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Employment Agreement

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT, effective as of May 8, 2007 (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 James E. Krause, who currently resides at 123 Five Field Road, Madison, CT 06443 (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:

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 Employees habitual drug or alcohol abuse;

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

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

(vi) the Employees 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 Companys best interest.

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 Employees 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 Employees 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 Companys 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.

The term of Employees 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 May __, 2008, subject to the terms and conditions contained in this Agreement (the Employment Period). The Employment Period shall automatically be extended commencing on May __, 2008 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 May __, 2008 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.