockholders,
either or both, as may be required to authorize the same, shall approve any
liquidation or dissolution of the Company, or the sale of all or substantially
all of the assets of the Company.

     

    
      	
              2.  

            	
              TERM

            

    

     

    The term
of Employee’s employment under this Agreement shall, unless earlier terminated
under Section 7 herein or extended as hereinafter provided, be for a period
commencing as of (the “Commencement Date”) and terminating on April 14, 2009,
subject to the terms and conditions contained in this Agreement (the “Employment
Period”). The Employment Period shall automatically be extended commencing on
April 14, 2009 and thereafter on the relevant anniversary of the Commencement
Date, for successive one (1) year periods unless, not later than ninety (90)
days prior to April 14, 2009 or any such anniversary, either party to this
Agreement shall give written notice to the other that such party does not wish
to extend or further extend the Employment Period beyond its then already
automatically extended term, if any.

     

    
      	
              3.  

            	
              DUTIES
      AND SERVICES

            

    

     

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

     

    
      	
              4.  

            	
              COMPENSATION
      AND OTHER BENEFITS

            

    

     

    
      	
              (a)  

            	
              Salary

            

    

     

    As
compensation for the Employee’s services under this Agreement, beginning on the
Commencement Date and until the termination of the Employment Period, the
Employee shall be paid by the Company a base salary of $380,000 per annum,
payable in equal semi-monthly installments in accordance with the Company’s
normal payroll practices, which base salary may be increased but not decreased
(other than in connection with an across the board salary reduction agreed to by
the Employee) during the Employment Period at the sole discretion of the Board
or the Board’s designee (the “Base Salary”). Such increased (or decreased) Base
Salary shall then constitute the “Base Salary’ for purposes of this
Agreement.

     

    
      	
              (b)  

            	
              Annual
      Bonus

            

    

     

    In
addition to the Base Salary, at the sole discretion of the Board of Directors or
its designee, the Employee is eligible to receive such annual bonuses during the
Employment Period as the Board or its designee, in its sole discretion, may
approve. It is anticipated that annual bonus awards, if any, will be calculated
on the basis of both Company and individual performance and that Employee’s
annual target bonus for complete achievement of all Company and individual
objectives will be targeted at a level equal to thirty percent (30%) of Base
Salary. Notwithstanding anything in this agreement to the contrary, the Company
reserves the right at the sole discretion of the Board or its designee at any
time and without notice to change or abandon altogether any or all of it’s
incentive compensation policies and practices, including the award of any annual
bonuses or the determination not to make any such awards in any
year.

     

    
      	
              (c)  

            	
              Benefits

            

    

     

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

     

    
      	
              (d)  

            	
              Equity

            

    

     

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

     

    
      	
              5.  

            	
              NON-COMPETITION

            

    

     

    (a) During
the Employment Period and for one year after the date of any such termination of
employment, the Employee agrees that, without the prior express written consent
of the Company, he shall not, directly or indirectly, for his own benefit or as
an employee, owner, shareholder, partner, consultant, (or in any other
representative capacity) for any other person, firm, partnership, corporation or
other entity (other than the Company), (i) engage in the discovery, research
and/or development of therapeutic, diagnostic or prophylactic products which
work through the same biological mechanisms as products which at the time of
such termination are under active clinical or pre-clinical development or have
been pre-clinically or clinically developed by the Company and which the Company
has not abandoned (“Related Programs”) or (ii) solicit or hire (or direct
another to solicit or hire) the services of any employee of the Company or
attempt to induce any such employee or any consultant to the Company to leave
the employ of the Company (except when such acts are performed in good faith by
the Employee on behalf of the Company). Notwithstanding the above, this
provision shall not be deemed to prevent or prohibit Employee from being
employed during such one year period by another entity in a managerial role
where Employee has overall responsibility for managing (or assisting in the
management of) a research and development portfolio which includes one or more
Related Programs, provided that Employee does not violate the terms of Section 6
hereof and does not during such one year term actively advise or direct the
discovery, research or development efforts of such other entity in the Related
Program(s). During the Employment Period, the Employee shall not own more than
2% of the outstanding common stock of any corporation, The provisions of this
Section 5 shall not be deemed to reduce in any way any other fiduciary,
contractual or other legal obligation the Employee may have to the Company,
including without limitation any obligation which may arise by virtue of any
corporation law, securities law, patent or intellectual property law or right,
the common law, other agreements with the Company or otherwise.

     

    For purposes of Section 5 of this
Agreement, the term “solicit” shall mean any communication of any kind
whatsoever, regardless of by whom initiated, inviting, encouraging, or
requesting any person or entity to take or refrain from taking any
action.

