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MGE GROUND SUBLEASE

This MGE Ground Sublease (the “MGE Sublease”) is made and effective as of the _______ day of _________, 2004, by and between MGE Power West Campus, LLC, a Wisconsin limited liability company (“Ground Lessee”), and Madison Gas and Electric Company (“MGE”).

RECITALS

A.

Ground Lessee is the assignee and successor in interest as lessee under that certain ground lease (the “Ground Lease”) made and effective July 1, 2002 by and between Ground Lessee and the Board of Regents of the University of Wisconsin System (the “University”), covering a parcel on the University of Wisconsin-Madison Campus in the City of Madison, County of Dane, State of Wisconsin (the “Project Site”). The Project Site is more particularly described in Exhibit A to the Amendment to Ground Lease of even date.  The legal description and a boundary survey of the Project Site are also attached to this MGE Sublease as Exhibit A.

B.

MGE is a Wisconsin public utility providing, among other things, electric generation and distribution services to customers in its service territories.

C.

Ground Lessee has the right, under Section 12 of the Ground Lease, to sublease its interest in the Project Site to any affiliate of Ground Lessee within the MGE Energy, Inc. family of companies.  MGE is such an affiliate

D.

Ground Lessee desires to enter into a sublease of the Project Site with MGE for the purpose of maintaining, and operating a Steam, Chilled Water, and Electric Plant to serve the specific needs of the University of Wisconsin-Madison Campus and the electric power needs of MGE (the “Facility”). 

 

E.

Ground Lessee and MGE further intend to enter into that certain Facility Lease (the “Facility Lease”) pursuant to which MGE will lease from Ground Lessee, a “complete electric generating facility” as this term is defined under the Leased Generation Law (Section 196.52(9), Stats.) consisting of certain of the equipment and other improvements within the Facility to be constructed upon the Project Site and owned by Ground Lessee.  Such complete electric generating facility is referred to in the Facility Lease as the “Leased Facility”.  Pursuant to its rights under the Facility Lease, MGE intends to operate such Leased Facility for the benefit of its retail electric customers, including the University.

F.

In accordance with Section 12 of the Ground Lease, Ground Lessee is willing to sublease to MGE and MGE is willing to sublease from Ground Lessee the Project Site on the terms and conditions set forth below in this MGE Sublease.

NOW, THEREFORE, in consideration of the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

AGREEMENT

1.

Subleased Premises.  Ground Lessee hereby subleases to MGE, and MGE hereby subleases from Ground Lessee the Project Site for the purposes described in the Recitals above and on and subject to the terms, covenants and conditions herein contained and further subject to the terms and conditions of the Ground Lease.  In exercising its rights to occupy the Project Site hereunder, MGE shall do so in a manner that enables MGE and any co-owner of the Facility to promote the safe, sound and efficient operation of the Facility.   

2.

Sublease Term.  The initial term of this MGE Sublease (the “Initial Term”) shall commence on the “Commercial Operation Date” under the Facility Lease and shall be co-extensive in length with the “Base Term” of the Facility Lease.  In the event MGE exercises any option to renew the Facility Lease, then MGE shall automatically be deemed to have exercised an option to renew this MGE Sublease for a renewal term that is co-extensive with the exercised renewal term of the Facility Lease.  In the event the Facility Lease terminates prior to the end of the Base Term or any renewal term (including, without limitation, termination due to any default in performance of the terms and conditions of the Facility Lease), this MGE Sublease shall be deemed to have terminated upon the Facility Lease termination date. If MGE purchases the Leased Facility, then in connection with the closing of such purchase, Ground Lessee shall assign its entire interest in Project Site as lessee under the Ground Lease to MGE, MGE shall assume Ground Lessee’s obligations thereunder, and this MGE Sublease shall thereupon terminate.

3.

Rent.  The annual rent for the Project Site shall be equal to the total rent payable by Ground Lessee to the University under Article 3 of the Ground Lease.  

