EXHIBIT 10.1

 

 

 

EMPLOYMENT AGREEMENT

 

Employment Agreement dated as of November 7, 2005, between PHARMOS CORPORATION,
a Nevada corporation (with its successors and assigns, referred to as the
“Corporation”), and ALAN L. RUBINO (hereinafter referred to as “RUBINO”).

 

 

PRELIMINARY STATEMENT

 

The Corporation desires to employ RUBINO as President and Chief Operating
Officer of the Corporation, and RUBINO wishes to be employed by the Corporation,
upon the terms and subject to the conditions set forth in this Agreement. The
Corporation and RUBINO also wish to enter into the other agreements set forth in
this Agreement, all of which are related to RUBINO’s employment under this
Agreement.

 

 

AGREEMENT

 

RUBINO and the Corporation therefore agree as follows:

 

1. Term of Employment. The Corporation hereby employs RUBINO and RUBINO hereby
accepts employment with the Corporation for the period (the “Initial Term”)
commencing on November 14, 2005 (the “Commencement Date”), and ending on the
third anniversary of the date thereof or upon the earlier termination of the
Initial Term pursuant to Section 6. The Initial Term will be extended
automatically for additional one year periods (each, an “Additional Term”
together with the Initial Term, the “Term”), subject to the rights of the
parties generally to terminate this Agreement in accordance with the provisions
of Section 6. The termination of the Term for any reason shall end RUBINO’s
employment under this Agreement, but, except as otherwise set forth herein,
shall not terminate RUBINO’s or the Corporation's other agreements in this
Agreement.

 

2. Position and Duties. During the Term, RUBINO shall serve as President and
Chief Operating Officer of the Corporation, based at the Corporation’s corporate
headquarters, which is currently located at Iselin, New Jersey. RUBINO shall
also hold such additional positions and titles as the Chief Executive Officer
(“CEO”) of the Corporation may determine from time to time. RUBINO shall report
to the CEO. During the Term, RUBINO shall devote his full time and attention to
performing his duties as an employee of the Corporation. The Corporation
acknowledges that the foregoing sentence shall not restrict RUBINO from
currently serving on the Board of Directors of AASTROM Biosciences or the
Advisory Board of SK Corp., and that RUBINO may serve in similar capacities with
other companies or organizations subject to his obtaining prior approval from
the CEO or the Board of Directors (the “Board”).

 

3. Compensation.

 

(a) Base Salary. The Corporation shall pay RUBINO a base salary, beginning on
the first day of the Initial Term and ending on the last day of the Initial
Term, of not less than $315,000 per annum, payable on the Corporation's regular
pay cycle for professional employees.

 

 

(b)

Other and Additional Compensation.

 

 

 

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(i)

Section 3(a) establishes the minimum compensation during the Term and shall not
preclude the Board from awarding RUBINO a higher salary or any bonuses or stock
options in the discretion of the Board.

 

 

(ii)

The Corporation shall pay to RUBINO a one time sign-on bonus of $40,000, to be
paid within 30 days of the commencement of the Initial Term.

 

 

(iii)

During the Term, RUBINO shall receive an annual cash bonus as determined by the
Chief Executive Officer of the Corporation and approved by the Compensation and
Stock Option Committee of the Board (the “Compensation Committee”), taking into
consideration the attainment of goals and milestones during the prior year. The
minimum cash bonus for the remainder of fiscal year 2005 (ending December 31,
2005) shall be a pro rated amount of an annualized bonus of $100,000. The
minimum cash bonus for fiscal year 2006 shall be $100,000.

 

(iv)

In subsequent years of the Term, RUBINO’s annual cash bonus shall range from a
minimum of 25% of his base salary compensation, with a target of 50% of base
salary compensation and with no maximum limit. The bonus payment for all years
within these parameters will be based upon the recommendations of the Chief
Executive Officer and the Compensation Committee and adoption by the Board,
taking into consideration the attainment of goals and milestones during the
prior year.

