SEVERANCE AGREEMENT, MUTUAL RELEASE
AND PROMOTION AGREEMENT
This Severance Agreement, Mutual Release and Promotion Agreement
("Agreement") is made and entered into by and between Xx. Xx Xxxxxxx ("Xxxxxxx")
and Electronic Sensor Technology, Inc., a Nevada corporation (together with its
subsidiaries, collectively, "EST").
RECITALS
X. Xxxxxxx is an employee of EST, the chief science officer of EST
(the "Office") and a director of EST ("Director").
B. Concurrent with the execution and delivery of this agreement,
Staples will voluntarily resign (i) his employment with EST, (ii) from the
Office and (iii) as a Director (collectively, the "Resignations").
C. EST desires to retain Staples, and Staples desires to be
retained, to promote EST and its products.
X. Xxxxxxx and EST desire to settle fully and finally any and all
issues, claims, causes of action, concerns, and differences between them.
TERMS
NOW, THEREFORE, IN CONSIDERATION of the covenants and promises herein
contained and other good and valuable consideration, and to avoid unnecessary
litigation, it is agreed by and between the parties as follows:
1. EST and Staples agree that the Resignations shall become effective
at 5:00 p.m., Los Angeles time, on date upon which Staples executes and delivers
this Agreement.
2. Upon the expiration of all periods of consideration and revocation
required by the Age Discrimination in Employment Act of 1967, 29 U.S.C. Sections
621, et seq. (the "Effective Date"), EST will commence paying Staples nine (9)
months of Staples' salary, a total of One Hundred Sixteen Thousand Three Hundred
Twenty Four Dollars and Fifty Two Cents ($116,324.52), which payment shall,
subject to compliance with the terms and conditions of this Agreement, be
payable in eighteen (18) equal biweekly payments in accordance with EST's
current payroll schedule and practices. In addition, for the twelve (12) month
period following the Effective Date, EST shall reimburse Staples for the
premiums paid by Staples in securing major medical insurance for Staples and his
immediate family pursuant to the Consolidated Omnibus Budget Reconciliation Act,
provided that such insurance coverage does not exceed the insurance coverage
presently maintained by Staples through EST's group policy (the "COBRA
Reimbursements").
3. Staples agrees not to file any claim or seek to pursue any claims
which Staples has or claims to have against EST, its officers, its directors or
its shareholders (the "EST Parties") regarding events that have occurred as of
or prior to the date of this Agreement, including, but not limited to, any and
all claims against the EST Parties related or in any manner incidental to
Staples' s employment with EST, or the cessation of his employment therefrom, or
any discrimination or harassment he may claim to have encountered in connection
therewith.
4. Staples represents that he has not filed any complaints, claims, or
actions against the EST Parties with any state, federal, or local agency or
court, and that, unless fails to perform its obligations under this Agreement,
he will not do so at any time hereafter and that if any agency or court assumes
jurisdiction of any complaint, claim, or action against any EST
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Party on behalf of Staples, he will direct that agency or court to withdraw from
or dismiss with prejudice the matter.
5. Concurrent with the execution of this Agreement, Staples agrees to
return to EST, at EST' s offices, all property and information, if any, held by
Staples as a result of his employment with EST.
6. Except for the failure of a party to perform his or its obligations
under this Agreement, each of Staples and EST waives all rights he or it may
have under California Civil Code section 1542. Section 1542 provides as follows:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
7. By waiving the provisions of California Civil Code section 1542,
each of Staples and EST hereby irrevocably and unconditionally releases and
forever discharges the other, and each of its shareholders, directors, officers,
employees (individually or in their representative capacities), representatives,
heirs, and their successors and assigns, and all persons acting by, through,
under, or in concert with any of them from any and all charges, complaints,
claims, and liabilities of any kind or nature whatsoever, whether in tort,
contract, or otherwise, known or unknown, suspected or unsuspected (hereinafter
referred to as "claim" or "claims") which Staples or EST, as the case may be, at
any time heretofore has or claims to have against EST or Staples, respectively,
regarding events that have occurred on or prior to the date of this Agreement,
including, but not limited to any and all claims related to or in any manner
incidental to Staples' s employment with EST, the cessation of Staples
employment with EST, and any discrimination or harassment he may claim to have
encountered in connection therewith,
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including, but not limited to, that under the Age Discrimination in Employment
Act of 1967 (29 U.S.C. Sections 621, et seq.), Title VII of the Civil Rights Act
of 1964, the Civil Rights Act of 1991, the Civil Rights Act of 1866, the Equal
Pay Act of 1963, the Americans with Disabilities Act of 1990, the Family and
Medical Leave Act of 1993, the Worker Adjustment and Retraining Notification
Act, the Staples Retirement Income security Act of 1974 (except any valid claim
to recover vested benefits, if applicable), any applicable Executive Order
program, and their state and local counterparts, including, without limitation,
the California Fair Employment and Housing Act or any other federal, state or
local law, rule, regulation, constitution or ordinance, or under any public
policy or common law or arising under any practices or procedure of EST. For the
avoidance of doubt, neither party is waiving any rights or claims he or it may
have against the other party for breach of his or its, as the case may be,
obligations under this Agreement.
