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                                                                   EXHIBIT 10.30

                      STANDARD COMMERCIAL-INDUSTRIAL LEASE

1. PARTIES. This Lease dated, for reference purposes only DECEMBER 30, 1997 is
made by and between TUCSON TECH PARK (herein called "Lessor") and IMARX
PHARMACEUTICAL CORPORATION (herein called "Lessee").

2. PREMISES. Lessor hereby leases to Lessee and Lessee leases from Lessor for
the term, at the rental and upon all the conditions set forth herein that
certain real property situated in the County of Pima State of Arizona commonly
known as: Suite 100, located at 1700 East 18th Street, Tucson, Arizona 85719.
Approximately 1500 sq ft as shown on the attached site plan, and described on
Exhibit A attached premises outlined in red hereto and made a part hereof. Said
real property including the land and all improvements thereon is herein called
"the Premises". All dimensions and areas quoted herein are approximate.

3. TERM.

     3.1 TERM. The term of this Lease shall be for one year less 15 days
commencing on February 15, 1998 and ending on January 31, 1999 unless sooner
terminated pursuant to any provision hereof.

     3.2 DELAY IN COMMENCEMENT. Notwithstanding said commencement date, if for
any reason Lessor cannot deliver possession of the Premises to Lessee on said
date, Lessor shall not be subject to any liability therefore, nor shall failure
affect the validity of this Lease or the obligations of Lessee hereunder or
extend the term hereof, but in such case Lessee shall not be obligated to pay
rent until possession of the Premises is tendered to Lessee; provided, however
that if Lessor shall not have delivered possession of the Premises within sixty
(60) days from said commencement date, Lessee may, at Lessee's option, by notice
in writing to Lessor within ten (10) days thereafter cancel this Lease, in which
event the parties shall be discharged from all obligations hereunder. If Lessee
occupies the Premises prior to said commencement date such occupancy shall be
subject to all provisions hereof; such occupancy shall not advance the
termination date, and Lessee shall pay rent for such period at the initial
monthly rates set forth below. If Lessor by reason outside the reasonable
control of Lessor, cannot deliver said premises within ninety (90) days from
said commencement date, Lessor may at Lessor's option, by notice in writing
within ten (10) days thereafter cancel this Lease.

4. RENT. Lessee shall pay by the first day of each month, Lessor a monthly
rental of eight hundred forty and no/00 dollars ($840.00) in lawful money of the
United States of America for each and every month of the Lease. The Lessee
further agrees to pay in addition to the rent as provided herein all privilege,
sales, excise, and other taxes (except income taxes) imposed by State Federal,
or municipal upon the rentals herein provided to be paid by the Lessee to the
Lessor. Said payment shall be in addition to and accompanying each rental
payment made by Lessee to Lessor.

Rent for any period during the term hereof which is for less than one month
shall be a pro rata portion of the monthly installment. Rent shall be payable in
lawful money of the United States to Lessor at the address stated herein or to
such other persons or at such other places as Lessor may designate in writing.
The rent due under terms of this Paragraph may be modified by Paragraph Eleven
(11) below.

5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof
$840.00 as security for Lessee's faithful performance of Lessee's obligations
hereunder. If Lessee fails to pay rent or other charges due hereunder or
otherwise defaults with respect to any provision of this Lease. Lessor may use
apply, or retain all or any portion of said deposit for the payment of any rent
or other charge in default or for the payment of any other sum to which Lessor
may become obligated by reason of Lessee's default, or to compensate Lessor for
any loss or damage which Lessor may suffer thereby if Lessor so uses or applies
all of any portion of said deposit Lessee shall within ten (10) days after
written demand thereof deposit cash with Lessor in an amount sufficient to
restore said deposit to the full amount hereinabove stated, and Lessee's failure
to do so shall be a material breach of this Lease. Lessor shall not be required
to keep said deposit separate from its general accounts. If Lessee performs all
of Lessee's obligations hereunder, said deposit, or so much thereof as has not
theretofore been applied by Lessor, shall be returned, without payment of
interest or other increment for its use to Lessee (or at Lessor's option, to the
last assignee, if any, of Lessee's interest hereunder) at the expiration of the
term hereof, and after Lessee has vacated the premises.

6. USE.

     6.1 USE. The Premises shall be used and occupied only for research and
associated activities, including but not limited to storage, records
maintenance, general office, etc. and for no other purpose Lessee shall not use,
or permit to be used, the Premises or any part thereof, for any purpose or
purposes other than the purpose or purposes for which said Premises are hereby
leased; and no use shall be made or permitted to be made of said Premises, which
will increase the existing rate of insurance upon the building in which said
Premises may be located, or cause a cancellation of any insurance policy
covering said building, or any part thereof, nor shall Lessee sell, or permit to
be kept, used, or sold, in or about said Premises, any article which may be
prohibited by standard form of fire Insurance policies.

     6.2 COMPLIANCE WITH LAW. Lessee shall at Lessee's expense, comply promptly
with all applicable statutes, ordinances, rules, regulations, orders, and
requirements in effect during the term or any part of the term hereof regulating
the use by Lessee of the Premises Lessee shall not use or permit the use of the
Premises in any manner that will tend to create waste or a nuisance or, if there
shall be more than one tenant of the building containing the Premises, which
shall tend to disturb such other tenants.

     6.3 CONDITION OF PREMISES. Lessee hereby accepts the Premises in their
condition existing as of the date of the execution hereof, subject to all
applicable zoning, municipal, county and state laws, ordinances and regulations
governing and regulating the use of the Premises, and accepts this Lease subject
thereto and to all matters disclosed thereby and by any exhibits attached
hereto. Except as otherwise stated in this Lease, Lessee hereby acknowledges
that neither the Lessor nor any employees or agents of Lessor has made any oral
or written warranties or representations to Lessee relative to the condition or
use by Lessee of said Premises and Lessee acknowledges that Lessee assumes all
responsibility regarding the Occupational Safety Health Act, the legal use and
adaptability of the Premises and the compliance thereof with all applicable laws
and regulations in effect during the term of this Lease except as otherwise
specifically stated in this Lease.

7. MAINTENANCE, REPAIRS AND ALTERATIONS.

     7.1 LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraph 9 and
except for damage caused by any negligent or intentional act or ommission of
Lessee. Lessee's agents employees, or invitees Lessor, at Lessor's expense shall
keep in good order, condition, and repair the foundations, exterior walls, and
the exterior roof of the Premises. The Lessee shall give the Lessor prompt
notice of any defects or breakage in the structure, equipment fixtures, or of
any unsafe conditions upon or within the Leased Premises. Lessee expressly
waives the benefits of any statute now or hereafter in effect which would
otherwise afford Lessee the right to make repairs at Lessor's expense or to
terminate this Lease because of Lessor's failure to keep the Premises in good
order, condition, and repair.

     7.2 LESSEE'S OBLIGATIONS.

     (a) Subject to the provision of Paragraphs 7 and 9, Lessee, at Lessee's
expense shall keep in good order and in a neat and sanitary condition and repair
the Premises and every part thereof (whether or not the damaged portion of the
Premises or the means of repairing the same are reasonably or readily accessible
to Lessee) including, without limiting the generality of the foregoing, all
plumbing, heating air conditioning, ventilating, electrical and lighting
facilities and equipment within the Premises, fixtures, interior walls and
interior surface of exterior walls, ceilings, windows, doors plate glass, and
skylights, located within the Premises, and all landscaping, driveways, parking
lots fences and signs located in the Premises and all areas immediately adjacent
to the Premises. Notwithstanding the foregoing the Lessor shall maintain and
repair all Lessee's expense the heating and cooling equipment and shall bill
Lessee for said work.

     (b) If Lessee fails to perform Lessee's obligations under this Paragraph
7.2, Lessor may at Lessor's option enter upon the Premises after ten (10) day's
prior written notice to Lessee and put the same in good order condition and
repair, and the cost thereof together with interest thereon shall be due and
payable as additional rent to Lessor together with Lessee's next rental
installment.

7.3 ALTERATIONS AND ADDITIONS.

     (a) Lessee shall not without Lessor's prior written consent make any
alterations, improvements or additions in, on or about the Premises. Lessor may
require that Lessee, at Lessee's expense, remove any or all of said alterations,
improvements, or additions at the expiration of the term, and restore the
Premises to their prior condition. Should Lessee make any alterations,
improvements or additions without the prior approval of Lessor. Lessor may
require that Lessee remove the same. Anything herein contained to the contrary
notwithstanding, Lessee shall not drill, punch or otherwise cause any crack,
hole, opening or other break in the roof or roof area, or roof supports, or in
the floors, on the walls or in other permanent areas or structures without first
receiving the prior written consent of Lessor.

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          (b) Any alterations improvements or additions in, or about the
Premises that Lessee shall desire to make and which requires the consent of the
Lessor shall be presented to Lessor in written form with proposed detailed
plans. If Lessor shall give its consent the consent shall be deemed conditioned
upon Lessee acquiring a permit to do so from appropriate governmental agencies
the furnishing of a copy thereof to Lessor prior to the commencement of the work
and the compliance by Lessee of all conditions of said permit in a prompt and
expeditious manner. In addition, Lessor may require Lessee to provide Lessor, at
Lessee's sole cost and expense, a lien and completion bond in an amount equal to
one and one half times the estimated costs of such improvements to insure Lessor
against any liability for mechanics and materialmen's liens and to insure
completion of the work.

          (c) Lessee shall pay when due all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use in
the Premises, which claims are or may be secured by any mechanics or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days notice prior to the commencement of any
work in the Premises and Lessor shall have the right to post notices of
non-responsibility in or on the Premises as provided by law. If Lessee shall in
good faith, contest the validity of any such lien, claim or demand then Lessee
shall at its sole expenses defend itself and Lessor against the same and shall
pay and satisfy any such adverse judgment that may be rendered thereon before
the enforcement thereof against the Lessor or the Premises, upon the condition
that if Lessor shall require, Lessee shall furnish to Lessor a surely bond
satisfactory to Lessor in an amount equal to such contested lien claim or demand
indemnifying Lessor against liability for the same and holding the Premises free
from the effect of such lien or claim in addition. Lessor may require Lessee to
pay Lessor's attorney's fees and costs in participating in such action if Lessor
shall decide it is to its best interest to do so.

          (d) Unless Lessor requires their removal as set forth in Paragraph
7.3(a) all alterations improvements and additions which may be made on the
Premises shall become the property of Lessor and remain upon and be surrendered
with the Premises at the expiration of the term or on sooner termination
thereof.

8. INSURANCE; INDEMNITY.

     8.1. Liability Insurance. Lessee shall at Lessees expense obtain and keep
in force during the term of this Lease a policy of comprehensive public
liability Insurance insuring Lessor and Lessee against any liability arising out
of the ownership use occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be in an amount of not less than
$300,000 for injury to or death of one person in any one accident or occurrence
and any amount of not less than $500,000 for injury to or death of more than one
person in any one accident or occurrence. Such Insurance shall further insure
Lessor and Lessee against liability for property damage of at least $50,000. The
limits of said insurance shall not, however limit the liability of Lessee
hereunder. In the event that the Premises constitute a part of a larger property
said insurance shall have a Lessor's Protective Liability endorsement attached
thereto. If Lessee shall fail to procure and maintain said Insurance Lessor may,
but shall not be required to, procure and maintain the same, but at the expense
of Lessee.

     8.2 PROPERTY INSURANCE.

          (a) Lessor shall obtain and keep in force during the term of this
Lease a policy or policies of insurance covering loss or damage to the Premises
and loss of rents; but not Lessee's fixtures equipment or tenant improvements in
such amount as Lessor shall determine providing protection against all perils
included within the classification of fire extended coverage, vandalism,
malicious mischief, special extended perils (all risk) but not plate glass
insurance.

          (b) Lessee shall pay to Lessor, during the term hereof. In addition to
the rent the amount of any increase in premiums for the insurance required under
this Paragraph 8.2 over and above such premiums paid during the Base Period as
hereinafter defined, whether such premium increase shall be the result of the
nature of Lessee's occupancy, any act or omission of Lessee, requirements of the
holder of a mortgage or deed of trust covering the Premises or increased
valuation of the Premises or general rate increases. In the event that the
Premises have been occupied previously the words "Base Period" shall mean the
last twelve months of the prior occupancy and in the event that the Premises
have never been previously occupied the words "Base Period" shall mean the
lowest premium reasonably obtainable for the said insurance for the Premises
assuming the most nominal use of the Premises.