 

 

(v)

On the Commencement Date, the Board will grant to RUBINO options for the
purchase of up to 325,000 shares (the “Initial Option Grant”) of the
Corporation’s common stock under the Corporation’s 2000 Amended and Restated
Stock Option Plan (the “Plan”). The terms of the grant, including the vesting
schedule and exercise price of the Initial Option Grant, will be set forth in a
separate option agreement executed by and between the parties providing, among
other things, for (A) the vesting of 100,000 shares in five equal quarterly
installments during the first year of the Initial Term, commencing on the
Commencement Date, (B) the vesting of the remaining 225,000 options in quarterly
increments over the following three years and (C) an exercise price equal to the
closing price of the Corporation’s Common Stock as quoted on the NASDAQ Capital
Market as of the trading date immediately prior to the Commencement Date.

 

 

(vi)

Additional annual stock option grants will be determined annually by the
Compensation Committee and the Board, based upon the recommendation of the Chief
Executive Officer and utilizing the same criteria for evaluating the annual cash
performance bonus.

 

4. Employee Benefits.

 

(a) General. During the Term, RUBINO shall be entitled to the employee benefits,
including 4 weeks’ paid vacation and all U.S. national holidays, a 401(k) plan,
and current health and dental insurance benefits made available by the
Corporation and other benefits described in this Section 4.

 

 

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(b) Corporation Automobile. RUBINO shall have an automobile expense allowance of
$850 per month, to be used for his leasing of a Corporation automobile and the
payment of insurance, maintenance and gasoline expenses, to be paid either
directly by the Corporation or to be reimbursed to RUBINO upon his presentation
of reasonable documentation to the Corporation, in accordance with the
Corporation’s controls and procedures and consistent with applicable law.

 

(c) Disability Insurance. The Corporation will obtain and provide as soon as
practicable at its expense short-term and long-term disability insurance for the
benefit of RUBINO, provided that RUBINO complete a complete physical examination
to the Corporation’s satisfaction.

 

(d) Indemnification. The Corporation hereby represents that Article VI, Section
6 of its By-Laws, which is in full force and effect, currently provides for the
indemnification of its officers, employees and directors, subject to the terms
thereof, and RUBINO acknowledges having received a copy of the By-Laws and
having reviewed such section to his satisfaction.

 

5. Expenses. During the Term, the Corporation shall reimburse RUBINO for actual
out-of-pocket expenses incurred by him in the performance of his services for
the Corporation upon the receipt of appropriate documentation of such expenses,
in accordance with the Corporation’s controls and procedures and consistent with
applicable law.

 

6. Termination.

 

(a) General. The Term shall end immediately upon RUBINO’s death, and for Cause
or Disability, as defined in Section 7. Upon termination of the Term due to
RUBINO’s death or Disability, all compensation due RUBINO under this Agreement
will cease, except, in the case of death, as provided in Section 6(l) below.
Upon the Corporation’s termination of the Term for Cause, RUBINO shall have
thirty (30) days to cure said Cause, if curable. With respect to the termination
of RUBINO pursuant to Sections 6(e), (f), (g) and (h), the Corporation may elect
to terminate this Agreement at any time during the Term by giving the prior
written notice set forth in such Sections. With respect to termination by
RUBINO, RUBINO may elect to terminate this Agreement at any time by giving 90
days’ prior written notice at any time during the Term (except that prior to the
end of the Term, he need only give 60 days’ prior written notice if he elects
not to renew the Term), and, upon such termination, all compensation due RUBINO
under this Agreement will cease, except as set forth in Sections 6(i), (j), (k)
and 9.

 

(b) Notice of Termination. The Corporation shall notify RUBINO in writing of its
termination of his employment hereunder. The Corporation’s failure to give
notice under this Section 6(b) shall not, however, affect the validity of the
Corporation’s termination of the Term. The giving of notice of termination,
either by RUBINO or the Corporation, shall not constitute the effective date of
termination of employment, which instead shall occur on the date after the
applicable notice period has elapsed.

 

(c) Termination by the Corporation for Cause. If terminated by the Corporation
for Cause, the Corporation shall describe to RUBINO the grounds for his
termination. Upon the Corporation’s termination of the Term for Cause, all
compensation due RUBINO under this Agreement will cease, except as set forth in
Section 9. Moreover, all options to purchase Common Stock of the Corporation
shall expire upon such termination.