4.

Possession, Use, Surrender.  MGE shall be entitled to possession of the Project Site upon the “Commercial Operation Date” under the Facility Lease.  Except as expressly set forth in this MGE Sublease, MGE, upon taking possession of the Project Site, will be deemed as accepting the Project Site in “as is” condition, without any representations or warranties on the part of Ground Lessee as to the condition of such Project Site.  Unless MGE purchases the Leased Facility, at the expiration or termination of the Facility Lease and this MGE Sublease, MGE shall surrender possession of the Project Site upon such expiration or termination.  This MGE Sublease does not impose any obligation on MGE, upon surrender of the Project Site as the result of the expiration or termination of this MGE Sublease (other than as a consequence of a purchase by MGE of the Leased Facility), to remove the Facility or any portion thereof from the Project Site.  

5.

Maintenance.  MGE shall cause the Project Site to be maintained (or shall reimburse Ground Lessee for such maintenance) in a neat and orderly manner, including maintenance of any landscaping, and regular grass cutting and snow removal.  MGE shall further limit outside storage for itself (and storage undertaken on behalf of the State pursuant to MGE’s role as Operator under the Operation and Maintenance Agreement between MGE and the State) to within the permanent perimeter fence to be constructed as part of the Facility.  MGE further agrees to ensure that any storage it undertakes will not be visible from street level on Herrick Drive or Walnut Street.  

6.

No Liens.  Except for “Permitted Encumbrances” as defined in the Facility Lease, and only to the extent expressly permitted by Article 12 of the Ground Lease, MGE shall not directly or indirectly create or permit to be created or to remain upon the Project Site any lien, encumbrance or charge on, or pledge of, the Project Site, or any part thereof, and will immediately discharge, any lien, encumbrance or charge on, or pledge of, the Project Site, or any part thereof.  MGE shall defend and indemnify Ground Lessee against any liens placed against Ground Lessee’s interest in the Project Site or liens that otherwise impair the University’s title to the Project Site, to the extent such liens arise as the result of the acts or omissions of MGE, its agents or employees.  In amplification and not in limitation of the foregoing, MGE shall not permit any portion of the Project Site to be used by any persons or persons or by the public, as such, at any time or times during the term of this MGE Sublease, in such manner as might tend to impair the title or interest of Ground Lessee or the University in the Project Site, or any portion thereof, or in such manner as might make possible a claim or claims of adverse use, adverse possession, prescription, dedication, or similar claims of, in, to or with respect to the Project Site, or any part thereof.  Nothing in this Article shall be construed to prohibit MGE (or any permitted assignee of MGE) from assigning its interest in this MGE Sublease to the extent permitted by Article 11 of this MGE Sublease.  In no event may MGE assign or sublease its interest in a manner not permitted by Article 12 of the Ground Lease without obtaining the necessary approvals required under such Article.  

7.

Taxes and Insurance.  MGE shall be responsible for real property taxes, if any, relating to the Project Site borne by Ground Lessee under Article 8 of the Ground Lease.  Ground Lessee shall be responsible for all taxes, fees or costs, if any, related to the Rent payable under this MGE Sublease, including all taxes, assessments, fees, charges or impositions on income or franchise tax upon rents received.  Ground Lessee and MGE hereby release each other from any and all liability or responsibility to the other or anyone claiming through or under them by way of subrogation for any loss of damage to property caused by fire or any of the extended coverage or supplementary contract casualties, even if such fire or other casualty shall have been caused by the fault or negligence of the other party or anyone for whom such party may be responsible.  The insurance policies of Ground Lessee and MGE shall contain a clause or endorsement to the effect that any such release shall not adversely affect or impair said policies or prejudice the right of the releaser to recover thereunder.

8.