     

    (b) The
Employee agrees to comply with the terms of set forth in the Proprietary
Information and Inventions Agreement previously entered into by the Company and
Employee.

     

    (c) If at any
time within twelve (12) months after the date on which the Employee exercises a
Company stock option or stock appreciation right, or on which Company restricted
stock vests, or on which income is realized by the Employee in connection with
any other Company equity-based award (each of which events is a “Realization
Event”), the Employee breaches any provision of Section 5(a) or 5(b) of the
Agreement in more than a minor, deminimus or trivial manner that causes or is
likely it cause, more than deminimus financial or reputational harm to the
Company (and, if such breach is susceptible to cure, the Employee does not cure
such breach and harm within ten (10) days after the Employee’s receipt of
written notice of such breach of the Company which specifies in reasonable
detail the facts and circumstances claimed to be the basis for such breach),
then (i) the Employee shall forfeit all of Employee’s unexercised (including
unvested) Neurogen Corporation stock options and restricted stock and (ii) any
gain realized within the twelve (12) months prior to such breach from the
exercise of any Company stock options or the vesting of any Company restricted
stock or other equity-based awards by the Employee from the Realization Event
shall be paid by the Employee to the Company upon written notice from the
Company within ninety (90) days of such notice (such payments may be made in
increments over such period). Such gain shall be determined after reduction for
any taxes paid (or, if such gain is determined before such taxes are paid,
owing, provided that such taxes are actually paid in a timely manner) by the
Employee which are attributable to such gain as of the date of the Realization
Event, and without regard to any subsequent change in the Fair Market Value (as
defined below) of a share of Company common stock; provided that any federal or
state income tax benefit actually realized by the Employee as a result of making
payments to the Company under this Section 5(c) (relating to any of the next ten
(10) tax year periods) shall also be paid to the Company within fifteen (15)
days of such realization. Such gain shall be paid by the Employee delivering to
the Company shares of Company Common Stock with a Fair Market Value on the date
of delivery equal to the amount of such gain. To the extent permitted by
applicable law, the Company shall have the right to offset such gain against any
amounts otherwise owed to the Employee by the Company (whether as wages,
vacation pay, or pursuant to any benefit plan or other compensatory
arrangement). For purposes of this Section 5(c), the “Fair Market Value” of a
share of Company Common Stock on any date shall be (i) the closing sale price
per share of Company Common Stock during normal trading hours on the national
securities exchange on which the Company Common Stock is principally traded for
such date or the last preceding date on which there was a sale of such Company
Common Stock on such exchange or (ii) if the shares of Company Common Stock are
then traded on the NASDAQ Stock Market or any other over-the-counter market, the
average of the closing bid and asked prices for the shares of Company Common
Stock during normal trading hours in such over-the-counter market for such date
or the last preceding date on which there was a sale of such Company Common
Stock in such market, or (iii) if the shares of Company Common Stock are not
then listed on a national securities exchange or traded in an over-the-counter
market, such value as the Compensation Committee, in its sole discretion, shall
reasonably determine. In the event that the Company seeks to enforce the
provisions of this Section 5(c), and such enforcement is contested by the
Employee, and it is finally determined that the Employee is not subject to the
provisions of this Section 5(c), then the Company shall (i) reimburse the
Employee for reasonable attorneys’ fees incurred by the Employee in connection
with such contest; and (ii) pay to the Employee an additional amount equal to
one (1) times the amount in clause (i); provided that such
payment under this clause (ii) shall not exceed $250,000.

     

    (d) Any
termination of the Employee’s employment or of this Agreement shall have no
effect on the continuing operation of this Section 5.

     

    (e) The
Employee acknowledges and agrees that the Company will have no adequate remedy
at law, and could be irreparably harmed, if the Employee breaches or threatens
to breach any of the provisions of this Section 5. The Employee agrees that the
Company shall be entitled to equitable and/or injunctive relief to prevent any
breach or threatened breach of this Section 5, and to specific performance of
each of the terms hereof in addition to any other legal or equitable remedies
that the Company may have. The Employee further agrees that Employee shall not,
in any equity proceeding relating to the enforcement of the terms of this
Section 5, raise the defense that the Company has an adequate remedy at
law.