 

 

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(d) Termination by the Corporation upon a Change of Control. If the Corporation
terminates its relationship with RUBINO within one (1) year of a “Change of
Control”, as defined in Section 7, which termination shall be preceded by at
least 90 days’ prior written notice, RUBINO shall receive the following:

 

 

(i)

an amount equal to eighteen (18) months of base salary in effect as of the date
of termination (in addition to the base salary paid to RUBINO after the
Corporation’s delivery of notice of termination and the actual date of
termination);

 

(ii)

Other Compensation (as defined in Section 9);

 

(iii)

the full vesting of RUBINO’s stock options, and extended exercisability thereof
until their respective expiration dates; and

 

(iv)

If the foregoing payments and benefits provided to RUBINO in Sections 6(d)(i)
through (iii) above (the “Change of Control Payments”) are or become subject to
the tax (“Excise Tax”) imposed by Section 4999 of the Internal Revenue Code of
1986, as amended, the Corporation shall pay to RUBINO such amount (the “Gross-up
Payment”) as may be necessary to place RUBINO in the same after-tax position as
if no portion of the Change of Control Payments and any amounts paid to him
pursuant to this paragraph 6d(iv) had been subject to the Excise Tax.

 

(e) Termination by the Corporation other than upon Change of Control, Death,
Disability or Cause within 90 days of Commencement Date . If the Corporation
terminates its relationship with RUBINO within 90 days of the Commencement Date
(which termination shall be preceded by at least 30 days’ prior written notice),
other than upon a Change of Control, Death, Disability or Cause, RUBINO shall
receive the following:

 

 

(i)

an amount equal to eight (8) months of current base salary (in addition to the
base salary paid to RUBINO after the Corporation’s delivery of notice of
termination and the actual date of termination); and

 

(ii)

Other Compensation.

 

(f) Termination by the Corporation other than upon Change of Control, Death,
Disability or Cause after 90 days from Commencement Date and prior to first
anniversary. If the Corporation terminates its relationship with RUBINO after 90
days from the Commencement Date and prior to the first anniversary thereof
(which termination shall be preceded by at least 90 days’ prior written notice),
but other than upon a Change of Control, Death, Disability or Cause, RUBINO
shall receive the following:

 

 

(i)

an amount equal to nine (9) months of base salary in effect as of the date of
termination (in addition to the base salary paid to RUBINO after the
Corporation’s delivery of notice of termination and the actual date of
termination);

 

(ii)

an additional amount equal to the product of (A) the minimum 2006 bonus amount
of $100,000, and (B) a fraction, the numerator of which is the number of days
RUBINO was employed prior to termination and the denominator of which is 365;

 

(iii)

Other Compensation; and

 

 

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(iv)

the full vesting of 162,500 options of the initial stock option grant made to
RUBINO pursuant to Section 3(b)(v) hereof (and 50% of any additional stock
options granted hereafter), and the extended exercisability thereof for one year
from the date of termination (resulting in the cancellation of all other
unvested stock options as of such date of termination).

 

(g) Termination by the Corporation other than upon Change of Control, Death,
Disability or Cause on or after first anniversary of Commencement Date . If the
Corporation terminates its relationship with RUBINO on or after the first
anniversary of the Commencement Date (which termination shall be preceded by at
least 180 days prior written notice), but other than upon a non-renewal (which
is governed by Section 6(h) hereof), Change of Control, Death, Disability or
Cause, RUBINO shall receive the following:

 

 

(i)

an amount equal to twelve (12) months of base salary in effect as of the date of
termination (in addition to the base salary paid to RUBINO after the
Corporation’s delivery of notice of termination and the actual date of
termination);

 

(ii)

Other Compensation; and

 

(iii)

the full vesting of RUBINO’s stock options, and extended exercisability thereof
until their respective expiration dates.