          (c) If the Premises being leased herein are part of a larger property,
then Lessee shall not be responsible for paying any increase in the property
insurance caused by the acts or omissions of any other tenant of the building in
which the Premises are a part.

          (d) Lessee shall pay any such premium increases to Lessor within
thirty (30) days after receipt by Lessee of a copy of the premium statement or
other satisfactory evidence of the amount due. If the insurance policies
maintained hereunder cover other improvements in addition to the Premises,
Lessor shall also deliver to Lessee a statement of the amount of such increase
attributable to the Premises and showing in reasonable detail the manner in
which such amount was computed. If the term of this Lease does not expire
concurrently with the expiration of the period covered by such insurance
Lessee's liability for premium increases shall be prorated on an annual basis.

     8.3 INSURANCE POLICIES. Lessee shall deliver to Lessor copies of policies
of liability insurance required under Paragraph 8.1 or certificates evidencing
the existence and amounts of such insurance with loss payable clauses
satisfactory to Lessor. No such policy shall be cancellable or subject to
reduction of coverage or other modification except after ten (10) days prior
written notice to Lessor. Lessee shall within ten (10) days prior to the
expiration of such policies furnish Lessor with renewals or binders thereof, or
Lessor may order such insurance and charge the cost thereof to Lessee which
amount shall be payable by Lessee upon demand Lessee shall not do or permit to
be done anything which shall invalidate the insurance policies referred to in
Paragraph 8.2.

     8.4 WAIVER OF SUBROGATION. Lessee and Lessor each hereby waives any and all
rights of recovery against the other or against the officers employees, agents
and representatives of the other, for business interruption or for loss of or
damage to such waiving party or its property or the property of others under its
control, where such business interrupting loss or damage is insured against
under any insurance policy in force at the time of such business interrupting
loss or damage: Lessee and Lessor shall, upon obtaining the policies of
insurance required hereunder give notice to the insurance carrier or carriers
that the foregoing mutual waiver of subrogation is contained in this Lease.

     8.5 INDEMNIFY. Lessee shall indemnify and hold harmless Lessor from and
against any and all claims arising from Lessee's use of the Premises or from the
conduct of Lessee's business or from any activity, work or things, done
permitted or suffered by Lessee in or about the Premises or elsewhere and shall
further indemnify and hold harmless Lessor from and against any and all claims
arising from any breach or default in the performance of any obligation on
Lessee's part to be performed under the terms of this Lease or arising from any
negligence of the Lessee, or any of Lessee's agents contractors or employees,
and from and against all costs attorney's fees expenses and liabilities incurred
in the defense of any such claim or any action or proceeding brought thereon and
in case any action or proceeding be brought against Lessor by reason of any such
claim. Lessee upon notice from Lessor shall defend the same at Lessee's expense
by counsel satisfactory to Lessor.

     8.6 EXEMPTION OF LESSOR FROM LIABILITY. Lessee hereby agrees that Lessor
shall not be liable for injury to Lessee's business or any loss of income
therefrom or for damage to the goods wares, merchandise or other property of
Lessee. Lessee's employees, invitees customers or any other person in or about
the Premises nor shall Lessor be liable for injury to the person of Lessee.
Lessee's employees, agents or contractors, whether such damage or injury is
caused by or results from fire, steam electricity, gas, water or rain or from
the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures or from any other
cause, whether the said damage or injury results from conditions arising upon
the Premises or upon other portions of the building of which the Premises are a
part, or from other sources or places and regardless of whether the cause of
such damage or injury or the means of repairing the same is inaccessible to
Lessee.

9. DAMAGE OR DESTRUCTION.

     9.1 PARTIAL DAMAGE-INSURED. Subject to the provisions of Paragraphs 9.3 and
9.4 if the Premises are damaged and such damage was caused by a casualty covered
under an insurance policy required to be maintained and pursuant to Paragraph
8.2, Lessor shall at Lessor's expense repair such damage as soon as reasonably
possible and this Lease shall continue in full force and effect but Lessor shall
not repair or replace Lessee's fixtures, equipment or tenant improvements.

     9.2 PARTIAL DAMAGE-UNINSURED. Subject to the provisions of Paragraphs 9.3
and 9.4 if at any time during the term hereof the Premises are damaged, except
by a negligent or willful act of Lessee (in which event Lessee shall make the
repairs at its expense) and such damage was caused by a casualty not covered
under an insurance policy required to be maintained pursuant to Paragraph 8.2.
Lessor may at Lessor's option either (i) repair such damage as soon as
reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) give written notice to Lessee within
thirty (30) days after the date of the occurrence of such damage of Lessor's
intention to cancel and terminate this Lease as of the date of the occurrence of
such damage in the event Lessor elects to give such notice of Lessor's intention
to cancel and terminate this Lease. Lessee shall have the right within ten (10)
days after the receipt of such notice to give written notice to Lessor of
Lessee's intention to repair such damage at Lessee's expense, without
reimbursement from Lessor, in which event this Lease shall continue in full
force and effect and Lessee shall proceed to make such repairs as soon as
reasonably possible. If Lessee does not give such notice within such 10-day
period this Lease shall be cancelled and terminated as of the date of the
occurrence of such damage.

     9.3 TOTAL DESTRUCTION. If at any time during the term hereof the Premises
are totally destroyed from any cause whether or not covered by the insurance
required to be maintained by Lessor pursuant to Paragraph 8.2 (including any
total destruction required by any authorized public authority) this Lease shall
automatically terminate as of the date of such total destruction.

     9.4 DAMAGE NEAR END OF TERM. If the Premises are partially destroyed or
damaged during the last six (6) months of the term of this Lease Lessor may at
Lessors option cancel and terminate this Lease as of the date of occurrence of
such damage by giving written notice to Lessee of Lessor's election to do so
within thirty (30) days after the data of occurrence of such damage.

     9.5 ABATEMENT OF RENT; LESSEE'S REMEDIES.

          (a) If the Premises are partially destroyed or damaged and Lessor or
Lessee repairs or restores them pursuant to the provisions of this Paragraph 9,
the rent payable hereunder for the period during which such damage, repair or
restoration continues shall be abated in proportion to the degree to which
Lessee's use of the Premises is impaired Except for abatement of rent, if any,
Lessee shall have no claim against Lessor for any damage suffered by reason of
any such damage, destruction, repair or restoration.

          (b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence such repair or
restoration within ninety (90) days after such obligation shall accrue. Lessee
may at Lessee's option cancel and terminate this Lease by giving Lessor written
notice of Lessee's election to do so at any time prior to the commencement of
such repair or restoration in such event this Lease shall terminate as of the
date of such notice.

     9.6 TERMINATION--ADVANCE PAYMENTS. Upon termination of this Lease pursuant
to this Paragraph 9 an equitable adjustment shall be made concerning advance
rent and any advance payments made by Lessee to Lessor. Lessor shall in
addition, return to Lessee so much of Lessee's security deposit as has not
theretofore been applied by Lessor.

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     9.7 WAIVER. Lessee waives the provisions of A R S Section 33-343 which
relate to the termination of a lease when the leased premises is destroyed and
agrees that such event shall be governed by the terms of this Lease.

10. TAXES

10.4 PERSONAL PROPERTY TAXES.

          (a) Lessee shall pay prior to delinquency all taxes assessed against
and levied upon trade fixtures furnishings equipment and all other personal
property of Lessee contained in the Premises or elsewhere. When possible Lessee
shall cause said trade fixtures furnishings equipment and all other personal
property to be assessed and billed separately from the real property of Lessor.

          (b) If any of Lessee's said personal property shall be assessed with
Lessor's real property. Lessee shall pay Lessor the taxes attributable to Lessee
within 10 days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.

     10.5 TRANSACTION PRIVILEGE TAX. Lessee shall pay at the time of and in
addition to the rent as additional rent any sales gross income rental occupancy,
transaction privilege tax or other like tax measured by or imposed upon the rent
paid by Lessee under this Lease by any governmental authority pursuant to any
present or future law.

12. UTILITIES. Lessee shall pay for all water gas heat light power telephone and
other utilities and services supplied to the Premises together with any taxes
thereon. If any such services are not separately metered to Lessee. Lessee shall
pay a reasonable proportion to be determined by Lessor of all charges jointly
metered with other premises.

13. ASSIGNMENT AND SUBLETTING.

     13.1 LESSOR'S CONSENT REQUIRED. Lessee shall not voluntarily or by
operation of law assign transfer, mortgage sublet or otherwise transfer or
encumber all or any part of Lessee's interest in this Lease or in the Premises
without Lessor's prior written consent which Lessor shall not unreasonably
withhold. Any attempted assignment, transfer, mortgage, encumbrance, or
subletting without such consent shall be void, and shall constitute a breach of
this Lease.

     13.2 NO RELEASE OF LESSEE. Regardless of Lessor's consent, no subletting or
assignment shall release Lessee of Lessee's obligation or alter the primary
liability of Lessee to pay the rent and to perform all other obligations to be
performed by Lessee hereunder. The acceptance of rent by Lessor from any other
person shall not be deemed to be a waiver by Lessor of any provision hereof.
Consent to one assignment or subletting shall not be deemed consent to any
subsequent assignment or subletting.

14. DEFAULTS; REMEDIES.

     14.1 DEFAULTS. The occurrence of any one or more of the following events
shall constitute a material default and breach of this Lease by Lessee:

          (a) The vacating or abandonment of the Premises by Lessee.

          (b) The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and when due.

          (c) The failure by Lessee to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by Lessee
other than described in Paragraph (b) above, where such failure shall continue
for a period of thirty (30) days after written notice hereof from Lessor to
Lessee; provided, however, that if the nature of Lessee's default is such that
more than thirty (30) days are reasonably required for its cure, then Lessee
shall not be deemed to be in default if Lessee commenced such cure within said
30-day period and thereafter diligently prosecutes such cure to completion.

          (d) (i) The making by Lessee of any general assignment, or general
arrangement for the benefit of creditors: (ii) the filling by or against Lessee
of a petition to have Lessee adjudged a bankrupt or a petition for
reorganization or arrangement under any law relating to bankruptcy (unless, in
the case of a petition filed against Lessee, the same is dismissed within sixty
(60) days; (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where possession is not restored to Lessee within thirty
(30) days: or (iv) the attachment, execution, or other judicial seizure of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where such seizure is not discharged within thirty (30)
days.

     14.2 REMEDIES. In the event of any such material default or breach by
Lessee, Lessor may at any time thereafter, with or without notice or demand and
without limiting Lessor in the exercise of any right or remedy which Lessor may
have by reason of such default or breach;

          (a) Re-enter upon the Premises with or without process of law and take
possession of the same and of all trade fixtures, furnishings and equipment of
Lessee including the right to change door locks and suspend utilities and
services and expel or remove Lessee and all other parties occupying the
Premises, using such force as may reasonably be necessary to do so without being
liable to Lessee for any loss or damage occasioned thereby Such personal
property may be removed by Lessor from the Premises and stored for the account
of and at the expense and risk of Lessee; or Lessor may, at its option, and
after giving Lessee five (5) days' prior written notice thereof, sell said
personal property at public or private sale for such price and upon such terms
as Lessor may determine, applying the proceeds of such sale against the balance
owing by Lessee or Lessor under this Lease, including the expense of such
removal and sale.

          (b) Terminate this Lease, or from time to time, without terminating
this Lease, relet the Premises or any part thereof such terms and conditions
as Lessor in its sole discretion, shall determine with the right to make
alterations and repairs to said Premises: provided, however, that Lessor shall
in no way be responsible or liable for any failure to relet the Premises or any
part thereof or for any failure to collect any rent due upon any such reletting.
In the event Lessor relets the Premises from time to time, the rentals so
received shall be applied first to the payment of any obligation other than rent
due hereunder from Lessee to Lessor, than to the payment of the cost of such
reletting, including attorneys' fees and broker's commission, which Lessor may
have paid or incurred in connection with such repossession and reletting, then
to the payment of the costs of any alteration or repair to the Premises to make
them tenantable or acceptable to a new tenant, then to the payment of rent due
and unpaid hereunder and the residue, if any, shall be held by the Lessor and
applied in payment of future rent as the same may become due and payable
hereunder, Whether or not the premises are relet. Lessee shall pay Lessor all
amounts required to be paid by Lessee up to the date of Lessor's re-entry and
thereafter Lessee shall pay Lessor until the end of the term the amount of all
rentals and other charges required to be paid by Lessee hereunder, less the
proceeds of such reletting during the term hereof. if any, after payment of the
foregoing expenses.

