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                                                                   EXHIBIT 10.81

                     [FERROFLUIDICS CORPORATION LETTERHEAD]


August 6, 1999





Mr. Alvan F. Chorney
10 Mt. Laurel Road
Unit 607
Nashua, N.H. 03061


Dear Mr. Chorney:

     This letter sets forth our understanding with respect to severance pay to
which you would be entitled to in the event of change of control of the
Company, and within 12 months of that occurrence. For severance events other
than "change of control of the Company", our original agreement dated
October 1, 1993, remain in-place.

     In the event that your employment with the Company is terminated, other
than by reason of your death, disability or for cause, you will be entitled to
receive severance pay ("Severance Payment") for a period of twenty-four (24)
months at a rate equal to the highest annual salary rate during the time of
employment. The Severance Payment shall be paid to you in fifty-two (52) equal
bi-weekly payments, commencing with the first pay date of the Company following
your termination of employment.

     For purposes of this Agreement, in the event you shall be totally disabled
from performing your duties with the Company for a consecutive period of
thirteen weeks, the Board of Directors may terminate your employment after one
(1) month prior written notice to you, in which event the Company shall not be
liable to pay you any further compensation or the severance payment.

     This Letter Agreement does not change in any way the at-will nature of
your employment with the Company, nor does it supersede the Non-Disclosure
Agreement dated January 29, 1990 between you and the Company that remains in
full force and effect.

     This Letter Agreement shall in all respects be interpreted, enforced,
governed and construed by and under the laws of the State of New Hampshire,
exclusive of the conflicts of laws provisions thereof.

     This Letter Agreement represents our entire understanding regarding the
terms of your severance from the Company and supersedes any prior understandings
or agreements between you and the Company or any of its representatives
regarding the terms of your severance from the Company. This Agreement may not
be modified, altered or changed except by a written instrument duly signed by
the parties.

     Please signify your agreement to the terms of this Letter Agreement by
signing in the space provided.

                                             Sincerely,


                                             FERROFLUIDICS CORPORATION



                                             By: /s/ Paul F. Avery, Jr.
                                                -----------------------------
                                                Paul F. Avery, Jr.
                                                President & CEO


Agreed to:  /s/ Alvan F. Chorney             Date: August 6, 1999
            ------------------------               --------------------------
            Alvan F. Chorney