 

(h) Non renewal by the Corporation upon expiration of the Initial Term or
Additional Term. If the Corporation elects not to renew RUBINO’s employment
hereunder upon the expiration of the Initial Term or an Additional Term (which
non-renewal shall be preceded by at least 90 days’ prior written notice), RUBINO
shall receive the following at the expiration of the Initial Term or the
Additional Term, as the case may be:

 

 

(i)

an amount equal to nine (9) months of base salary in effect as of the date of
expiration (in addition to the base salary paid to RUBINO after the
Corporation’s delivery of notice of non-renewal and the actual date of
expiration);

 

(ii)

Other Compensation; and

 

(iii)

the full vesting of RUBINO’s stock options, and extended exercisability thereof
until their respective expiration dates.

 

(i) Termination by RUBINO upon Good Reason occurring within six months of
Commencement Date. If RUBINO delivers notice to the Corporation terminating his
employment for “Good Reason”, as defined in Section 7, and such notice
identifies the occurrence of the event which occurred during the first six
months of the Commencement Date and which constitutes the Good Reason and is
delivered to the Corporation within 90 days of such occurrence, RUBINO shall
receive the following:

 

 

(i)

an amount equal to six (6) months of the current base salary (in addition to the
base salary paid to RUBINO after his delivery of notice of termination and the
actual date of termination);

 

(ii)

an additional amount equal to the product of (A) the minimum 2006 bonus amount
of $100,000, and (B) a fraction, the numerator of which is the number of days
RUBINO was employed prior to termination and the denominator of which is 365;

 

 

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(iii)

Other Compensation; and

 

(iv)

the full vesting of 81,250 options of the initial stock option grant made to
RUBINO pursuant to Section 3(b)(v) hereof (and 25% of any additional stock
options granted hereafter), and the extended exercisability thereof for one year
from the date of termination (resulting in the cancellation of all other
unvested stock options as of such date of termination).            

 

Notwithstanding the foregoing, if a Change of Control occurred prior to RUBINO
giving notice of termination for Good Reason or if the Change of Control
resulted in events which themselves constituted Good Reason, the amount payable
under Section 6(i)(i) shall be equal to twenty one (21) months of the current
base salary (in addition to the base salary paid to RUBINO after his delivery of
notice of termination and the actual date of termination), and RUBINO also shall
be entitled to the Gross-up Payment if an Excise Tax were applicable in such
circumstances.

 

(j) Termination by RUBINO upon Good Reason occurring after six months of
Commencement Date and prior to the first anniversary. If RUBINO delivers notice
to the Corporation terminating his employment for Good Reason, and such notice
identifies the occurrence of the event which occurred during the period between
the date that is 181 days from the Commencement Date and prior to the first
anniversary of the Commencement Date and which constitutes the Good Reason and
is delivered to the Corporation within 90 days of such occurrence, RUBINO shall
receive the following:

 

 

(i)

an amount equal to twelve (12) months of the base salary in effect as of the
date of termination (in addition to the base salary paid to RUBINO after his
delivery of notice of termination and the actual date of termination);

 

(ii)

an additional amount equal to the product of (A) the minimum 2006 bonus amount
of $100,000, and (B) a fraction, the numerator of which is the number of days
RUBINO was employed prior to termination and the denominator of which is 365;

 

(iii)

Other Compensation; and

 

(iv)

the full vesting of 162,500 options of the initial stock option grant made to
RUBINO pursuant to Section 3(b)(v) hereof (and 50% of any additional stock
options granted hereafter), and the extended exercisability thereof for one year
from the date of termination (resulting in the cancellation of all other
unvested stock options as of such date of termination).            

 

Notwithstanding the foregoing, if a Change of Control occurred prior to RUBINO
giving notice of termination for Good Reason or if the Change of Control
resulted in events which themselves constituted Good Reason, the amount payable
under Section 6(j)(i) shall be equal to twenty one (21) months of the base
salary in effect as of the date of termination (in addition to the base salary
paid to RUBINO after his delivery of notice of termination and the actual date
of termination) ), and RUBINO also shall be entitled to the Gross-up Payment if
an Excise Tax were applicable in such circumstances.