          (c) Pursue any other remedy now or hereafter available to Lessor under
the laws and decisions of the State of Arizona. Lessor shall not by such
re-entry or any other act be deemed to have terminated this Lease or the
liability of Lessee for the total rent reserved hereunder unless Lessor shall
give to Lessee written notice of Lessor's election to terminate this Lease. In
the event that Lessor shall terminate this Lease as provided herein, Lessor
shall thereupon be entitled to recover from Lessee the worth, at the time of
such termination, or the excess, if any, of the rent and other charges required
to be paid by Lessee hereunder for the balance of the term (If this Lease had
not been so terminated) over the then reasonable rental value of the Premises
for such period.

15. LATE CHARGES. Tenant hereby acknowledges that late payment by Tenant to
Landlord of rent and other sums due hereunder will cause Landlord to incur costs
not contemplated, by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed on Landlord by the
terms of any mortgage or trust deed covering the Premises. Accordingly, if any
installment of rent or any other sum due from Tenant shall not be received by
Landlord or Landlord's designee within five (5) days after such amount shall be
due, Tenant shall pay to Landlord a late charge equal to ten percent (10%) of
such overdue amount. The parties hereby agree that such late charge represents a
fair and reasonable estimate of the costs Landlord will incur by reason of late
payment by Tenant. Acceptance of such late charge by Landlord shall in no event
constitute a waiver of Tenant's default with respect to such overdue amount not
prevent Landlord from exercising any of the other rights and remedies granted
hereunder.

16. CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain, or sold under the threat of the exercise of said power,
(all of which are herein called "condemnation." this Lease shall terminate as to
the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than 35% of the floor area of the
improvements on the premises or more than 35% of the land area of the Premises
which is not occupied by any improvements, is taken by condemnation. Lessee may,
at Lessee's option, to be exercised in writing only within ten (10) days after
Lessor shall have given Lessee written notice of such taking (or in the absence
of such notice, within ten (10) days after the condemning authority shall have
taken possession) terminate this Lease as of the date the condemning authority
takes such possession. If Lessee does not terminate this Lease in accordance
with the foregoing, this Lease shall remain in fullforce and effect as to the
portion of the Premises remaining, except that the rent shall be reduced in the
proportion that the floor area taken bears to the total floor area of the
building situated on the Premises. Any award for the taking of all or any part
of the Premises under the power of eminent domain or any payment made under
threat of the exercise of such power shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold or for the taking of the fee, or as severance damages provided,
however that Lessee shall be entitled to any award for loss of damage to
Lessee's trade fixtures and removable personal property. In the event that this
Lease is not terminated by reason of such condemnation, Lessor shall, to the
extent of severance damages received by Lessor in connection with such
condemnation, repair any damage to Premises caused by such condemnation except
to the extent that Lessee has been reimbursed therefor by the condemning
authority. Lessee shall pay any amount in excess of such severance damages
required to complete such repair.

<PAGE>

award for loss or damage to Lessee's trade fixtures and removable personal
property in the event that this Lease is not terminated by reason of such
condemnation Lessor shall to the extent of severance damages received by Lessor
in connection with such condemnation, repair any damage to Premises caused by
such condemnation except to the extent that Lessee has been reimbursed therefor
by the condemning authority Lessee shall pay any amount in excess of such
severance damages required to complete such repair.

17. SURRENDER. Lessee shall on the last day of the term hereof, or upon any
earlier termination of this Lease, surrender and deliver up the Premises to
Lessor without delay and in good order, condition and repair broom-clean,
ordinary wear and tear excepted. All furniture, furnishings, fixture and
equipment, installed or used in the operation of the Premises, shall throughout
the term of this Lease, be the property of Lessee. At the expiration or earlier
termination of this Lease, provided Lessee is not in default hereunder, Lessee
may remove its unattached, movable equipment and trade fixtures. Upon the
expiration or termination of this Lease, if so requested by Lessor, Lessee shall
within ten (10) days following such expiration or termination, remove all such
fixtures and equipment installed on the Premises by Lessee, whether or not such
fixtures and equipment are attached to the building or other improvements
located on the Premises, unless such removal would cause damage to the Premises
which would require substantial repair Lessee shall fully repair all damage of
any kind or character to the Premises occasioned by the removal of any fixtures
or equipment which repair shall include the patching and filing of holes and
repair of structural damage. Any fixtures, furnishings, equipment or other
personal property of Lessee which shall remain on the Premises or any part
thereof for ten (10) days following the expiration or termination of this Lease,
at the option of Lessor, shall be deemed to have been abandoned by Lessee and
either may be retained by Lessor as its property or disposed of, without
accountability, in such manner as Lessor may determine.

18. GENERAL PROVISIONS

     18.1 ESTOPPEL CERTIFICATE

          (a) Lessee shall at any time upon not less than ten (10) days prior
written notice from Lessor execute, acknowledge, and deliver to Lessor a
statement in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and the
date to which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to Lessee's knowledge, and uncured defaults on
the part of Lessor hereunder, or specifying such defaults if any are claimed.
Any such statement may be conclusively relied upon by any prospective purchaser
or encumbrancer of the Premises.

          (b) Lessee's failure to deliver such statement within such time shall
be conclusive upon Lessee (i) that this Lease is in full force and effect,
without modification except as may be represented by Lessor, (ii) that there are
no uncured defaults in Lessor's performance, and (iii) that not more than one
month's rent has been paid in advance.

          (c) If Lessor desires to finance or refinance the Premises, or any
part thereof, Lessee hereby agrees to deliver to any lender designated by Lessor
such financial statements of Lessee as may be reasonably required by such
lender. Such statements shall include the past three years' financial statements
of Lessee. All such financial statements shall be received by Lessor in
confidence and shall be used only for the purposes herein set forth

     18.2 LESSOR'S LIABILITY. The term Lessor" as used herein shall mean only
the owner or owners at the time in question of the fee title or a lessee's
interest in a ground lease of the Premises, in the event of any transfer of such
title or interest, Lessor herein named (and in case of any subsequent transfers
the then grantor) shall be relieved from and after the date of such transfer of
all liability as respects Lessor's obligations thereafter to be performed,
provided that any funds in the hands of Lessor or the then grantor at the time
of such transfer, in which Lessee has an interest, shall be delivered to the
grantee. The obligations contained in this Lease to be performed by Lessor
shall, subject as aforesaid, be binding on Lessor's successors and assigns only
during their respective periods of ownership.

     18.3 SEVERABILITY. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction, shall in no way effect the
validity of any other provision hereof.

     18.4 INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein provided,
any amount due to Lessor not paid when due shall bear interest at 16% per annum
from the date due Payment of such interest shall not excuse or cure any default
by Lessee under this Lease.

     18.5 TIME OF ESSENCE. Time is of the essence.

     18.6 CAPTIONS. Article and paragraph caption are not a part hereof.

     18.7 INCORPORATION OF PRIOR AGREEMENT; AMENDMENTS. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No prior
agreement or understanding pertaining to any such matter shall be effective.
This Lease may be modified in writing only, signed by the parties in interest at
the time of the modification.

     18.8 NOTICES. Any notice required or permitted to be given hereunder shall
be in writing and may be given by personal delivery or by certified mail, and if
given personally or by mail shall be deemed sufficiently given if addressed to
Lessee or to Lessor at the address noted below the signature of the respective
parties, as the case may be Either party may by notice to the other specify a
different address for notice purposes expect that upon Lessee's taking
possession of the Premises, the Premises shall constitute Lessee's address for
notice purposes. A copy of all notices required or permitted to be given to
Lessor hereunder shall be concurrently transmitted to such party or parties at
such addresses as Lessor may, from time to time hereafter designate by notice to
Lessee.

     18.9 WAIVERS. No waiver by Lessor of any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision Lessor's consent to or approval of any act shall
not be deemed to render unnecessary the obtaining of Lessor's consent to or
approval of any subsequent act by Lessee. The acceptance of rent hereunder by
Lessor shall not be a waiver of any preceding breach by Lessee of any provision
hereof, other than the failure of Lessee to pay the particular rent so accepted,
regardless of Lessor's knowledge of such preceding breach at time of acceptance
of such rent.

     18.10 RECORDING. Lessee shall not record this Lease without Lessor's prior
written consent, and such recordation shall, at the option of Lessor constitute
a non-curable default of Lessee hereunder. Either party shall upon request of
the other, execute, acknowledge and deliver to the other a "short form"
memorandum of this Lease for recording purposes.

     18.11 HOLDING OVER. If Lessee remains in possession of the Premises or any
part thereof after the expiration of the term hereof without the express written
consent of Lessor, such occupancy shall be a tenancy from month to month at a
rental in the amount of two times the last monthly rental plus all other charges
payable hereunder and upon all the term hereof applicable to a month-to-month
tenancy.

     18.12 CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall wherever possible, be cumulative with all other remedies at
law or in equity.

     18.13 COVENANTS AND CONDITIONS. Each provision of this Lease performable by
Lessee shall be deemed both a covenant and a condition.

     18.14 BINDING EFFECT; CHOICE OF LAW. Subject to any provisions hereof
restricting assignment or subletting by Lessee and subject to the provisions of
Paragraph 18.2, this Lease shall bind the parties, their personal
representatives, successors and assigns. This Lease shall be governed by the
laws of the State of Arizona.

<PAGE>

     18.15 SUBORDINATION.

          (a) This Lease, at Lessor's option shall be subordinate to any ground
lease, mortgage, deed of trust, or any other hypothecation for security now or
hereafter placed upon the property of which the Premises are a part and to any
and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements, and extensions thereof if any
mortgages, trustee, or ground lessor shall elect to have this Lease prior to the
lien of its mortgage, deed of trust, or ground lease, and shall give written
notice thereof to Lessee, this Lease shall be deemed prior to such mortgage,
deed of trust, or ground lease, whether this Lease is dated prior or subsequent
to the date of said mortgage, deed of trust, or ground lease or the date of
recording thereof.

          (b) Lessee agrees to execute any documents required to effectuate such
subordination or to make this Lease prior to the lien of any mortgage, deed of
trust, or ground lease, as the case may be, and failing to do so within ten (10)
days after written demand, does hereby make, constitute, and irrevocably appoint
Lessor as Lessee's attorney in fact and in Lessee's name, place and stead, to
do so.

     18.16 ATTORNEY'S FEES. If either party brings an action to enforce the
terms hereof or declare rights hereunder, the prevailing party in any such
action, on trial or appeal, shall be entitled to his reasonable attorney's fees
to be paid by the losing party as fixed by the court.

     18.17 LESSOR'S ACCESS. Lessor and Lessor's agents shall have the right to
enter the Premises at reasonable times between 8 a.m. and 5 p.m. weekdays for
the purpose of inspecting the same, showing the same to prospective purchasers
or lenders, and making such alterations, repairs, improvements, or additions to
the Premises or to the building of which they are a part as Lessor may deem
necessary or desirable. Lessor may at any time place on or about the Premises
any ordinary For Sale and For Lease signs.

     18.18 SIGNS AND AUCTIONS. Lessee shall not, without the prior written
consent of Lessor (a) paint or place any signs on the Premises or anywhere on or
in the Building or (b) place any window coverings, serials or flagpoles, or the
like, on the Premises or anywhere on or in the building visible from outside the
Premises. Lessor reserves the right to disapprove of signs, window coverings on
wholly aesthetic grounds and establish a sign criteria for the Premises. Lessee
shall pay the expenses involved in the erection of any sign and obtaining the
permit therefor and the Lessee shall remove said sign at Lessor's option and any
window coverings, serials or flagpoles or the like on the termination of this
Lease. Lessee shall not conduct any auction or going-out-of-business sale on the
Premises without the Lessor's prior written consent.