Casualty.  Pursuant to the Ground Lease, if the Facility, or any material portion thereof that prevents the Facility from providing steam, chilled water or electric generation services, is destroyed or damaged by fire, explosion, or other casualty, then Ground Lessee and any other co-owners of the Project and MGE shall, to the extent and in the manner they have agreed to as more particularly set forth in the Joint Ownership Agreement and the Facility Lease, repair, restore, and rebuild the Project to a condition equivalent to that existing prior to such casualty.  With respect to such rebuilding, in the event of any conflict between this MGE Sublease and the Joint Ownership Agreement or the Facility Lease, the terms of the Joint Ownership Agreement and the Facility Lease shall govern and prevail.  In the event that a decision is made not to repair, restore or rebuild, MGE shall pay rent up to the date such decision is made with an appropriate refund by Ground Lessee of such rent as may have been paid in advance for any period subsequent to such date and the provisions regarding expiration or termination of the lease in Article 4 of this MGE Sublease shall apply

9.

Condemnation.  In the event of a Total Taking of the Facility (as hereinafter defined) or a Substantial Taking of the Facility, the term hereof shall terminate as of the date of the Taking (as hereinafter defined); MGE shall pay rent up to such date, with an appropriate refund by Ground Lessee of such rent as may have been paid in advance for any period subsequent to such date; and except as provided below or in the Facility Lease, the entire award or other compensation, whether pursuant to judgment or by agreement or otherwise, with respect to such Taking, shall be paid directly to and be the property of Ground Lessee and any other co-owner of the Facility, as their interests may appear.  In the event of a Partial Taking (as hereinafter defined), Ground Lessee and/or MGE shall, to the extent required in the Joint Ownership Agreement and the Facility Lease restore the Facility to a condition equivalent to that existing prior to such Partial Taking.  As used herein, “Partial Taking” shall mean any Taking of the Facility that is not either a Total Taking or a Substantial Taking; “Substantial Taking” shall mean the Taking of so much of the Facility or Ground Lessee’s interest in the Ground Lease that, in the reasonable opinion of MGE, the remaining portion thereof not taken cannot reasonably be used by MGE for the efficient operation of the Facility; and “Taking” used alone or modified by “Partial”, “Substantial” or “Total” shall mean the taking or damaging of the Facility, or any part or parts thereof, by a Federal or State body with the power of condemnation or eminent domain lawfully exercising such power, including severance damage, by eminent domain, or for any public or quasi-public use under any statute.  “Total Taking” shall mean the taking of the entire Facility or Ground Lessee’s entire interest in the Ground Lease.

10.

Default: Remedies.  If either party shall be in default under this MGE Sublease; or either party shall fail to duly and fully observe or perform any other covenant, condition, or agreement on the part of such party to be observed or performed by such party pursuant to this MGE Sublease and such default continues for a period of sixty (60) days after delivery of written notice from the non-defaulting party to the defaulting party, then the non-defaulting party shall be entitled to exercise all of its rights and remedies with respect to the MGE Sublease and the Project Site permitted or allowed by law.

11.

Assignment and Subletting.  Except to the limited extent expressly permitted by this Article and further only to the extent consistent with Article 12 of the Ground Lease, MGE shall not assign, sell, mortgage, pledge, encumber or in any other manner transfer this MGE Sublease or any right, title or interest of MGE hereunder, by operation of law or otherwise, or sublet the Project Site or any portion thereof without the prior written consent of Ground Lessee and the University.  Any such assignment, sale, mortgage, pledge, encumbrance or other transfer without Ground Lessee’s prior consent shall be void.  MGE may sublet and/or assign an interest in the Project Site (a) to any affiliate of Ground Lessee within the MGE Energy, Inc. family of companies or in connection with any merger, consolidation or restructuring transaction involving MGE or any affiliate of MGE within the MGE Energy, Inc. family of companies; and (b) to allow MGE or any permitted sublessee or assignee to collaterally assign its interest in this MGE Sublease in connection with Facility-related financing.  Notwithstanding anything to the contrary in the preceding sentence, any permitted sublessee or assignee thereunder shall, following such sublease or assignment, continue to be subject to all requirements and limitation set forth in this Article. Any permitted assignment, sale, mortgage, pledge, encumbrance or any other transfer under this Article shall further be made in accordance with the terms and conditions of the Ground Lease.  Any permitted assignee of any interest under this MGE Sublease, regardless of whether or not consent is required for such assignment, shall execute a written instrument obligating such assignee to assume all obligations under this Lease.