 

(k) Termination by RUBINO upon Good Reason occurring on or after the first
anniversary of Commencement Date. If RUBINO delivers notice to the Corporation
terminating his employment for Good Reason, and such notice identifies the
occurrence of the event which occurred on or after the first anniversary of the
Commencement Date and which constitutes the “Good Reason” and is delivered to
the Corporation within 90 days of such occurrence, RUBINO shall receive the
following:

 

 

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(i)

an amount equal to twelve (12) months of the base salary in effect as of the
date of termination (in addition to the base salary paid to RUBINO after his
delivery of notice of termination and the actual date of termination);

 

(ii)

an additional amount equal to the product of (A) the actual prior year’s bonus
amount awarded to RUBINO (starting with fiscal year 2006 bonus), and (B) a
fraction, the numerator of which is the number of days RUBINO was employed in
the fiscal year prior to termination and the denominator of which is 365;
provided, however, that if such termination occurs before the fiscal year 2006
bonus has been determined, the amount in clause (A) above shall be based on a
good faith determination by the Board of what the bonus for fiscal year 2006
would have been, taking into consideration the attainment of goals and
milestones for such fiscal year;

 

(iii)

Other Compensation; and

 

(iv)

the full vesting of RUBINO’s stock options and warrants, and extended
exercisability thereof until their respective expiration dates.        

 

Notwithstanding the foregoing, if a Change of Control occurred prior to RUBINO
giving notice of termination for Good Reason or if the Change of Control
resulted in events which themselves constituted Good Reason, (A) the amount
payable under Section 6(k)(i) shall be equal to twenty one (21) months of the
base salary in effect as of the date of termination (in addition to the base
salary paid to RUBINO after his delivery of notice of termination and the actual
date of termination) and (B) the delivery of RUBINO’s notice of termination for
Good Reason must be made by the later of (x) the first anniversary of the date
of the Change of Control or (y) 90 days from the occurrence of the event
constituting Good Reason. ). In such event, RUBINO also shall be entitled to the
Gross-up Payment if an Excise Tax were applicable in such circumstances.

 

(l) Termination resulting from Death. In the event of RUBINO’s death, RUBINO’s
estate or representative shall receive the following:

 

 

(i)

payment of his then-current base salary for the remainder of the fiscal year in
which his death occurred;

 

 

(ii)

payment of a pro-rated bonus payment based on the prior fiscal year’s bonus, or
if death occurred prior to his bonus for fiscal year 2006 being determined,
based on his projected 2006 bonus, based on a good faith determination by the
Board of what the bonus for fiscal year 2006 would have been, taking into
consideration the attainment of goals and milestones for such fiscal year; and

 

 

(iii)

the additional benefits as set forth in Section 9.

 

Any payments to RUBINO’s estate or representative in the event of death pursuant
to this Section 6(l) shall be reduced by any proceeds paid to his estate or
representative from life insurance obtained on his behalf by the Corporation.

 

7. Definitions.

 

(a) “Cause” Defined. “Cause” means (i) willful malfeasance or willful misconduct
by RUBINO in connection with his employment; (ii) RUBINO’s gross negligence in
performing any of his duties under this Agreement; (iii) RUBINO’s conviction of,
or entry of a plea of guilty to, or entry of a plea of nolo

 

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contendere with respect to, any felony; (iv) RUBINO’s habitual drunkenness or
excessive absenteeism not related to illness; (iv) RUBINO’s material breach of
any written policy applicable to all employees adopted by the Corporation; or
(vi) material breach by RUBINO of any of his agreements in this Agreement.

 

(b) “Disability” Defined. “Disability” shall mean RUBINO’s incapacity due to
physical or mental illness that results in his being unable to substantially
perform his duties hereunder for six consecutive months (or for six months out
of any nine-month period). During a period of Disability, RUBINO shall continue
to receive his base salary hereunder, provided that if the Corporation provides
RUBINO with disability insurance coverage, payments of RUBINO’s base salary
shall be reduced by the amount of any disability insurance payments received by
RUBINO due to such coverage. Upon termination, after the end of the period of
Disability, all compensation due RUBINO under this Agreement shall cease, except
as set forth in Section 9.