     

    (f) The terms
and provisions of this Section 5 are intended to be separate and divisible
provisions and if, for any reason, any one or more of them is held to be invalid
or unenforceable, neither the validity nor the enforceability of any other
provision of this Agreement shall thereby be affected. The parties hereto
acknowledge that the potential restrictions on the Employee’s future employment
imposed by this Section 5 are reasonable in both duration and geographic scope
and in all other respects. If for any reason any court of competent jurisdiction
shall find any provisions of this Section 5 unreasonable in duration or
geographic scope or otherwise, the Employee and the Company agree that the
restrictions and prohibitions contained herein shall be effective to the fullest
extent allowed under applicable law in such jurisdiction.

     

    (g) The
parties acknowledge that this Agreement would not have been entered into and the
benefits described in Section 4 of this Agreement would not have been promised
in the absence of the Employee’s promises under this Section 5.

     

    
      	
              6.  

            	
              CONFIDENTIAL
      INFORMATION

            

    

     

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

     

    
      	
              7.  

            	
              TERMINATION

            

    

     

    
      	
              (a)  

            	
              Termination
      by the Company for Cause

            

    

     

    The
Company may terminate the Employee’s employment hereunder for cause. If the
Company terminates the Employee’s employment hereunder for cause, the Employment
Period shall end and the Employee shall only be entitled to any Base Salary
accrued or annual bonus awarded and earned but not yet paid as of the date of
termination of the Employee’s employment with the Company.

     

    If the
Employee’s employment is to be terminated for cause, the Company shall give
written notice of such termination to the Employee. Such notice shall specify
the particular act or acts, or failure to act, which is or are the basis for the
decision to so terminate the Employee’s employment for cause.

     

    
      	
              (b)  

            	
              Termination
      Without Cause or Termination For Good
Reason

            

    

     

    The
Company may terminate the Employee’s employment hereunder without cause and the
Employee may terminate Employee’s employment hereunder for good reason. If the
Company terminates the Employee’s employment hereunder without cause, or if the
Employee terminates Employee’s employment hereunder for good reason, the
Employment Period shall end and the Employee shall only be entitled to (i) any
Base Salary accrued or annual bonus awarded and earned but not yet paid as of
the actual date of termination of the Employee’s employment with the Company;
(ii) a lump sum payment in an amount equal to the Employee’s annual Base Salary
as provided in Section 4(a) above; (iii) continuation of the health and welfare
benefits of the Employee, Employees’ spouse and their eligible dependents, if
any, as set forth in Section 4(c) above (except for Disability Insurance), or
the economic equivalent thereof, at the same cost and level in effect on the
date of termination of the Employee’s employment with the Company for one (1)
year after such date of termination; and (iv) the right to exercise immediately
any stock options and to freely trade any restricted stock granted to the
Employee which, but for such termination, would have become exercisable or
tradable, as the case may be, within one year of the date of such termination
without cause or for good reason.  Notwithstanding any other provision
of this Agreement, in addition to the benefits described above, if Employee is
terminated without cause or terminates his employment for good reason as a
result of a Change in Control of the Company (including without limitation any
termination within two (2) years of a Change in Control which shall be deemed to
be as a result of a Change in Control) then Employee shall also be entitled to a
lump sum payment in an amount equal to the greater of (i) the Employee’s then
targeted annual bonus or (ii) the Employee’s targeted annual bonus immediately
prior to the Change in Control.

     

    If the
Employee’s employment is to be terminated without cause, the Company shall give
the Employee thirty (30) days prior written notice of its intent to so terminate
the Employee’s employment. If the Employee intends to terminate Employee’s
employment for good reason, the Employee agrees to give the Company at least
thirty (30) days prior written notice.

     

    
      	
              (c)  

            	
              Termination
      Due to Death or Disability

            

    

     

    The
Company may terminate the Employee’s employment hereunder due to the Employee’s
inability to render, for a period of three consecutive months or an aggregate of
any one hundred twenty (120) days within any six (6) month period, services
hereunder by reason of permanent disability, as determined by the written
medical opinion of an independent medical physician selected in good faith by
the Company (“Disability”). In the event of the Employee’s death or a
termination of the Employee’s employment by the Company due to Disability, the
Employment Period shall end and the Employee, Employee’s estate or Employee’s
legal representative, as the case may be, shall only be entitled to (i) (a) any
Base Salary accrued or annual bonus awarded and earned but not yet paid as of
the actual date of termination of the Employee’s employment with the Company,
and (b) any other compensation and benefits as may be provided in accordance
with the terms and provisions of any applicable plans and programs of the
Company; and (ii) in the case of Disability, (a) continuation of payment of the
Employee’s Base Salary if any, as set forth in Section 4(a) above, until the
Employee commences to receive payments under the Company’s long-term disability
plan, (b) continuation of the health and welfare benefits of the Employee, as
set forth in Section 4(c) above (except for Disability Insurance), or the
economic equivalent thereof, at the same cost and level in effect on the date of
termination for one (1) year after the date of termination and (c) the right to
exercise immediately that proportion of the stock options (rounded up to the
nearest whole number of shares) granted to the Employee which would become
exercisable on or before the April 14 immediately following the date of
termination of the Employee’s employment with the Company due to Disability
which is equal to the number of days worked by the Employee from, but excluding,
the April 14 immediately preceding such termination date to, and including, such
termination date divided by 365 days.