12.

Notices.  All notices required or otherwise given hereunder shall be in writing and shall be delivered by hand, by certified or registered mail, return receipt requested or by Federal Express, Express Mail, or other internationally recognized overnight carrier.  Notices are effective when received.  Notice addresses are as follows:

If to Ground Lessee: 

MGE Power West Campus, LLC

133 South Blair Street

P.O. Box 1231

Madison, WI 53701-1231

Attention: Manager

With a copy to: 

MGE Power West Campus, LLC

133 South Blair Street

P.O. Box 1231

Madison, WI 53701-1231

Attention: General Counsel

If to MGE:

Madison Gas and Electric Company

133 South Blair Street

P.O. Box 1231

Attention: Treasurer

With a copy to: 

Madison Gas and Electric Company

133 South Blair Street

P.O. Box 1231

Madison, WI 53701-1231

Attention: General Counsel

13.

Successors; Assigns.  This MGE Sublease and each and all of the terms, covenants and conditions hereof shall be binding upon and inure to the benefit of Ground Lessee and MGE, and their respective successors and assigns (but as to the successors and assigns of MGE, the benefits hereof shall inure to them only to the extent that assignment is permitted hereunder).  No third party, other than such permitted successors and assigns, shall be entitled to enforce any term, covenant or condition of this MGE Sublease or have any rights hereunder.

14.

Surrender of Project Site.  MGE upon termination of this MGE Sublease, by lapse of time or otherwise, agrees to peaceably surrender the Project Site to Ground Lessee subject to the requirements of Article 4.

15.

Holding Over.  Unless MGE purchases the Leased Facility and is assigned and assumes Ground Lessee’s rights and obligations under the Ground Lease, upon expiration or termination of this MGE Ground Sublease, MGE shall have no right to continue to occupy the Project Site, without the express written consent of Ground Lessee.  If MGE, following such expiration or termination continues to occupy the Project Site without the written consent of Ground Lessee, Ground Lessee shall be entitled to all its remedies at law or equity and the rent payable during the unapproved holdover period shall be an amount equal to 200% of the rent then in effect and payable pursuant to Article 3.

16.

Estoppel Certificates; Subordination, Non-Disturbance and Attornment.  MGE or Ground Lessee will, at any time from time to time, upon not less than ten (10) days prior request by the other, execute, acknowledge and deliver to the other a statement in writing certifying that this MGE Sublease is unmodified (or, if modified, the disclosure of such modification shall be made) and in full force and effect, the date to which the rents and other charges have been paid, stating whether or not the party requested to provide the statement had knowledge of any default hereunder on the part of requesting party in the performance of any covenant, agreement or condition contained herein and, if so, specifying each such default, and any other matter reasonably requested by the requesting party, it being intended that any such statement may be relied upon by any prospective purchaser, mortgagee or holder of a deed of trust on the Project Site or any assignee of such party.  If required by any lender providing Facility financing to MGE, Ground Lessee agrees to execute a commercially reasonable form of subordination, non-disturbance and attornment agreement, providing that in the event such lender exercises its remedies under the instrument collaterally assigning MGE’s interest in this MGE Sublease, Ground Lessee will recognize the rights of such lender as the sublessee under this MGE Sublease.  Any such instrument shall provide the same notice to Ground Lessee as MGE of any default of MGE thereunder giving rise to such lender’s rights to exercise remedies thereunder.

17.