 

(c) “Change of Control” Defined. “Change of Control” shall mean the occurrence
of any one or more of the following events:

 

(i)          An acquisition (whether directly from the Corporation or otherwise)
of any voting securities of the Corporation (the “Voting Securities”) by any
“Person” (as the term person is used for purposes of Section 13(d) or 14(d) of
the Securities and Exchange Act of 1934, as amended (the “1934 Act”)),
immediately after which such Person has “Beneficial Ownership” (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) of fifty percent (50 %) or
more of the combined voting power of the Corporation’s then outstanding Voting
Securities;

 

(ii)         The individuals who, as of the date hereof, are members of the
Board (the “Incumbent Board”), cease for any reason to constitute at least
fifty-one percent (51%) of the Board; or

 

(iii)         Approval by the Board or stockholders of the Corporation of, or
execution by the Corporation of any agreement with respect to, or the
consummation of:

 

(A)         A merger, consolidation or reorganization involving the Corporation,
where either or both of the events described in Section 7(c)(i) or 7(c)(ii)
would be the result;

 

(B)          A liquidation or dissolution of or appointment of a receiver,
rehabilitator, conservator or similar person for, the Corporation; or

 

(C)          An agreement for the sale or other disposition of all or
substantially all of the assets of the Corporation to any Person (other than a
transfer to a subsidiary of the Corporation).

 

Notwithstanding anything contained in this Agreement to the contrary, if
RUBINO’s employment is terminated prior to a Change in Control and RUBINO
reasonably demonstrates that such termination (i) was at the request of a third
party who has indicated an intention or taken steps reasonably calculated to
effect a Change in Control and who effectuates a Change in Control (a “Third
Party”) or (ii) otherwise occurred in connection with, or in anticipation of, a
Change in Control which actually occurs, then for all purposes of this
Agreement, the date of a Change in Control with respect to RUBINO shall mean the
date immediately prior to the date of such termination of RUBINO’s employment.

 

 

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(d) “Good Reason” Defined. “Good Reason” shall mean the occurrence, whether or
not after a Change in Control, of any of the events or conditions described
below:

 

(i)           a change in RUBINO’s status, title, position or responsibilities
(including reporting responsibilities) which represents a material adverse
change from his status, title, position or responsibilities as in effect
immediately prior to such change; the assignment to RUBINO of any duties or
responsibilities which are inconsistent with his status, title, position or
responsibilities as in effect immediately prior to such change; or any removal
of RUBINO from any of such offices or positions;

(ii)          the Corporation’s requiring RUBINO (X) to be based more than 30
miles from its current corporate offices in Iselin, New Jersey, or (Y) to be
based in New York City, or (Z) to travel, other than for reasonably required
travel on the Corporation’s business which is not materially greater than such
travel requirements prior to such time (the parties agreeing that such
“reasonably required travel” will be primarily, but not exclusively, in the
United States and Europe);

 

(iii)         any material breach by the Corporation of any provision of this
Agreement which is not cured within thirty (30) days after the receipt of
written notice by the Corporation of a description of the breach; or

 

(iv)         a significant material adverse effect in the class action and
derivative litigations involving the Corporation and currently described in its
most recent Quarterly Report on Form 10-Q for the quarter ended June 30, 2005,
which would result in significant liability or expense directly to the
Corporation, other than the defeat of anticipated motions by the Corporation of
motions to dismiss those cases, as reasonably determined in good faith by
counsel for both the Corporation and RUBINO.

 

8. Payment Terms. Payment of any amounts to which RUBINO shall be entitled
pursuant to the provisions of Sections 6 and 7 shall be made no later than sixty
(60) days following receipt of notice of termination or the event giving rise to
such termination. Any amounts payable pursuant to Sections 6 and 7 which are not
made within the period specified in this Section 8 shall bear interest at a rate
equal to the lesser of (i) the maximum interest rate allowable pursuant to
applicable law or (ii) five points above the “prime rate” of interest as
published from time-to-time in the Eastern Edition of the Wall Street Journal.