     18.19 MERGER. The voluntary or other surrender of this Lease by Lessee or a
mutual cancellation thereof, shall not work a merger, and shall at the option of
Lessor terminate all or any existing subtenancies or may, at the option of
Lessor, operate as an assignment to Lessor of any or all such subtenancies.

     18.20 CORPORATE AUTHORITY. If Lessee is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of said
corporation, in accordance with a duly adopted resolution of the Board of
Directors of said corporation or in accordance with the Bylaws of said
corporation, and that this Lease is binding upon said corporation in accordance
with its terms. If Lessee is a corporation Lessee shall within thirty (30) days
after execution of this Lease, deliver to Lessor a certified copy of a
resolution of the Board of Directors of said corporation authorizing or
ratifying the execution of this Lease.

19. PARKING AND COMMON AREAS. The Lessee, its agents, employees, and invitees
shall be entitled to park in common with other tenants of Lessor providing that
it agrees not to over-burden the parking facilities and agrees to cooperate with
the Lessor and other tenants in the use of the parking facilities. The Lessor
specifically reserves the right in its absolute discretion to determine whether
parking facilities are becoming overburdened and in such event to allocate the
parking spaces among the Lessee and other tenants their agents, employees, and
business invitees using the parking facilities. All loading operations for
receipts or shipment of goods, wares, and merchandise by the Lessee shall be
done in the rear of the Leased Premises or in such area therein which is
specifically designated in writing by the Lessor.

20. SAFETY. Lessee will maintain on Leased Premises at all times during the
terms hereof adequate number, size and type of fire extinguishers as is
appropriate to Lessees business Lessee will at all times adhere to good safety
practices or as may be required by safety inspectors. No goods, merchandise or
materials shall be kept, stored or sold by Tenant on or about the premises which
are in any way hazardous, and Tenant shall not suffer or permit any acts of
omission or commission to be done on or about the premises which will increase
the existing rate of fire insurance. If the said insurance rate is increased by
such an act, then the increased cost of such insurance on the building of which
the premises are a part shall be paid by Tenant to Landlord with the next
succeeding installment of rental, Tenant, at its sole expense, shall comply with
any and all requirements of any insurance organization or company necessary for
the maintenance of reasonable fire and public liability insurance covering the
premises or the building of which the premises are a part.

21. MULTIPLE TENANT BUILDING. In the event that the Premises are part of a
larger building or group of buildings then Lessee agrees that it will abide by,
keep and observe all reasonable rules and regulations which Lessor may make from
time to time for the management, safety, care and cleanliness of the building
and grounds, the parking of vehicles and the preservation of good order therein
as well as for the convenience of other occupants and tenants of the building.
Lessee agrees to pay, as additional rent during the Lease term its prorata share
of Lessor's cost of operating, maintaining and repairing such portion of the
Premises or such portion of the property of which the Premises are a part which
are common areas or used or shared by Lessee and other occupants thereof,
including but not limited to all parking areas, roadways, walkways, truckways,
stairways, roofing areas, loading docks, delivery areas, landscaped areas,
maintenance buildings, business center sign, common toilets and washroom
facilities and all other facilities provided for the convenience and use of
Lessee, its agents, employees and customers. Such costs shall include all costs
for utilities, cleaning, garbage and refuse disposal, sweeping landscaping,
policing wages, supplies and small tools. The proportionate share of the common
area cost which Lessee is obligated to pay shall be based upon the ratio that
the floor area in the Premises bears to the total floor area in the building or
group of buildings of which the Premises are a part. The amount which Lessee is
required to pay shall be payable within ten (10) days after receipt by Lessee of
a statement for the same. The violations of any such rules and regulations, or
the failure to pay such prorata share of costs, shall be deemed a material
breach of this Lease by Lessee.

22. Additional items as set forth below are made a part of this lease.

Rent is due on the first day of each month. Checks are payable to:
                                TUCSON TECH PARK

Send checks to: Tucson Tech Park
                1700 East 18th Street #101
                Tucson, AZ 85719

                                       OR

drop off at the office. There is a mail slot for your convenience, after hours.

NO OUTSIDE STORAGE IS ALLOWED. Items left out longer than 24 hours will be
considered abandoned and handled accordingly by Management. Any costs involved
in such removal shall be charged to Lessee.

SEE ADDENDUM which is attached to and made a part of this Lease.

The parties hereto have executed this Lease on the dates specified immediately
adjacent to their respective signatures.

If this Lease has been ________ in it has been prepared for submission to your
attorney for his approval. No representation or recommendation is made by the
Lessor or its agents or employees as to the legal sufficiency, legal effect, or
tax consequences of this Lease or the transaction relating thereto.

DATE: /s/ Illegible  2-26-98
      -------------------------------   X --------------------------------------
                                          Print Name
HOME ADDRESS:
              -----------------------   X --------------------------------------
                                          Signature
EMERGENCY PHONE: X 770-1259-122           --------------------------------------
                                                       "LESSEE"

                                          --------------------------------------
                                          LESSEE'S EIN #

                                          /s/ Betty June Slawson, Agent
                                          --------------------------------------

DATE: 2-25-98                             --------------------------------------

AGENT: Betty June Slawson                 --------------------------------------
                                                       "LESSOR"

<PAGE>

                                  (FLOOR PLAN)

<PAGE>

                                  (FLOOR PLAN)

<PAGE>

                           LEASE EXTENSION / RENEWAL
                                    ADDENDUM

This form, when signed by Lessor and Lessee, will serve as an addendum to those
certain leases dated December 30, 1997, by and between: "Lessor", TUCSON TECH
PARK, and "Lessee", IMARX THERAPEUTIC, INC., for space located at 1700 East 18th
Street, Suites 100, 102 and 103, Tucson, Arizona, 85719.

ATTN:      Ms. Jennifer Marshall
           IMARX THERAPEUTIC, INC.

ADDRESS:   1635 East 18th Street
           Tucson, AZ 85719

This Lease shall be extended/renewed for an additional term of twelve (12)
months commencing January 1, 2006 and ending December 31, 2006. The base rent
shall be two thousand, three hundred, sixty and no/00 dollars, ($2360.00) per
month plus applicable rental tax, presently at 2%.

<TABLE>
<S>              <C>
New Base Rent:   $2360.00
Tax @ 2%            47.20
                 --------
Monthly Total    $2407.20
</TABLE>

All other terms and conditions of the Lease shall remain the same.
Please note, this increase is to be effective January 1, 2006.

MAKE CHECKS PAYABLE TO:   TUCSON TECH PARK
                          (PLEASE WRITE YOUR SUITE # AND ADDRESS ON YOUR CHECK)

MAIL PAYMENT TO:          TUCSON TECH PARK
                          C/O ASSET WEST MANAGEMENT, LTD.
                          1700 East 18th Street, Suite 101
                          TUCSON, AZ 85719
OFFICE: (520)624-1665

                          BETTY JUNE'S PAGER: (800) 251-7893
                          ELDA'S PAGER: 446-2887

OR          BRING PAYMENT TO THE LEASING OFFICE LOCATED AT:
            (There is a mail slot in the door for your convenience)

            1700 EAST 18TH STREET #101

REMINDER:   Rent is due and payable on the 1st of each month and subject to late
            penalties on the 2nd day.

Lessee's EMERGENCY PHONE NUMBER (Where Lessee can be reached in the event of an
EMERGENCY):

(520)   770-1259   OR: (___) ______________________

IMARX THERAPEUTICS, INC.                  12-9-05
Lessee's (Please Print Full Name Above)   DATE

/s/ Illegible
-------------------------------------     12-9-05
Lessee's Signature                        DATE

1635 EAST 18TH STREET TUCSON, AZ 85719
Lessee's address (For Notices)exv10w11

 

Exhibit 10.11

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

          This
Amended and Restated Employment Agreement (this “Agreement”) is made and entered
into as of the 5th day of October, 2005 by and between SAVE THE WORLD AIR, INC., a Nevada
corporation (“STWA”) and Eugene E. Eichler (the “Executive”).

RECITALS

     A. STWA and the Executive are parties to that certain Employment Agreement dated as of the
1st day of December, 2003 (the “Original Agreement”), which sets forth the terms and
conditions upon which STWA employs the Executive.

     B. STWA and the Executive have previously entered into an Amendment to Employment Agreement
dated as of March 2, 2004 (the “First Amendment”), pursuant to which STWA appointed the Executive
to the position of President of STWA and increased the annual base compensation of the Executive
from $192,000 to $240,000 for the period commencing March 2, 2004.

     C. STWA and the Executive desire to further amend the Original Agreement, as previously
amended by the First Amendment, in certain respects, including to promote the Executive to the
positions of Chief Executive Officer and Chief Financial Officer of STWA effective on and as of
October 5, 2005 and to increase the annual base compensation payable to the Executive from $240,000
to $300,000 effective on and as of October 5, 2005.

     D. In order to memorialize the amendments to the Original Agreement described above, STWA and
the Executive have agreed to amend and restate the Original Agreement in its entirety.

AGREEMENT

          NOW, THEREFORE, in consideration of the premises and the respective covenants and agreements
of the parties contained herein, and intending to be legally bound hereby, the parties hereto agree
as follows:

     1. DEFINITIONS AND SPECIAL PROVISIONS. Each capitalized word and
term used herein shall have the meaning ascribed to it in the glossary appended hereto. Such
glossary is incorporated herein by reference and made a part hereof.

     2. EMPLOYMENT. STWA hereby agrees to employ the Executive, and the Executive hereby
agrees to accept employment with STWA, on the terms and conditions set forth herein.

 

 

     3. TERM OF AGREEMENT. The Executive’s employment under this Agreement shall commence on
the date hereof and, except as otherwise provided herein, shall continue until December 31, 2007;
provided, however, that commencing on December 31, 2007 and each anniversary thereafter, the term
of this Agreement shall automatically be extended for one additional year beyond the term otherwise
established unless, prior to such date, STWA or the Executive shall have given a Notice of
Non-Extension.

     4. POSITION AND DUTIES. The Executive shall serve as Chief Executive Officer and Chief
Financial Officer of STWA and he shall have such responsibilities, duties and authority as may,
from time to time, be generally associated with such positions and as may be specifically directed
by the Board of Directors of STWA from time to time during the term of this Agreement, including
any extensions thereof. In addition, the Executive shall serve in such capacity, with respect to
each Subsidiary or affiliated company, as the Board of Directors of each such Subsidiary or
affiliated company shall designate from time to time. During the term of this Agreement, he shall
devote substantially all of his working time and efforts to the business and affairs of STWA, the
Subsidiaries and affiliated companies; provided, however, that nothing herein shall be construed
as precluding him from devoting a reasonable amount of time to civic, charitable, trade association
and similar activities that do not represent conflicts and are not otherwise in any way detrimental
to STWA.

     5. COMPENSATION AND RELATED MATTERS.

(a) BASE COMPENSATION. During the period of the Executive’s employment hereunder, STWA shall pay to
him annual base compensation for the period from December 1, 2003 to December 31, 2004 of
$192,000.00. STWA shall pay to the Executive the annual base compensation of $240,000 for the
period commencing March 2, 2004 to October 5, 2005. For the period commencing October 5, 2005 and
continuing thereafter during the term of this Agreement, STWA shall pay to the Executive annual
base compensation of $300,000. The Board(s) of Directors of STWA shall periodically review the
Executive’s employment performance, in accordance with policies generally in effect from time to
time, for possible merit or cost-of-living increases in such base compensation. Except for a
reduction, should such reduction occur, which is proportionate to a company-wide reduction in
executive pay, the annual base compensation paid to the Executive in any period shall not be less
than the annual base compensation paid to him in any prior period. The frequency and manner of
payment of such base compensation shall be in accordance with STWA’s executive payroll practices
from time to time in effect. Nothing herein shall be construed as precluding the Executive from
entering into any salary reduction or deferral plan or arrangement during the term of this
Agreement; provided, however, that his base compensation shall be determined without regard to any
such salary reduction or deferral for purposes of calculating the amount of any compensation and
benefits to which he or his surviving spouse may be entitled under Paragraph 6, 7, 10, or 11 hereof
following his termination of employment. The amounts set forth in the first sentence of this
subparagraph 5(a) shall be pro rated to the extent such period is less than a year.