Public Record of MGE Sublease.  If required by any Facility-related lender to Ground Lessee or to any permitted sublessee or assignee under this MGE Sublease, Ground Lessee and MGE shall cooperate to prepare and cause to be recorded in the Office of the Register of Deeds for Dane County or such other location satisfactory to such lender or other party requesting such action, a memorandum or other public record evidencing MGE’s subleasehold interest (or the interest of such sublessee or assignee, as the case may be) under this MGE Sublease.  

18.

Liability for Environmental Conditions. 

a.

“Hazardous Materials” shall mean:

i)

any biologically or chemically active, or other toxic or hazardous wastes, pollutants, or substances, including, without limitation, asbestos, PCB’s, petroleum products and by-products, substances defined or listed as “hazardous substances” or “toxic substances,” or similarly identified in or pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §9601, et seq., and as hazardous wastes under the Resource Conservation and Recovery Act, 42 U.S.C. §6010, et seq.;

ii)

any chemical substance or mixture regulated under the Toxic Substance Control Act 1976, as amended, 15 U.S.C. §2601, et seq.;

iii)

any “toxic pollutant” under the Clean Water Act, 33 U.S.C. §466, et seq., as amended;

iv)

any hazardous air pollutants under the Clean Air Act, 42 U.S.C. §7401, et seq.;

v)

hazardous materials identified in or pursuant to the Hazardous Materials Transportation Act, 49 U.S.C. §1802, et seq.; and

vi)

any hazardous or toxic substances or pollutant regulated under other applicable federal, state or local statutes, ordinances, bylaws, codes, rules, or regulations relating to or concerning any hazardous, toxic or dangerous waste, substance or material.

b.

MGE covenants and agrees that MGE shall, at MGE’s sole cost and expense, comply at all times with all requirements governing the use, generation, storage, treatment, and/or disposal of any Hazardous Materials used in connection with MGE’s use of the Project Site.  Notwithstanding, MGE shall not be responsible for any cleanup, remediation, fines, or penalties resulting from the presence of any Hazardous Materials on, under, or near the Project Site existing prior to the Commercial Operation Date, or not caused by MGE’s use of the Project Site.  MGE shall defend, indemnify and hold harmless Ground Lessee from and against any and all liability, loss, damage and expense, including reasonable attorneys’ fees arising out of the release, threatened release, storage or disposal of any such hazardous wastes or hazardous substances on, under or adjacent to the Project Site, directly attributable to the activities of MGE, its employees, agents, contractors and invitees to whom MGE grants rights to occupy or use such Project Site and facilities in connection with the Facility.

c.

Ground Lessee represents and warrants that Ground Lessee has not engaged in the generation, use, manufacture, treatment, transportation, storage, or disposal of any Hazardous Materials at or near the Project Site in violation of applicable environmental laws; that Ground Lessee has not received any notice of any material violation of any applicable environmental law with respect to the Project Site about which a government agency would, under such laws, require corrective action; that to Ground Lessee’s knowledge, there are no conditions existing as of the Commencement Date which would subject Ground Lessee to damages, penalties, injunctive relief, or cleanup costs under any applicable environment law, or which would require or is likely to require cleanup, removal, remedial action, or other response pursuant to any applicable environmental law; that Ground Lessee is not a party to any litigation or administrative proceeding, nor is any litigation or administrative proceeding threatened, which asserts or alleges that Ground Lessee has violated or is violating any applicable environmental law, or is required to clean up, remove, or take remedial action or other responsive action due to the disposal, deposit, discharge, leaking, or other release of any Hazardous Materials; and that the Project Site is not subject to any judgment, decree, order, or citation related to or arising out of the violation or alleged violation of any applicable environmental law and has not been named or listed as a potentially responsible party by any governmental body or agency in a manner arising under any applicable environmental law.

d.

All representations, warranties, and indemnification agreements described in this Article 18 shall survive the expiration or termination of this MGE Sublease and shall apply to and inure to the benefit of all heirs, successors, and assigns of Ground Lessee and MGE their directors, officers, shareholders, employees, subtenants, and affiliates.

