Document:

Exhibit 10.2

    EXHIBIT
      10.2

     

    AMENDED
      AND RESTATED EMPLOYMENT AGREEMENT

     

    This
      AMENDED AND RESTATED EMPLOYMENT AGREEMENT, originally effective as of June
      27,
      2005 (the “Commencement Date”) and amended and restated as of May 8, 2007, is
      made by and between Neurogen Corporation, a Delaware corporation (the “Company”)
      with offices at 35 Northeast Industrial Road, Branford, Connecticut 06405,
      and
      Dr. Stephen Uden, who currently resides at 35 Sunset Hill Road, Salem, CT 06420
      (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 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)   as
        a
        result of any action or inaction on the part of the Company the Employee
        suffers
        a material reduction in Employee’s duties, responsibilities or effective
        authority typically associated with his title and position as set forth and
        described in Section 3 of this Agreement;

       

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

       

          (iv)   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

       

          (v)   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 June 26, 2006,
      subject to the terms and conditions contained in this Agreement (the “Employment
      Period”). The Employment Period shall automatically be extended commencing on
      June 27, 2006 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 June 26, 2006 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 be employed as Executive Vice
      President, Head of R&D of the Company. In such position, the Employee shall
      have the duties, responsibilities and authority normally associated with, or
      otherwise appropriate to, the offices and positions of an Executive Vice
      President, Head of R&D of a corporation. In the performance of his duties
      and responsibilities as Executive Vice President, Head of R&D, the Employee
      shall report only to the President or the Chief Executive Officer of the
      Company. 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 as Executive Vice President, Head of R&D.

     

    
      
        	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 $335,000 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-five percent (35%) 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 and that Employee’s annual target stock
      option grant for complete achievement of all Company and individual objectives
      will be targeted at a level equal to forty thousand (40,000) shares.
      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. Notwithstanding any other provision
      of
      this Agreement, in the event of a Change in Control of the Company (as defined
      below), on the first annual anniversary of the effective date of such Change
      in
      Control, all stock options granted to the Employee prior to the effective date
      of the Change in Control that have not otherwise vested or expired shall
      automatically vest and be exercisable by the Employee. For purposes of this
      Agreement, the term “Change in Control” shall have the same meaning given to
      that term in Section 2.4 of the Amended and Restated Neurogen Corporation 2001
      Stock Option Plan.

     

    
      	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 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

     

    (d)  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.

     

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

     

    (f)  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.

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    (g)  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.

     

    (h)  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, Employee’s 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 on 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, 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, Employee’s
      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 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
      June 27 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 June 27 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 dependents, 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 June 27 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.

     

    
      	
            	
              NEUROGEN
                CORPORATION

            
	 	 
	
              By:

            	
              /s/
                William H. Koster

            
	 	
              William
                H. Koster

            
	 	
              President
                and Chief Executive Officer

            
	 	 
	 	 
	 	
              /s/
                Stephen Uden

            
	 	
              Stephen
                UdenExhibit 10.3

    EXHIBIT
      10.3

     

    AMENDED
      AND RESTATED EMPLOYMENT AGREEMENT

     

    This
      AMENDED AND RESTATED EMPLOYMENT AGREEMENT, originally effective as of December
      1, 1997 (the “Commencement Date”) and amended and restated as of May 8, 2007, is
      made by and between Neurogen Corporation, a Delaware corporation (the “Company”)
      with offices at 35 Northeast Industrial Road, Branford, Connecticut 06405,
      and
      Alan J. Hutchison (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 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)   as
      a
      result of any action or inaction on the part of the Company the Employee suffers
      a material reduction in Employee’s duties, responsibilities or effective
      authority typically associated with his title and position as set forth and
      described in Section 3 of this Agreement;

     

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

     

        (iv)   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

     

        (v)   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 November 30, 1999,
      subject to the terms and conditions contained in this Agreement (the “Employment
      Period”). The Employment Period shall automatically be extended commencing on
      December 1, 1999 and thereafter on the relevant alternate anniversary of the
      Commencement Date, for successive two (2) year periods unless, not later than
      three (3) months prior to December 1, 1999 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 be employed as Executive Vice
      President, Discovery Research of the Company. In such position, the Employee
      shall have the duties, responsibilities and authority normally associated with,
      or otherwise appropriate to, the offices and positions of an Executive Vice
      President, Discovery Research of a corporation. In the performance of his duties
      and responsibilities as Executive Vice President, Discovery Research, the
      Employee shall report only to the Head of Research and Development (or a
      comparable title and position) of the Company. 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 as Executive Vice
      President, Discovery Research.

     

    
      	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 $215,000 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 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, Employee’s 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 on 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, 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, Employee’s
      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 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
      December 1 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 December 1 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 dependents, 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 December 1 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.

     

    
      	
            	
              NEUROGEN
                CORPORATION

            
	 	 
	
              By:

            	
              /s/
                William H. Koster

            
	 	
              William
                H. Koster

            
	 	
              President
                and Chief Executive Officer

            
	 	 
	 	 
	 	
              /s/
                Alan Hutchison

            
	 	
              Alan
                Hutchison

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