(b) INCENTIVE COMPENSATION. During the period of the Executive’s employment hereunder, he
shall be entitled to participate in all incentive plans, stock option plans, and similar

2

 

arrangements as may be in effect and maintained by STWA for executive officers on a basis and at
award levels consistent and commensurate with his position and duties hereunder.

(c) EMPLOYEE BENEFIT PLANS AND OTHER PLANS OR ARRANGEMENTS. The Executive shall be
entitled to participate in all Employee Benefit Plans of STWA that either, are in effect at present
or that may be adopted in the future. In addition, he shall be entitled to participate in and enjoy
any other plans and arrangements which provide for sick leave, vacation, sabbatical, or personal
days, club memberships and dues, education payment or reimbursement, business-related seminars, and
similar fringe benefits provided to or for the executive officers of STWA from time to time.
Notwithstanding the foregoing, Executive shall be entitled to at least four (4) weeks vacation per
calendar year during each year of employment. Such vacation shall be prorated during the year 2003
based on the date of this Agreement.

(d) EXPENSES. During the period of the Executive’s employment hereunder, he shall be entitled
to receive prompt reimbursement for all reasonable and customary expenses, including transportation
expenses, incurred by him in performing services hereunder in accordance with the general policies
and procedures established by STWA.

(e) AUTOMOBILE. STWA shall provide for an unaccountable monthly automobile allowance of
$900.00. The company may, at its discretion, provide an automobile, mutually acceptable, to the
Executive for his exclusive use.

(f) MEDICAL INSURANCE. Notwithstanding the provisions of Paragraph 5(c) hereof, the Executive
shall not be entitled to participate in any group health insurance plan which may be offered to
employees of STWA for any period prior to July 1, 2006; provided however, that
commencing December 1, 2003 continuing to and including June 30, 2006, STWA will reimburse Masry &
Vititoe LLC for the insurance premiums incurred in connection with maintaining health insurance for
the Executive and his spouse, including the share of such premiums otherwise required to be paid
by the Executive, if any, through participation in the health insurance plan offered to employees
of Masry & Vititoe LLC, which insurance premium was, at June 1, 2006, $2,841 per month

     6. TERMINATION BY REASON OF DISABILITY.

(a) IN GENERAL. In the event the Executive becomes unable to perform his duties on a full-time
basis by reason of the occurrence of his Disability and, within 30 days after a Notice of
Termination is given, he shall not have returned to the full-time performance of such duties, his
employment may be terminated by STWA.

(b) COMPENSATION AND BENEFITS. In the event of the termination of the Executive’s employment
pursuant to Subparagraph 6(a), the term of this Agreement shall continue for one year after the
Date of Termination, and STWA shall pay or provide the compensation and benefits set forth below:

          (1) The Executive shall be paid an amount per annum equal to the greater of (i) his
highest annual base compensation (including the car allowance provided for in

3

 

subparagraph 5(e)) received during one of the two calendar years immediately preceding the calendar
year in which the Date of Termination occurs, or (ii) his base compensation (including the car
allowance provided for in subparagraph 5(e)) in effect immediately prior to the Date of Termination
(or prior to any reduction which entitled him to terminate his employment for Good Reason), over a
period of one year beginning with such Date of Termination. The frequency and manner of payment of
such amounts shall be in accordance with STWA’s executive payroll
practices from time to time in effect.

          (2) The Executive shall be paid an amount equal to the higher of the aggregate bonuses
paid to him with respect to one of the two years immediately preceding the year in which the Date
of Termination occurs. Such amount shall be paid to him in cash on the first anniversary date of
the Date of Termination.

          (3) The Executive shall be paid an amount equal to the highest annual contribution made
on his behalf (other than his own salary reduction contributions) to each tax-qualified and
non-qualified Defined Contribution Plan of STWA with respect to the year in
which the Date of Termination occurs or one of the two years immediately preceding such year. The
amount separately determined for each such plan shall be aggregated and shall be paid to him in
cash on the first anniversary date of the Date of Termination.

          (4) The Executive shall accrue benefits equal to the excess of (i) the aggregate
retirement benefits he would have received under the terms of each tax-qualified and non-qualified
Defined Benefit Plan of STWA as in effect immediately prior to the Date of Termination had he (A)
continued to be employed for one more year, and (B) received (on a pro rated basis, as appropriate)
the greater of (I) the highest compensation taken into account under each such plan with respect to
one of the two years immediately preceding the year in which the Date of Termination occurs, or
(II) his annualized base compensation in effect immediately prior to the Date of Termination (or
prior to any reduction which entitled him to terminate his employment for Good Reason), over (ii)
the retirement benefits he actually receives under such plans. The frequency, manner and extent of
payment of such benefits shall be consistent with the terms of the plans to which they relate and
any elections made thereunder.

          (5) The Executive and his eligible dependents shall be entitled to continue to
participate at the same aggregate benefit levels, for one year and at no out-of-pocket or tax cost
to him, in the Welfare Benefit Plans in which he was a participant immediately prior to the Date of
Termination, to the extent permitted under the terms of such plans and applicable law. To the
extent STWA is unable to provide for continued participation in a Welfare Benefit Plan, it shall
provide an equivalent benefit directly at no out-of-pocket or tax cost to him. For purposes of the
preceding two sentences, STWA shall be deemed to have provided a benefit at no tax cost to him if
it pays an additional amount to him or on his behalf, with respect to those benefits which would
otherwise be nontaxable to him, calculated in a manner consistent with the provisions of Paragraph
12.

(c) ADJUSTMENT TO CERTAIN SUBPARAGRAPH 6(b) COMPENSATION AND BENEFITS. Notwithstanding the
provisions of Subparagraph 6(b)(5), STWA’s obligation to pay or fund any disability insurance
premiums on behalf of the Executive shall be suspended while

4

 

his Disability continues, provided the cessation of payment or funding does not result in the
termination of disability benefits. Any amounts otherwise due under Subparagraph (b) shall be
reduced (but not below zero) by the dollar amount of disability benefits received by him pursuant
to plans or policies funded, directly at its cost, by STWA.

(d) EARLIER CESSATION OF CERTAIN WELFARE BENEFITS. Notwithstanding the provisions of
Subparagraph (b)(5), STWA shall not be required to provide, at its cost, the welfare benefits
covered therein after the later of (i) the attainment by the Executive and his spouse (if any) of
age 65, or (ii) the date specified in the relevant plan document for benefit termination (assuming
that he was employed until age 65 or the normal retirement date, if any, specified in such
document).

(e) DEATH DURING REMAINING TERM OF AGREEMENT.

          (1) In the event the Executive dies during the remaining term of this Agreement following
his termination for Disability and he is survived by a spouse, the compensation and benefits
remaining to be paid and provided under Subparagraph 6(b) shall be unaffected by his death and
shall be paid and provided to her or on her behalf; provided, however, that the extent of her
rights to the accrued benefits described in Subparagraph 6(b)(4) shall be determined by reference
to the relevant plan provisions and any elections made under such plans; and provided further, that
STWA shall not be required to provide continued benefits with respect to her deceased husband; and
provided further, that in no event shall STWA be required to provide, at its cost, the other
welfare benefits described in Subparagraph 6(b)(5) to such spouse and her eligible dependents after
the earlier of (i) her death, or (ii) the later of (A) her attainment of
age 65, or (B) the date specified in the relevant plan document for benefit termination (assuming
that the Executive was employed until age 65 or the normal retirement date, if any, specified in
such document).

          (2) In the event the Executive dies during the remaining term of this Agreement following
his termination for Disability and he is not survived by a spouse, (i) STWA shall thereafter make
the remaining payments described in Subparagraphs 6(b)(1) through 6(b)(3) directly to his estate,
(ii) the extent of the rights of any person to the accrued benefits described in Subparagraph
6(b)(4) shall be determined by reference to the relevant plan provisions and any
elections made under such plans, and (iii) STWA’s obligation to provide continued benefits under
Subparagraph 6(b)(5) shall terminate.

(f) COMPENSATION AND BENEFITS UPON EXPIRATION OF REMAINING TERM OF AGREEMENT. Upon the
expiration of the remaining term of this Agreement following the Executive’s termination for
Disability, and provided his Disability then continues, he shall be entitled to receive the
compensation and benefits provided under the terms of any long-term disability plan of STWA in
effect on the Date of Termination or, if greater, at the expiration of such remaining term. If such
plan exists, such compensation and benefits shall continue until the earlier of (i) his death, or
(ii) the later of (A) his attainment of age 65, or (B) the date specified in the plan document for
benefit termination. To the extent STWA is unable to provide such compensation and benefits under
its long-term disability plan, if any, it shall provide equivalent compensation and benefits
directly at no out-of-pocket or tax cost to him. For purposes of the preceding sentence, STWA shall
be deemed to have provided compensation and benefits at no

5

 

tax cost to him if it pays an additional amount to him or on his behalf, with respect to the
compensation and benefits which would otherwise be nontaxable to him, calculated in a manner
consistent with the provisions of Paragraph 12.

     7. TERMINATION BY REASON OF DEATH.

(a) COMPENSATION AND BENEFITS TO SURVIVING SPOUSE. In the event the Executive dies while he is
employed under this Agreement and is survived by a spouse, STWA shall pay or provide the
compensation and benefits set forth below:

          (1) The surviving spouse shall be paid an amount equal to the greater of (i) the
Executive’s highest base compensation received during one of the two calendar years immediately
preceding the calendar year in which the Date of Termination occurs, or (ii) his base compensation
in effect immediately prior to the Date of Termination (or prior to any reduction
which entitled him to terminate his employment for Good Reason) for a period of one year,
beginning with such Date of Termination. The frequency and manner of payment of such amounts shall
be in accordance with STWA’s executive payroll practices from time to time
in effect.

          (2) The surviving spouse shall be paid an amount equal to the highest payment made to
Executive under each incentive bonus plan of STWA with respect to one of the two years immediately
preceding the year in which the Date of Termination occurs. Such amount shall be paid in cash to
her within 30 days after the Date of Termination.

          (3) The surviving spouse shall be paid an amount equal to the sum of the highest annual
contribution made on the Executive’s behalf (other than his own salary reduction contributions) to
each tax-qualified and non-qualified Defined Contribution Plan of STWA with respect to the year in
which the Date of Termination occurs or one of the two years immediately preceding such year. Such
amount shall be paid in cash to her within 30 days after the Date of
Termination or within 30 days after such amount can first be determined, whichever is later.

          (4) Subject to the following sentence, the surviving spouse shall be paid benefits
determined by reference to the excess of (i) the aggregate retirement benefits the Executive would
have accrued under the terms of each tax-qualified and non-qualified Defined Benefit Plan as in
effect immediately prior to the Date of Termination, had he (A) continued to be employed for a
period of one year following the Date of Termination, and (B) received
(on a pro rated basis, as appropriate) the greater of (I) the highest compensation taken into
account under each such plan with respect to one of the two years immediately preceding the year in
which the Date of Termination occurs, or (II) his annualized base compensation in effect
immediately prior to the Date of Termination (or prior to any reduction which entitled him to
terminate his employment for Good Reason), over (ii) the retirement benefits actually determined
under such plans. The frequency, manner, and extent of payment of such benefits shall be consistent
with the terms of the plans to which they relate and any elections
made thereunder.

6

 

          (5) The surviving spouse and her eligible dependents shall be entitled to continue to
participate at the same aggregate benefit levels, for a period of one year following the Date of
Termination and at no out-of-pocket or tax cost to her, in the Welfare Benefit Plans in which the
Executive was a participant immediately prior to the Date of Termination, to the extent permitted
under the terms of such plans and applicable law; provided however, that STWA shall not be required
to provide continued benefits with respect to her deceased husband; and provided further, that STWA
shall not thereafter be required to provide, at its cost, the other welfare benefits covered by
such plans to such spouse and her eligible dependents after the earlier of (i) her death, or (ii)
the later of (A) her attainment of age 65, or (B) the date specified in the relevant plan document
for benefit termination (assuming the Executive was employed until age 65 or the normal retirement
date, if any, specified in such document). To the extent STWA is unable to provide for continued
participation in a Welfare Benefit Plan as required, it shall provide an equivalent benefit
directly at no out-of-pocket or tax cost to her. For purposes of the preceding two sentences, STWA
shall be deemed to have provided a benefit at no tax cost to her if it pays an additional amount to
her or on her behalf, with respect to those benefits which would otherwise be nontaxable to her,
calculated in a manner consistent with the provisions of Paragraph 12.