19.

Insurance.

a.

Ground Lessee’s Insurance.  Ground Lessee shall provide commercial general liability and umbrella or excess liability insurance in the amounts and upon the terms and conditions set forth in the Facility Lease and the Ground Lease.  

b.

MGE’s Insurance.  MGE shall provide commercial general liability and umbrella or excess liability insurance in the amounts and upon the terms and conditions set forth in the Facility Lease.  

1.

Subject to University’s Right to Locate Chilled Water Production Equipment on Project Site.  MGE’s rights to use and occupy the Project Site under this MGE Sublease shall be construed to operate in harmony with the rights of the University to locate the University’s owned interest in the Facility upon the Project Site, including any interest of the University’s in the expansion of the chilled water plant upon the Project Site that is anticipated to occur after the construction of the Facility is complete.  The anticipated location of such chilled water plant expansion is set forth on the Project Site diagram attached as part of Exhibit A.  Ground Lessee shall use reasonable efforts to ensure that in exercising such rights, the State and any other owner of such financed assets shall at all times cooperate in good faith with MGE and Ground Lessee for the benefit of the Facility as a whole.

2.

Miscellaneous.  Neither this MGE Sublease nor any of the terms, covenants or conditions hereof may be modified or amended, except by an agreement in writing, duly executed and delivered by the party against whom enforcement of such modification or amendment is sought.  If any term, covenant or condition of this MGE Sublease or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable under applicable law, then the remainder hereof and the application of such term, covenant or condition to persons or circumstances other than those as to which it is invalid or unenforceable shall not be affected thereby.  The headings of the paragraphs and subparagraphs of this MGE Sublease are for convenience only and shall in no way affect the construction or effect of any of the terms, covenants or conditions hereof. This MGE Sublease and each and all of the terms, covenants and conditions hereof shall be interpreted in accordance with and governed in all respects by the internal laws of the State of Wisconsin.  

3.

Provisions Severable.  If any provisions of this MGE Sublease shall be held or declared to be invalid, illegal or unenforceable under any law applicable thereto, by a court of competent jurisdiction in the State of Wisconsin, such provision shall be deemed deleted from this MGE Sublease without impairing or prejudicing the validity, legality and enforceability of the remaining provisions thereof.

4.

Force Majeure.  Neither party hereto shall be liable for any losses or damages caused by acts of God, including, but not limited to, wind, lightning, rain, ice, earthquake, floods or rising water, or by aircraft or vehicle damage.  In the event that Ground Lessee or MGE shall be delayed, hindered in, or prevented from the performance of any act required hereunder (but not including payment of rent, which shall not be excused by Force Majeure) by reason of acts of God (including, but not limited to, wind, lightning, rain, ice, earthquake, flood or rising water), aircraft or vehicle damage or other casualty, unforeseen soil conditions, acts of third parties who are not employees or agents of Ground Lessee or MGE, as the case may be, strikes, lockouts, labor troubles, inability to procure materials, failure of power, governmental actions or inactions (including, but not limited to, those related to zoning approvals, permits, or related appeals), laws or regulations, riots, insurrection, war, or other reasons beyond its control, then the performance of such act shall be excused for the period of delay; and the period for performance of any such act shall be extended for a period equivalent to the period of such delay.

5.

Access to Underground Utility Facilities; Reasonable Driveway Access.  Notwithstanding MGE’s rights to use the Project Site under this MGE Sublease, MGE agrees to permit the University to exercise its retained right of access, under the Ground Lease, at all reasonable times to existing underground utility facilities located beneath the Project Site and the right of access at all reasonable times for maintenance to the Walnut Street heating and chilling plant.  MGE further agrees that in accordance with the Ground Lease, the University shall also have the right, upon reasonable advance notice to Ground Lessee, to make reasonable use of the driveway to be constructed upon the Project Site for the purpose of permitting large delivery trucks to make deliveries of goods and services to the University of Wisconsin-Madison Campus, so long as such use does not unreasonably interfere with operations of the Facility and its personnel.