 

9. Benefits.

 

(a)          General. Except if RUBINO resigns without Good Reason or is
terminated by the Corporation for Cause, in the event RUBINO’s employment with
the Corporation is terminated for any reason prior to the end of the Term,
RUBINO and his dependents, if any, will continue to participate in any group
health plan sponsored by the Corporation in which RUBINO was participating on
the date of such termination, at a cost to RUBINO and his dependents equal to
the amount charged by the Corporation to similarly situated employees while
employed by the Corporation, for one year from the date of termination.
Thereafter, RUBINO and his dependents, if any, shall be entitled to elect to
continue such health coverage, at RUBINO’a sole expense, for the longest period
of time permitted by applicable law. Upon termination for any reason, in
addition to any payments to which RUBINO may be entitled upon termination of his
employment pursuant to any provision of this Agreement, RUBINO shall be entitled
to any benefits under any pension, supplemental pension, savings, or other
employee benefit plan (other than life insurance) in which RUBINO was
participating on the date of any such termination.

 

 

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(b)          Other Benefits. In addition to the rights provided in Section 9(a),
in the event of a termination of RUBINO’s employment for any reason (other than
his resignation without Good Reason or termination by the Corporation for
Cause), RUBINO shall retain his use of the Company automobile provided in
Section 4(b) for the remainder of its lease term, but the Corporation will not
pay directly or reimburse him for any costs other than the lease cost for
automobile, such as gasoline, maintenance or insurance. Notwithstanding the
termination of employment for any reason, without exception, RUBINO will
continue to be entitled to indemnification on the terms set forth in the
Corporation’s By-Laws, subject to the terms thereof. Such benefits, together
with the benefits provided in Section 9(a), shall be referred to herein,
collectively, as “Other Compensation”.

 

10. Confidentiality.

 

(a) "Corporation Information" Defined. "Corporation Information" means all
information, knowledge or data of or pertaining to (i) the Corporation, its
employees and all work undertaken on behalf of the Corporation, and (ii) any
other person, firm, corporation or business organization with which the
Corporation may do business during the Term, that is not in the public domain
(and whether relating to methods, processes, techniques, discoveries, pricing,
marketing or any other matters).

 

(b)          Confidentiality. RUBINO hereby recognizes that the value of all
trade secrets and other proprietary data and all other information of the
Corporation not in the public domain disclosed by the Corporation in the course
of his employment with the Corporation is attributable substantially to the fact
that such confidential information is maintained by the Corporation in strict
confidentiality and secrecy and would be unavailable to others without the
expenditure of substantial time, effort or money. RUBINO therefore, except as
provided in the next two sentences, covenants and agrees that all Corporation
Information shall be kept secret and confidential at all times during and after
the end of the Term and shall not be used or divulged by him outside the scope
of his employment as contemplated by this Agreement, except as the Corporation
may otherwise expressly authorize by action of the Board. In the event that
RUBINO is requested in a judicial, administrative or governmental proceeding to
disclose any of the Corporation Information, RUBINO will promptly so notify the
Corporation so that the Corporation may seek a protective order or other
appropriate remedy and/or waive compliance with this Agreement. If disclosure of
any of the Corporation Information is required, RUBINO may furnish the material
so required to be furnished, but RUBINO will furnish only that portion of the
Corporation Information that legally is required.

 

11. Successors and Assigns.

 

(a)          RUBINO. This Agreement is a personal contract, and the rights and
interests that the Agreement accords to RUBINO may not be sold, transferred,
assigned, pledged, encumbered, or hypothecated by him. All rights and benefits
of RUBINO shall be for the sole personal benefit of RUBINO, and no other person
shall acquire any right, title or interest under this Agreement by reason of any
sale, assignment, transfer, claim or judgment or bankruptcy proceedings against
RUBINO. Except as so provided, this Agreement shall inure to the benefit of and
be binding upon RUBINO and his personal representatives, distributees and
legatees.

 

(b)          The Corporation. This Agreement shall be binding upon the
Corporation and inure to the benefit of the Corporation and of its successors
and assigns.