(b) COMPENSATION AND BENEFITS TO ESTATE, ETC. In the event the Executive dies while he is
employed under this Agreement and is not survived by a spouse, (i) STWA shall make the payments
described in Subparagraphs (a)(1) through (a)(3) directly to his estate, (ii) the extent of the
rights of any person to the accrued benefits described in Subparagraph (a)(4) shall be determined
by reference to the relevant plan provisions and any elections made under such plans, and (iii)
STWA’s obligation to provide benefits under Subparagraph (a)(5) shall terminate.

     8. TERMINATION BY STWA FOR CAUSE.

(a) IN GENERAL. In the event STWA intends to terminate the Executive’s employment for Cause,
it shall deliver a Notice of Termination to him which specifies a Date of Termination not less than
30 days following the dat of such notice, unless a shorter period of notice is required by the
principal regulator of STWA or any affiliate of STWA.

(b) COMPENSATION. Promptly after the Executive’s termination under Subparagraph 8(a), STWA
shall pay him, in one lump sum, his accrued but unpaid base compensation and vacation compensation
earned through the Date of Termination.

     9. TERMINATION BY THE EXECUTIVE WITHOUT GOOD REASON.

(a) IN GENERAL. In the event the Executive intends to terminate his employment without Good
Reason, he shall deliver a Notice of Termination to STWA which specifies a Date of Termination not
less than (i) 90 days following the date of such notice, if a Change in Control shall not have
occurred, or (ii) 30 days following the date of such notice, if a Change in Control shall have
occurred.

7

 

(b) COMPENSATION. Promptly after the Executive’s termination under Subparagraph 9(a), STWA
shall pay him, in one lump sum, his accrued but unpaid base compensation and vacation compensation
earned through the Date of Termination.

     10. TERMINATION BY STWA WITHOUT DISABILITY OR CAUSE.

(a) IN GENERAL. In the event STWA intends to terminate the Executive’s employment for any
reason other than Disability or Cause, it shall deliver a Notice of Termination to him which
specifies a Date of Termination not less than 90 days following the date of such notice.

(b) COMPENSATION AND BENEFITS DURING REMAINING TERM OF AGREEMENT. In the event of the
termination of the Executive’s employment under Subparagraph (a), STWA shall pay or provide the
compensation and benefits described in Paragraph 6(b), except that all such compensation and
benefits shall be for the remaining term of this Agreement determined in accordance with Section 3
hereof, unless a change in control has occurred prior to such termination of employment, in which
case all such compensation and benefits shall be for a term of three (3) years from the Date of
Termination and the term of this Agreement shall continue until all such compensation and benefits
are paid to Executive in full.

(c) ADJUSTMENT TO CERTAIN SUBPARAGRAPH (b) COMPENSATION AND BENEFITS. In the event the
Executive suffers a Disability during the remaining term of this Agreement following the Date of
Termination, STWA’s obligation to pay or fund any disability insurance premiums on his behalf shall
be suspended while his Disability continues, provided the cessation of payment or funding does not
result in the termination of disability benefits. Any amounts described in Paragraph 6(b) and
otherwise payable under Subparagraph (b) shall be reduced (but not below zero) by the dollar amount
of disability benefits received by him pursuant to plans or policies funded, directly at its cost,
by STWA.

(d) EARLIER CESSATION OF CERTAIN WELFARE BENEFITS. Notwithstanding the provisions of
Subparagraph (b), STWA shall not be required to provide, at its cost, the welfare benefits covered
by Paragraph 6(b)(5) after the later of (i) the attainment by the Executive and his spouse (if any)
of age 65, or (ii) the date specified in the relevant plan document for benefit termination
(assuming that he was employed until age 65 or the normal retirement date, if any, specified in
such document).

(e) DEATH DURING REMAINING TERM OF AGREEMENT.

          (1) In the event the Executive dies during the remaining term of this Agreement following
his termination without Disability or Cause by STWA and he is survived by a spouse, the
compensation and benefits required to be paid and provided under Subparagraph 10(b) shall be
unaffected by his death and shall be paid and provided to her or on her behalf; provided, however,
that the extent of her rights to the accrued benefits described in Paragraph 6(b)(4) shall be
determined by reference to the relevant plan provisions and any elections made under such plans;
and provided further, that STWA shall not be required to provide continued benefits with respect to
her deceased husband; and provided further, that in no event shall STWA be required to provide, at
its cost, the other welfare benefits described in Paragraph 6(b)(5) to

8

 

such spouse and her eligible dependents after the earlier of (i) her death, or (ii) the later of
(A) her attainment of age 65, or (B) the date specified in the relevant plan document for benefit
termination (assuming that the Executive was employed until age 65 or the normal retirement date,
if any, specified in such document).

          (2) In the event the Executive dies during the remaining term of this Agreement following
his termination without Disability or Cause and he is not survived by a spouse, (i) STWA shall
thereafter make the remaining payments described in Paragraphs 6(b)(1) through 6(b)(3) directly to
his estate, (ii) the extent of the rights of any person to the accrued benefits described in
Paragraph 6(b)(4) shall be determined by reference to the relevant plan provisions and any
elections made under such plans, and (iii) STWA’s obligation to provide the continued benefits
described in Paragraph 6(b)(5) shall terminate.

     11. TERMINATION BY THE EXECUTIVE FOR GOOD REASON.

(a) IN GENERAL. In the event the Executive intends to terminate his employment for Good
Reason, he shall deliver a Notice of Termination to STWA which specifies a Date of Termination not
less than 30 days following the date of such notice.

(b) COMPENSATION AND BENEFITS DURING REMAINING TERM OF AGREEMENT. In the event of the
termination of the Executive’s employment under Subparagraph 11(a), STWA shall pay or provide the
compensation and benefits described in Paragraph 6(b), except that all such compensation and
benefits shall be for a term of three (3) years from the Date of Termination and the term of this
Agreement shall continue until all such compensation and benefits are paid to Executive in full.

(c) ADJUSTMENT TO CERTAIN SUBPARAGRAPH (b) COMPENSATION AND BENEFITS. In the event the
Executive suffers a Disability during the remaining term of this Agreement following the Date of
Termination, STWA’s obligation to pay or fund any disability insurance premiums on his behalf shall
be suspended while his Disability continues, provided the cessation of payment or funding does not
result in the termination of disability benefits. Any amounts described in Paragraph 6(b) and
otherwise payable under Subparagraph 11(b) shall be reduced (but not below zero) by the dollar
amount of disability benefits received by him pursuant to plans or policies funded, directly at its
cost, by STWA.

(d) EARLIER CESSATION OF CERTAIN WELFARE BENEFITS. Notwithstanding the provisions of
Subparagraph 11(b), STWA shall not be required to provide, at its cost, the welfare benefits
covered by Paragraph 6(b)(5) after the later of (i) the attainment by the Executive and his spouse
(if any) of age 65, or (ii) the date specified in the relevant plan document for benefit
termination (assuming that he was employed until age 65 or the normal retirement date, if any,
specified in such document).

(e) DEATH DURING REMAINING TERM OF AGREEMENT.

          (1) In the event the Executive dies during the remaining term of this Agreement
following his termination for Good Reason and he is survived by a spouse, the

9

 

compensation and benefits required to be paid and provided under Subparagraph (b) shall be
unaffected by his death and shall be paid and provided to her or on her behalf; provided, however,
that the extent of her rights to the accrued benefits described in Paragraph 6(b)(4) shall be
determined by reference to the relevant plan provisions and any elections made under such plans;
and provided further, that STWA shall not be required to provide continued benefits with respect to
her deceased husband; and provided further, that in no event shall STWA be required to provide, at
its cost, the other welfare benefits described in Paragraph 6(b)(5) to such spouse and her eligible
dependents after the earlier of (i) her death, or (ii) the later of (A) her attainment of age 65,
or (B) the date specified in the relevant plan document for benefit termination (assuming that the
Executive was employed until age 65 or the normal retirement date, if any, specified in such
document).

          (2) In the event the Executive dies during the remaining term of this Agreement following
his termination for Good Reason and he is not survived by a spouse, (i) STWA shall thereafter make
the remaining payments described in Paragraphs 6(b)(1) through 6(b)(3) directly to his estate, (ii)
the extent of the rights of any person to the accrued benefits described in Paragraph 6(b)(4) shall
be determined by reference to the relevant plan provisions and any elections made under such plans,
and (iii) STWA’s obligation to provide the continued benefits described in Paragraph 6(b)(5) shall
terminate.

     12. PROVISIONS RELATING TO EXCISE TAXES.

(a) IN GENERAL. In the event the Executive becomes liable, for any taxable year, for the
payment of an Excise Tax (because of a change in control) with respect to the compensation and
benefits payable by STWA under this Agreement or otherwise, STWA shall make one or more Gross-Up
Payments to the Executive or on his behalf. The amount of any Gross-Up Payment shall be calculated
by a certified public accountant or other tax professional designated jointly by the Executive and
STWA. The provisions of this paragraph shall apply with respect to the Executive’s surviving spouse
or estate, where relevant.

(b) METHODOLOGY FOR CALCULATION OF GROSS-UP PAYMENT. For purposes of determining the amount of
any Gross-Up Payment, the Executive shall be deemed to pay income taxes at the highest federal,
state, and local marginal rates of tax for the calendar year in which the Gross-Up Payment is to be
made, net of the maximum reduction in federal income tax which could be obtained from the deduction
of state and local income taxes. In the event that the Excise Tax is subsequently determined to be
less than the amount taken into account at the time the Gross-Up Payment was made, the Executive
shall repay to STWA, at the time that the amount of such reduction in Excise Tax is finally
determined, the portion of the Gross-Up Payment attributable to the reduction (plus a portion of
the Gross-Up Payment attributable to the Excise Tax and the federal, state, and local income taxes
imposed on the portion of the Gross-Up Payment being repaid by the Executive to the extent such
repayment results in a reduction in Excise Tax or federal, state, or local income tax), plus
interest on the amount of such repayment. Such interest shall be calculated by using the rate in
effect under Section 1274(d)(1) of the IRC, on the date the Gross-Up Payment was made, for debt
instruments with a term equal to the period of time which has elapsed from the date the Gross-Up
Payment was made to the date of repayment. In the event that the Excise Tax is subsequently
determined to exceed the amount

10

 

taken into account at the time the Gross-Up Payment was made (including by reason of any payment
the existence or amount of which could not be determined at the time of the Gross-Up Payment), STWA
shall make an additional Gross-Up Payment with respect to the excess at the time the amount thereof
is finally determined, plus interest calculated in a manner similar to that described in the
preceding sentence.

(c) TIME OF PAYMENT. Any Gross-Up Payment provided for herein shall be paid not later than the
30th day following the payment of any compensation or the provision of any benefit which causes
such payment to be made; provided, however, that if the amount of such payment cannot be finally
determined on or before such day, STWA shall pay on such day an estimate of the minimum amount of
such payment and shall pay the remainder of such payment (together with interest calculated in a
manner similar to that described in Subparagraph 12(b)) as soon as the amount thereof can be
determined. In the event that the amount of an estimated payment exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by STWA to the Executive, payable
on the 30th day after demand by STWA (together with interest calculated in a manner similar to that
described in Subparagraph (b)).

(d) OTHER ARRANGEMENTS. Notwithstanding the provisions of this paragraph to the contrary, the
actual amounts payable hereunder as Gross-Up Payments shall be coordinated with any similar amounts
paid to the Executive under any other contract, plan, or arrangement.

     13. FEES AND EXPENSES OF THE EXECUTIVE. After a Change in Control and except as provided
in the following sentence, STWA shall pay, within 30 days following demand by the Executive, all
legal, accounting, actuarial, and related fees and expenses incurred by him in connection with the
enforcement of this Agreement. An arbitration panel or a court of competent jurisdiction shall be
empowered to deny payment to the Executive of such fees and expenses only if it determines that he
instituted a proceeding hereunder, or otherwise acted, in bad faith.