6.

Counterparts.  This MGE Sublease may be signed in counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

IN WITNESS THEREOF, Ground Lessee and MGE have caused this MGE Sublease to be executed and delivered on the day and year first written above.

Ground Lessee:

MGE Power West Campus, LLC

By: /s/ Jeffrey C. Newman, Manager

By: /s/ Kristine A. Euclide, Manager

MGE:

Madison Gas and Electric Company

By: /s/

Terry A. Hanson,

Chief Financial Officer, Vice President and Secretary 

By: /s/ Gary J. Wolter

Chairman, President and Chief Executive Officer

 

EXHIBIT A

SITE DESCRIPTION

See AttachedEXHIBIT 10.1

 

 

	
             
 	
            EMPLOYMENT AGREEMENT
 

 

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

 

	
             
 	
            PRELIMINARY STATEMENT
 

 

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

 

	
             
 	
            AGREEMENT
 

 

RUBINO and the Corporation therefore agree as follows:

 

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

 

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

 

3.  Compensation.

 

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

 

	
             
 	
            (b)
 	
            Other and Additional Compensation.
 

 

 

 

1

 

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

 

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

 

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

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

 

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

 

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

 

4.  Employee Benefits.  

 

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

 

 

2

 

 

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

 

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

 

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

 

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

 

6.  Termination.

 

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

 

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

 

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

 

 

3

 

 

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

 

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

	
             
 	
            (ii)
 	
            Other Compensation (as defined in Section 9); 
 

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

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

 

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

 

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

	
             
 	
            (ii)
 	
            Other Compensation.
 

 

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

 

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

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

	
             
 	
            (iii)
 	
            Other Compensation; and
 

 

 

4

 

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

 

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

 

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

	
             
 	
            (ii)
 	
            Other Compensation; and
 

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

 

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

 

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

	
             
 	
            (ii)
 	
            Other Compensation; and
 

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

 

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

 

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

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

 

 

5

 

	
             
 	
            (iii)
 	
            Other Compensation; and
 

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

 

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

 

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

 

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

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

	
             
 	
            (iii)
 	
            Other Compensation; and
 

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

 

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

 

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

 

 

6

 

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

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

	
             
 	
            (iii)
 	
            Other Compensation; and  
 

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

 

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

 

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

 

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

 

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

 

	
             
 	
            (iii)
 	
            the additional benefits as set forth in Section 9.  
 

 

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

 

7.  Definitions.

 

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

 

7

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

8

 

 

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

 

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

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

 

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

 

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

 

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

 

9.  Benefits.

 

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

 

 

9

 

 

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

 

10.  Confidentiality.

 

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

 

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

 

11.  Successors and Assigns.

 

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

 

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

 

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

 

10

 

 

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

 

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

 

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

 

	
            If to RUBINO:
 	
            Alan L. Rubino
 

210 Old Chester Road

Essex Fells, NJ 07021

 

	
            with a copy to:
 	
            Piro, Zinna, Cifelli, Paris & Genitempo
 

360 Passaic Ave.

Nutley, NJ 07110-2787

Attention: James M. Piro, Esq.

 

	
            If to the Corporation:
 	
            Pharmos Corporation
 

99 Wood Avenue South, Suite 301

Iselin, NJ 08830

Attention: Chief Executive Officer

 

	
            with a copy to:
 	
            Eilenberg & Krause LLP
 

11 East 44th Street

New York, NY 10017

Attention: Adam D. Eilenberg, Esq.

 

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

 

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

 

11

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

	
             
 	
            /s/ ALAN L. RUBINO                                              
 

ALAN L. RUBINO

 

 

PHARMOS CORPORATION

 

 

	
             
 	
            By:
 	
            /s/ HAIM AVIV                                           
 

Haim Aviv

Chairman and Chief Executive Officer

 

 

 

12

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