     

    
      	
              (d)  

            	
              Voluntary
      Termination

            

    

     

    The
Employee may affect a Voluntary Termination of Employee’s employment with the
Company hereunder. A “Voluntary Termination” shall mean a termination of
employment by the Employee on Employee’s own initiative other than a termination
due to death or Disability or a termination for good reason. A Voluntary
Termination shall not be, and shall not be deemed to be, a breach of this
Agreement and shall result in the end of the Employment Period and only entitle
the Employee to all of the rights and benefits which the Employee would be
entitled in the event of a termination of the Employee’s employment by the
Company for cause.

     

    
      	
              (e)  

            	
              Termination
      by the Company at End of Employment
Period

            

    

     

    Notwithstanding
any provision of this Agreement to the contrary, if (a) the Employment Period is
not terminated early under Sections 7(a), 7(b), 7(c) or 7(d) above and (b) the
Company provides written notice to the Employee, pursuant to Section 2 above,
that it does not wish to extend or further extend the Employment Period, then
the Employee’s employment with the Company shall end on the last day of the
Employment Period and the Employee shall be entitled to (x) continuation of
payment of the Employee’s Base Salary, as provided in Section 4(a) above, as of
the date of termination of the Employee’s employment with the Company for a
period equal to (1) one year less the number of days notice given by the Company
to the Employee that it does not wish to extend or further extend the Employment
Period (such notice period shall be deemed to commence as of the date of such
written notice by the Company); (y) continuation of the health and welfare
benefits of the Employee, Employee’s spouse and their eligible dependent’s if
any, as set forth in 4(c) above (except for Disability Insurance), or the
economic equivalent thereof, at the same cost and level in effect on the date of
termination of the Employee’s employment with the Company for one (1) year after
such termination; and (z) the right to exercise immediately any stock options
and to trade freely any restricted stock granted to the Employee which, but for
such termination, would have become exercisable or freely tradable, as the case
may be, on or before the April 14 immediately following the date on which the
one (1) year period referred to the preceding subclause (x) ends; provided,
however, that the severance payment by the Company to the Employee under
subclause (x) of this Section 7(e) shall be offset on a dollar for dollar basis
by any cash, or the fair market value of any non-cash, remuneration, benefit or
other entitlement earned, received or receivable by the Employee in connection
with the employment of such Employee in any capacity, other than dividends,
interest income or other passive investment income earned as a result of an
interest in a business or entity of which the Employee owns less than 2% of the
beneficial ownership. If the Employee shall be entitled to any such severance
payment from the Company after the termination of the Employment Period, the
Employee shall have the obligation to notify the Company of any employment,
consultation or other activity which may involve any remuneration, benefits or
other entitlements as described above, and as to which the Company may be
entitled to an offset.

     

    
      	
              8.  

            	
              SURVIVAL

            

    

     

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

     

    
      	
              9.  

            	
              WHOLE
      AGREEMENT AND MODIFICATION

            

    

     

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

     

    
      	
              10.  

            	
              NOTICES

            

    

     

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

     

    
      	
              11.  

            	
              WAIVER

            

    

     

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

     

    
      	
              12.  

            	
              SUCCESSORS

            

    

     

    
      	
              (a)  

            	
              Effect
      on Employee

            

    

     

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

     

    
      	
              (b)  

            	
              Effect
      on Company

            

    

     

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

     

    
      	
              13.  

            	
              NO
      THIRD PARTY BENEFICIARIES

            

    

     

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

     

    
      	
              14.  

            	
              COUNTERPARTS

            

    

     

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

     

    
      	
              15.  

            	
              GOVERNING
      LAW

            

    

     

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

     

    
      	
              16.  

            	
              SEVERABILITY

            

    

     

    The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this
Agreement.

     

    
      	
              17.  

            	
              NO
      VIOLATION OF OUTSTANDING
AGREEMENT(S)

            

    

     

    Employee
hereby warrants that the execution of this Agreement and the performance of his
duties hereunder do not and will not violate any agreement with any other person
or entity.

     

    IN
WITNESS WHEREOF, the parties have duly executed this Agreement which shall be
effective as of the effective date noted above.

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