     14. REDUCTION FOR COMPENSATION AND BENEFITS RECEIVED UNDER STWA SEVERANCE POLICY, ETC.
Notwithstanding anything herein to the contrary, in the event the Executive, his surviving spouse,
or any other person becomes entitled to continued compensation and benefits hereunder by reason of
the Executive’s termination of employment and, in addition, compensation or similar benefits are
payable under a severance policy, program or arrangement maintained by STWA (other than retirement
plans), then the compensation or benefits otherwise payable hereunder shall be reduced by the
compensation or benefits provided under such severance policy, program or arrangement.

     15. MITIGATION. The Executive shall not be required to mitigate the amount of any
compensation or benefits which may become payable hereunder by reason of his termination by seeking
other employment or otherwise, nor, except as otherwise provided in the following sentence or
elsewhere herein, shall the amount of any such compensation or benefits be reduced by any
compensation or benefits received by the Executive as the result of his employment by another
employer. Notwithstanding anything in this Agreement to the contrary, STWA’s obligation to provide
any medical and dental benefits hereunder may be suspended, with the

11

 

written concurrence of the Executive or, if applicable, his surviving spouse during any period of
time that such benefits are being provided by reason of his or her employment.

     16. FUNDING OF COMPENSATION AND BENEFITS; ACCELERATION OF CERTAIN PAYMENTS.

(a) GRANTOR TRUST. In the event (i) the Executive’s employment is terminated without Cause or
he terminates his employment for Good Reason, and (ii) and a Change in Control has occurred as of
the Date of Termination or occurs thereafter, the Executive shall have the right to require STWA to
establish a grantor trust (taxable to STWA) and fund such trust, on an actuarially sound basis, to
provide the compensation and benefits to which he is entitled hereunder, other than those which may
be paid pursuant to the provisions of Subparagraph 16(c). The specific terms of such trust shall be
as agreed to by the parties in good faith; provided, however, that the trustee shall be a financial
institution independent of STWA; and provided further, that in no event shall STWA be entitled to
withdraw funds from the trust for its benefit, or otherwise voluntarily assign or alienate such
funds, until such time as all compensation and benefits required hereunder are paid and provided.
The determination of the extent of required funding, including any supplemental funding in the
event of adverse investment performance of trust assets, shall be made by an actuary or a certified
public accountant retained by each party. To the extent such professionals cannot agree on the
proper level of funding, they shall select a third such professional whose determination shall be
binding upon the parties. Notwithstanding the foregoing, STWA shall remain liable for all
compensation and benefits required to be paid or provided hereunder.

(b) ALTERNATE SECURITY. In lieu of the right given to the Executive under Subparagraph (a), he
shall have the right under such circumstances to require that STWA provide (i) an irrevocable
standby letter of credit issued by a financial institution other than STWA or any Subsidiary of
STWA with a senior debt credit rating of “A” or better by Moody’s Investors Service or Standard &
Poor’s Corporation, or (ii) other security reasonably acceptable to him, to secure the payment of
such compensation and benefits.

(c) ACCELERATED PAYMENT OF PRESENT VALUE OF CERTAIN COMPENSATION. In the event (i) the
Executive’s employment is terminated without Cause or he terminates his employment for Good Reason,
and (ii) a Change in Control has occurred as of the Date of Termination or occurs thereafter, the
Executive shall have the continuing right to demand that the present value of the remaining
payments described in Paragraphs 6(b)(1) through (3), and payable by reason of the provisions of
Paragraph 10 or 11 (as the case may be), be paid to him in one lump sum within 30 days after the
date written demand is given. For purposes of calculating the present value of such payments, a
discount factor shall be applied to each such payment which is equal to the relevant applicable
federal rate in effect on the date written demand is given by him, determined by reference to the
period of time between the date of such notice and the scheduled time such payment would otherwise
be made. In the event any payment described in Paragraphs 6(b)(1) through (3) is not yet
determinable on the date written demand is made, the other payments shall nonetheless be made as
provided above; and the undetermined payment shall be made within 30 days after it becomes
determinable, calculated as provided in the preceding sentence but by treating the date on which
the payment becomes

12

 

determinable as the date of written notice. Nothing in this subparagraph shall be construed as
affecting the Executive’s right to one or more Gross-Up Payments in accordance with the provisions
of Paragraph 12; and a Gross-Up Payment (if applicable) will be calculated and made with any
payment made under this subparagraph, as well as any other Gross-Up Payments that may be required
hereunder at a subsequent date.

     17. WITHHOLDING TAXES. All compensation and benefits provided for herein shall, to the
extent required by law, be subject to federal, state, and local tax withholding.

     18. CONFIDENTIAL INFORMATION. The Executive agrees that subsequent to his employment with
STWA, he will not, at any time, communicate or disclose to any unauthorized person, without the
written consent of the STWA, any proprietary or other confidential information concerning STWA or
any Subsidiary of STWA; provided, however, that the obligations under this paragraph shall not
apply to the extent that such matters (i) are disclosed in circumstances where the Executive is
legally obligated to do so, or (ii) become generally known to and available for use by the public
otherwise than by his wrongful act or omission; and provided further, that he may disclose any
knowledge of insurance, financial, legal and economic principles, concepts and ideas which are not
solely and exclusively derived from the business plans and activities of STWA. The Executive shall
execute and deliver to STWA such nondisclosure and confidentiality agreements as STWA shall adopt
from time to time during the term hereof.

     19. COVENANT NOT TO SOLICIT. During his employment and for period of 12 months
thereafter, the Executive shall not, whether on his own behalf or on behalf of any other individual
or business entity, solicit, endeavor to entice away from STWA, a Subsidiary or any affiliated
company, or otherwise interfere with the relationship of STWA, a Subsidiary or any affiliated
company with any person who is, or was within the then most recent 12 month period, an employee or
associate thereof; provided, however, that this subparagraph shall not apply following the
occurrence of a Change in Control.

     20. ARBITRATION. To the extent permitted by applicable law, any controversy or dispute
arising out of or relating to this Agreement, or any alleged breach hereof, shall be settled by
arbitration in Los Angeles, California in accordance with the commercial rules of the American
Arbitration Association then in existence (to the extent such rules are not inconsistent with the
provisions of this Agreement), it being understood and agreed that the arbitration panel shall
consist of three individuals acceptable to the parties hereto. In the event that the parties cannot
agree on three arbitrators within 20 days following receipt by one party of a demand for
arbitration from another party, then the Executive and STWA shall each designate one arbitrator and
the two arbitrators selected shall select the third arbitrator. The arbitration panel so selected
shall convene a hearing no later than 90 days following the selection of the panel. The arbitration
award shall be final and binding upon the parties, and judgment may be entered thereon in the
California Superior Court or in any other court of competent jurisdiction.

     21. ADDITIONAL EQUITABLE REMEDY. The Executive acknowledges and agrees that STWA’s remedy
at law for a breach or a threatened breach of the provisions of Paragraphs

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18 and 19 would be inadequate; and, in recognition of this fact and notwithstanding the provisions
of Paragraph 20, in the event of such a breach or threatened breach by him, it is agreed that STWA
shall be entitled to request equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction, or any other equitable remedy which may then
be available. Nothing in this paragraph shall be construed as prohibiting STWA from pursuing any
other remedy available under this Agreement for such a breach or threatened breach.

     22. RELATED AGREEMENTS. Except as may otherwise be provided herein, to the extent that
any provision of any other agreement between STWA and the Executive shall limit, qualify,
duplicate, or be inconsistent with any provision of this Agreement, the provision in this Agreement
shall control and such provision of such other agreement shall be deemed to have been superseded,
and to be of no force or effect, as if such other agreement had been formally amended to the extent
necessary to accomplish such purpose.

     23. NO EFFECT ON OTHER RIGHTS. Except as otherwise specifically provided herein, nothing
contained in this Agreement shall be construed as adversely affecting any rights the Executive may
have under any agreement, plan, policy or arrangement to the extent any such right is not
inconsistent with the provisions hereof.

     24. EXCLUSIVE RIGHTS AND REMEDY. Except for any explicit rights and remedies the
Executive may have under any other contract, plan or arrangement with STWA, the compensation and
benefits payable hereunder and the remedy for enforcement thereof shall constitute his exclusive
rights and remedy in the event of his termination of employment.

     25. INDEMNIFICATION. In addition to, and not in limitation of, the provisions of the
Certificate of Incorporation and Bylaws of STWA, STWA hereby agrees to indemnify, save and hold
harmless the Executive from and against all claims, loss, cost, expense or liability of every kind
and nature arising out of performance of his duties, other than those arising out of his breach of
this Agreement or his gross negligence, recklessness or willful misconduct, to the fullest extent
permitted by applicable law.

     26. NOTICES. Any notice required or permitted under this Agreement shall be sufficient if
it is in writing and shall be deemed given (i) at the time of personal delivery to the addressee,
or (ii) at the time sent certified mail, with return receipt requested, addressed as follows:

	 	 	 	 	 
	 

	 	If to the Executive:
	 	Eugene E. Eichler

4400 Carpenter Avenue

North Hollywood, CA 91607
	 
	 	 	 	 
	 

	 	If to STWA
	 	5125 Lankershim Boulevard

North Hollywood, CA 91601

Attention: Chairman of the Board of Directors

The name or address of any addressee may be changed at any time and from time to

14

 

time by notice similarly given.

     27. NO WAIVER. The failure by any party to this Agreement at any time or times hereafter
to require strict performance by any other party of any of the provisions, terms, or conditions
contained in this Agreement shall not waive, affect, or diminish any right of the first party at
any time or times thereafter to demand strict performance therewith and with any other provision,
term, or condition contained in this Agreement. Any actual waiver of a provision, term, or
condition contained in this Agreement shall not constitute a waiver of any other provision, term,
or condition herein, whether prior or subsequent to such actual waiver and whether of the same or a
different type. The failure of STWA to promptly terminate the Executive’s employment for Cause or
the Executive to promptly terminate his employment for Good Reason shall not be construed as a
waiver of the right of termination, and such right may be exercised at any time following the
occurrence of the event giving rise to such right.

     28. SURVIVAL. Notwithstanding the nominal termination of this Agreement and the
Executive’s employment hereunder, the provisions hereof which specify continuing obligations,
compensation and benefits, and rights (including the otherwise applicable term hereof) shall remain
in effect until such time as all such obligations are discharged, all such compensation and
benefits are received, and no party or beneficiary has any remaining actual or contingent rights
hereunder.

     29. SEVERABILITY. In the event any provision in this Agreement shall be held illegal or
invalid for any reason, such illegal or invalid provision shall not affect the remaining provisions
hereof, and this Agreement shall be construed, administered and enforced as though such illegal or
invalid provision were not contained herein.

     30. BINDING EFFECT AND BENEFIT. The provisions of this Agreement shall be binding upon
and shall inure to the benefit of the successors and assigns of STWA and the executors, personal
representatives, surviving spouse, heirs, devisees, and legatees of the Executive.

     31. ENTIRE AGREEMENT. This Agreement embodies the entire agreement among the parties with
respect to the subject matter hereof, and it supersedes all prior discussions and oral
understandings of the parties with respect thereto.

     32. NO ASSIGNMENT. This Agreement, and the benefits and obligations hereunder, shall not
be assignable by any party hereto except by operation of law.

     33. NO ATTACHMENT. Except as otherwise provided by law, no right to receive compensation
or benefits under this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to set off, execution, attachment,
levy, or similar process, and any attempt, voluntary or involuntary, to effect any such action
shall be null and void.

15

 

     34. CAPTIONS. The captions of the several paragraphs and subparagraphs of this Agreement
have been inserted for convenience of reference only. They constitute no part of this Agreement and
are not to be considered in the construction hereof.

     35. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of
which shall be deemed one and the same instrument which may be sufficiently evidenced by any one
counterpart.

     36. NUMBER. Wherever any words are used herein in the singular form, they shall be
construed as though they were used in the plural form, as the context requires, and vice versa.

     37. APPLICABLE LAW. Except to the extent preempted by federal law, the provisions of this
Agreement shall be construed, administered, and enforced in accordance with the domestic internal
law of the State of California without reference to its laws regarding conflict of laws.

     IN WITNESS WHEREOF, the parties have executed this Agreement, or caused it to be executed, as
of the date first above written.