 

12. Entire Agreement. This Agreement represents the entire agreement between the
parties concerning RUBINO’s employment with the Corporation and supersedes all
prior negotiations, discussions,

 

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understandings and agreements, whether written or oral, between RUBINO and the
Corporation relating to the subject matter of this Agreement.

 

13. Amendment or Modification; Waiver. No provision of this Agreement may be
amended or waived unless such amendment or waiver is agreed to in writing signed
by RUBINO and by a duly authorized officer of the Corporation. No waiver by any
party to this Agreement of any breach by another party of any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of a similar or dissimilar condition or provision at the same time, any
prior time or any subsequent time.

 

14. Notices. Any notice to be given under this Agreement shall be in writing and
delivered personally or sent by overnight courier or registered or certified
mail, postage prepaid, return receipt requested, addressed to the party
concerned at the address indicated below, or to such other address of which such
party subsequently may give notice in writing:

 

If to RUBINO:

Alan L. Rubino

210 Old Chester Road

Essex Fells, NJ 07021

 

with a copy to:

Piro, Zinna, Cifelli, Paris & Genitempo

360 Passaic Ave.

Nutley, NJ 07110-2787

Attention: James M. Piro, Esq.

 

If to the Corporation:

Pharmos Corporation

99 Wood Avenue South, Suite 301

Iselin, NJ 08830

Attention: Chief Executive Officer

 

with a copy to:

Eilenberg & Krause LLP

11 East 44th Street

New York, NY 10017

Attention: Adam D. Eilenberg, Esq.

 

Any notice delivered personally or by overnight courier shall be deemed given on
the date delivered and any notice sent by registered or certified mail, postage
prepaid, return receipt requested, shall be deemed given on the date mailed.

 

15. Severability. If any provision of this Agreement or the application of any
such provision to any party or circumstances shall be determined by any court of
competent jurisdiction to be invalid and unenforceable to any extent, the
remainder of this Agreement or the application of such provision to such person
or circumstances other than those to which it is so determined to be invalid and
unenforceable shall not be affected, and each provision of this Agreement shall
be validated and shall be enforced to the fullest extent permitted by law. If
for any reason any provision of this Agreement containing restrictions is held
to cover an area or to be for a length of time that is unreasonable or in any
other way is construed to be too broad or to any extent invalid, such provision
shall not be determined to be entirely null, void and of no effect; instead, it
is the intention and desire of both the Corporation and RUBINO that, to the
extent that the provision is or would be valid or enforceable under applicable
law, any court of competent jurisdiction shall construe and interpret or reform
this Agreement to provide for a restriction having the maximum enforceable area,
time period and such

 

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other constraints or conditions (although not greater than those contained
currently contained in this Agreement) as shall be valid and enforceable under
the applicable law.

 

16. Survivorship. The respective rights and obligations of the parties hereunder
shall survive any termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations.

 

17. Headings. All descriptive headings of sections and paragraphs in this
Agreement are intended solely for convenience of reference, and no provision of
this Agreement is to be construed by reference to the heading of any section or
paragraph.

 

18. Withholding Taxes. All salary, benefits, reimbursements and any other
payments to RUBINO under this Agreement shall be subject to all applicable
payroll and withholding taxes and deductions required by any law, rule or
regulation of and federal, state or local authority.

 

19. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together
constitute one and same instrument.

 

20. Applicable Law; Jurisdiction. The laws of the State of New Jersey shall
govern the interpretation, validity and performance of the terms of this
Agreement, without reference to rules relating to conflicts of law. Any suit,
action or proceeding against RUBINO with respect to this Agreement, or any
judgment entered by any court in respect thereof, may be brought in any court of
competent jurisdiction in the State of New Jersey, as the Corporation may elect
in its sole discretion, and RUBINO hereby submits to the exclusive jurisdiction
of such courts for the purpose of any such suit, action, proceeding or judgment.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

 

 

/s/ ALAN L. RUBINO                                              

ALAN L. RUBINO

 

 

PHARMOS CORPORATION

 

 

 

By:

/s/ HAIM AVIV                                          

Haim Aviv

Chairman and Chief Executive Officer

 

 

 

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