	 	 	 	 	 	 	 
	 	 	/s/ EUGENE E. EICHLER	 	 
	 	 	 	 	 
	 	 	Eugene E. Eichler	 	 
	 
	 	 	SAVE THE WORLD AIR, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ JOSEPH HELLEIS 	 	 
	 

	 	 	 	 	 	 
	 	 	Joseph Helleis, Chairman of the Board	 	 

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GLOSSARY

“BOARD OF DIRECTORS” means the board of directors of the relevant
corporation.

“CAUSE” means (i) a documented repeated and willful failure by the
Executive to perform his duties, but only after written demand and only
if termination is effected by action taken by a vote of (A) prior to a
Change in Control, at least a majority of the directors of STWA then in
office, or (B) after a Change in Control, at least 80% of the
non-officer directors of STWA then in office, (ii) his final conviction
of a felony, (iii) conduct by him which constitutes moral turpitude
which is directly and materially injurious to STWA or any Material
Subsidiary, (iv) willful material violation of corporate policy, or (v)
the issuance by the regulator of STWA or any Subsidiary or affiliated
company of an unappealable order to the effect that he be permanently
discharged.

For purposes of this definition, no act or failure to act on the part
of the Executive shall be considered “willful” unless done or omitted
not in good faith and without reasonable belief that the action or
omission was in the best interest of STWA or any of its Subsidiaries or
affiliated companies.

“CHANGE IN CONTROL” means the occurrence of any of the following
events:

     (a) any Person (except (i) STWA or any Subsidiary or
prior affiliate of STWA, or (ii) any Employee Benefit Plan (or any
trust forming a part thereof) maintained by STWA or any Subsidiary or
prior affiliate of STWA) is or becomes the beneficial owner, directly
or indirectly, of STWA’s securities representing 19.9% or more of the
combined voting power of STWA’s then outstanding securities, or 50.1%
or more of the combined voting power of a Material Subsidiary’s then
outstanding securities, other than pursuant to a transaction described
in Clause (c);

     (b) there occurs a sale, exchange, transfer or other
disposition of substantially all of the assets of STWA or a Material
Subsidiary to another entity, except to an entity controlled directly
or indirectly by STWA;

     (c) there occurs a merger, consolidation, share exchange,
division or other reorganization of or relating to STWA, unless—

          (i) the shareholders of STWA immediately before

17

 

such merger, consolidation, share exchange, division or reorganization
own, directly or indirectly, immediately thereafter at least two-thirds
of the combined voting power of the outstanding voting securities of
the Surviving Company in substantially the same proportion as their
ownership of the voting securities immediately before such merger,
consolidation, share exchange, division or reorganization; and

          (ii) the individuals who, immediately before such
merger, consolidation, share exchange, division or reorganization, are
members of the Incumbent Board continue to constitute at least
two-thirds of the board of directors of the Surviving Company;
provided, however, that if the election, or nomination for election by
STWA’s shareholders, of any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such director shall, for the
purposes hereof, be considered a member of the Incumbent Board; and
provided further, however, that no individual shall be considered a
member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened Election Contest
or Proxy Contest, including by reason of any agreement intended to avoid
or settle any Election Contest or Proxy Contest; and

          (iii) no Person (except (A) STWA or any Subsidiary
or prior affiliate of STWA, (B) any Employee Benefit Plan (or any trust
forming a part thereof) maintained by STWA or any Subsidiary or prior
affiliate of STWA, or (C) the Surviving Company or any Subsidiary or
prior affiliate of the Surviving Company) has beneficial ownership of
19.9% or more of the combined voting power of the Surviving Company’s
outstanding voting securities immediately following such merger,
consolidation, share exchange, division or reorganization;

     (d) a plan of liquidation or dissolution of STWA, other
than pursuant to bankruptcy or insolvency laws, is adopted; or

     (e) during any period of two consecutive years,
individuals who, at the beginning of such period, constituted the Board
of Directors of STWA cease for any reason to constitute at least a
majority of such Board of Directors, unless the election, or the
nomination for election by STWA’s shareholders, of each new director
was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period;
provided, however, that no individual shall be considered a member of
the Board of Directors of STWA at the beginning of such period if such
individual initially assumed office as a result of either an actual or
threatened Election Contest or Proxy Contest, including by reason of
any agreement intended to avoid or settle any Election Contest or Proxy
Contest.

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Notwithstanding the foregoing, a Change in Control shall not be deemed
to have occurred if a Person becomes the beneficial owner, directly or
indirectly, of securities representing 19.9% or more of the combined
voting power of STWA’s then outstanding securities solely as a result
of an acquisition by STWA of its voting securities which, by reducing
the number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person; provided, however, that if a
Person becomes a beneficial owner of 19.9% or more of the combined
voting power of STWA’s then outstanding securities by reason of share
repurchases by STWA and thereafter becomes the beneficial owner,
directly or indirectly, of any additional voting securities of STWA,
then a Change in Control shall be deemed to have occurred with respect
to such Person under Clause (a).

Notwithstanding anything contained herein to the contrary, if the
Executive’s employment is terminated and he reasonably demonstrates
that such termination (i) was at the request of a third party who has
indicated an intention of taking steps reasonably calculated to effect
a Change in Control and who effects a Change in Control, or (ii)
otherwise occurred in connection with, or in anticipation of, a Change
in Control which actually occurs, then for all purposes hereof, a
Change in Control shall be deemed to have occurred on the day
immediately prior to the date of such termination of his employment.

“DATE OF TERMINATION” means:

     (a) if the Executive’s employment is terminated for
Disability, 30 days after the Notice of Termination is given (provided
that he shall not have returned to the performance of his duties on a
full-time basis during such 30-day period);

     (b) if the Executive’s employment terminates by reason of
his death, the date of his death;

     (c) if the Executive’s employment is terminated by STWA
for Cause, the date of termination specified in the Notice of
Termination and determined in accordance with Section 8(a);

     (d) if the Executive’s employment is terminated by him
without Good Reason, the date of termination specified in the Notice of
Termination and determined in accordance with Section 9(a);

     (e) if the Executive’s employment is terminated by STWA
for any reason other than for Disability or Cause, the date specified
in the Notice of Termination and determined in accordance with Section

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10(a); or

     (f) if the Executive’s employment is terminated by him
for Good Reason, the termination date specified in the Notice of
Termination and determined in accordance with Section 11(a);

provided, however that the Date of Termination shall mean the actual
date of termination in the event the parties mutually agree to a date
other than that described above.

“DEFINED BENEFIT PLAN” has the meaning ascribed to such term in Section
3(35) of ERISA.

“DEFINED CONTRIBUTION PLAN” has the meaning ascribed to such term in
Section 3(34) of ERISA.

“DISABILITY” has the meaning ascribed to the term “permanent and total
disability” in Section 22(e)(3) of the IRC.

“ELECTION CONTEST” means a solicitation with respect to the election or
removal of directors that, if STWA was subject to the provisions of the
1934 Act, would be subject to the provisions of Rule 14a-11 of the 1934
Act.

“EMPLOYEE BENEFIT PLAN” has the meaning ascribed to such term in
Section 3(3) of ERISA.

“ERISA” means the Employee Retirement Income Security Act of 1974, as
amended and as the same may be amended from time to time.

“EXCISE TAX” means the tax imposed by Section 4999 of the IRC (or any
similar tax that may hereafter be imposed by federal, state or local
law).

“EXECUTIVE” means NAME OF EXECUTIVE, an individual residing in ADDRESS,
California.

“GOOD REASON” means:

     (a) prior to a Change in Control—

(i) the Executive’s demotion to a lesser
position, or any material diminution in his duties or
responsibilities;

(ii) a reduction in the Executive’s base

20

 

compensation, other than a reduction which is
proportionate to a company-wide reduction in
executive pay;

(iii) a failure to increase the Executive’s base
compensation, consistent with his performance rating,
within 24 months since the last increase, other than
similar treatment on a company-wide basis for
executives or a voluntary deferral by him of an
increase; or

(iv) any purported termination of the Executive’s
employment which is not in accordance with the terms
of this Agreement; and

     (b) after a Change in Control—

(i) a change in the Executive’s status or
position, or any material diminution in his duties or
responsibilities;

(ii) any increase in the Executive’s duties
inconsistent with his position;

(iii) any reduction in the Executive’s base
compensation;

(iv) a failure to increase the Executive’s base
compensation, consistent with his performance review,
within 12 months of the last increase; or a failure
to consider Executive for an increase within 12
months of his last performance review;

(v) a failure to continue in effect any Employee
Benefit Plan in which the Executive participates,
including (whether or not they constitute Employee
Benefit Plans) incentive bonus, stock option, or
other qualified or nonqualified plans of deferred
compensation (A) other than as a result of the normal
expiration of such a plan, or (B) unless such plan is
merged or consolidated into, or replaced with, a plan
with benefits which are of equal or greater value;

(vi) requiring the Executive to be based anywhere
other than the county where his principal office was

21

 

located immediately prior to the Change in Control;

(vii) refusal to allow the Executive to attend to
matters or engage in activities in which he was
permitted to engage prior to the Change in Control;

(viii) delivery to the Executive of a Notice of
Nonextension;

(ix) failure to secure the affirmation by a
Successor, within three business days prior to a
Change in Control, of this Agreement and its or
STWA’s continuing obligations hereunder (or where
there is not at least three business days advance
notice that a Person may become a Successor, within
one business day after having notice that such Person
may become or has become a Successor); or

(x) any purported termination of the Executive’s
employment which is not in accordance with the terms
of this Agreement.

Notwithstanding anything herein to the contrary, at the election of the
Executive, beginning with the 181st day following a Change in Control and
continuing through the first anniversary of such Change in Control, he may
terminate his employment for any reason or no reason and such termination will
be treated as having occurred for Good Reason.

     “GROSS-UP PAYMENT” means an additional payment to be made to or on
behalf of the Executive in an amount such that the net amount retained by him,
after deduction of any Excise Tax on the Total Payments and any federal, state,
and local income tax and Excise Tax on such additional payment, equals the Total
Payments.

     “INCUMBENT BOARD” means the Board of Directors of STWA as constituted
at any relevant time.

     “IRC” means the Internal Revenue Code of 1986, as amended and as the
same may be amended from time to time.

     “MATERIAL SUBSIDIARY” means a Subsidiary whose net worth, determined
under generally accepted accounting principles, at the fiscal year end
immediately prior to any relevant time is at least 25% of the aggregate net
worth of the controlled group of corporations of which STWA is parent.

     “1934 ACT” means the Securities Exchange Act of 1934, as amended and as

22

 

the same may be amended from time to time.

     “NOTICE OF NON-EXTENSION” means a written notice delivered to or by the
Executive which advises that the Agreement will not be extended as provided in
Paragraph 3.

     “NOTICE OF TERMINATION” means a written notice that (i) indicates the
specific termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated, and
(iii) gives the required advance notice of termination.

  “PERSON” has the same meaning as such term has for purposes of Sections
13(d) and 14(d) of the 1934 Act.

     “PROXY CONTEST” means the solicitation of proxies or consents by or on
behalf of a Person other than the Board of Directors of STWA.

     “SUBSIDIARY” means any business entity of which a majority of its
voting power or its equity securities or equity interests is owned, directly or
indirectly by STWA.

     “SUCCESSOR” means any Person that succeeds to, or has the practical
ability to control (either immediately or with the passage of time), STWA’s
business directly, by merger or consolidation, or indirectly, by purchase of
STWA’s voting securities or all or substantially all of its assets.

     “SURVIVING COMPANY” means the business entity that is a resulting
company following a merger, consolidation, share exchange, division or other
reorganization of or relating to STWA.

     “TOTAL PAYMENTS” means the compensation and benefits that become
payable under the Agreement or otherwise (and which may be subject to an Excise
Tax) by reason of the Executive’s termination of employment, less the federal,
state and local income tax (but not any Excise Tax) on such compensation and
benefits, in each case determined without regard to any Gross-Up Payments that
may also be made.

     “WELFARE BENEFIT PLAN” has the meaning ascribed to the term “employee
welfare benefit plan” in Section 3(1) of ERISA. For purposes of determining the Executive’s or his
dependents’ right to continued welfare benefits hereunder
following his termination of employment, the meaning of such term shall include any retiree health
plan maintained by STWA at any time after the relevant Date
of Termination, notwithstanding the fact that the Executive is not a participant
therein prior to such date.

23

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