8. The parties understand the word "claims" to include all actions,
claims, and grievances, whether actual or potential, known or unknown, and
specifically, but not exclusively, all claims against the other party and
against any of the other party' s shareholders, directors, officers, employees
(individually or in their representative capacities), representatives, heirs,
and their successors and assigns, arising out of Staples' s employment with EST,
the cessation of his employment with EST, and any discrimination or harassment
he may claim to have encountered in connection with his employment with EST. All
such claims (including related attorneys' fees and costs), other than those
arising as a result of a breach (or alleged breach) of a party' s obligations
under this Agreement, are forever barred by this Agreement without regard to
whether those claims are based on any alleged breach of a duty arising in
contract or tort; any alleged unlawful act, including, without limitation,
employment discrimination; any other claim or cause of action; and regardless of
the forum in which it might be brought.
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9. Staples understands and agrees that he has twenty-one (21) days
within which to consider this Agreement before executing it, whether or not he
has taken that time.
10. Each of Staples and EST understands and agrees that he or it has
been advised to consult with an attorney concerning the terms of this Agreement
and that he or it, as the case may be, has done so to the extent that he or it,
as the case may be, deems necessary.
11. Each of Staples and EST understands and agrees that he or it, as
the case may be, has carefully read and fully understands all of the provisions
of this Agreement.
12. Each of Staples and EST understands and agrees that he or it, as
the case may be, is, through this Agreement, releasing the other party from any
and all claims he or it, as the case may be, may have against the other party
(other than claims arising as a result of the breach (or alleged breach) of this
Agreement by the other party), that he or it, as the case may be, knowingly and
voluntarily agrees to all of the terms set forth in this Agreement, and that he
or it, as the case may be, knowingly and voluntarily intends to be legally bound
by this Agreement.
13. The parties have conducted such investigation of the facts
underlying this Agreement and the terms of this Agreement as they see fit.
14. Staples understands and agrees that he has a full seven (7) days
following the execution of this Agreement to revoke this Agreement and has been
and hereby is advised in writing that this Agreement shall not become effective
or enforceable until the revocation period has expired. Staples' revocation
shall be made by notifying the EST in writing of his decision to revoke. The
revocation must be personally delivered to Xxxxx Xxx at EST's offices located at
0000 Xxxxxxxx Xxxxxx Xxxxxx, Xxxxxxx Xxxx, Xxxxxxxxxx 00000.
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15. Staples understands that rights or claims under the Age
Discrimination in Employment Act of 1967 (29 U.S.C. Sections 621 et seq.) that
may arise after the date of this Agreement is executed are not waived.
16. This Agreement and compliance with this Agreement shall not be
construed as an admission by either party of any liability whatsoever, or as an
admission by either party that it violated the rights of the other, or any
person, or violation of any order, law, statute, duty, or contract whatsoever
against either party or any other person.
17. From the Effective Time until the date that is nine (9) months
after the Effective Time (such period, the "Promotion Term"), Staples shall
spend one (1) hour per month promoting EST and its products (the "Promotion
Services"). For providing the Promotion Services, Staples will be paid $100 per
hour by check drawn on EST's corporate account. EST shall pay or reimburse
Staples for reasonable business costs and expenses incurred by Staples
(including reasonable travel expenses) while performing Promotion Services as
specifically requested by EST pursuant to this Agreement, following receipt by
EST of an invoice in reasonable detail and documentation of such costs and
expenses; provided, however, that any such reimbursable costs and expenses to be
incurred by Staples shall be in accordance with policies established by EST from
time to time.
18. In performing the Promotion Services, Staples and EST agree that
Staples shall be an "independent contractor" (and Staples shall not be
considered as having employee or agent status with respect to EST for any
purpose) and shall not be entitled to participate in any employee benefit plans
or arrangements or fringe benefit plans or programs or payroll practices
maintained or contributed to by EST for its directors officers and/or employees.
EST shall not supervise, control or direct the manner or means by which Staples
performs the Promotion
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Services, and Staples shall have no authority to act for or on behalf of EST or
to contractually bind the EST without EST's prior written consent. Staples shall
be solely responsible for payment of all Federal, state and local taxes arising
out of Staples's performance of the Promotion Services, including by way of
illustration but not limitation, Federal, state and local income taxes, social
security taxes or social insurance obligations and any other taxes or business
license fees required by applicable law. EST shall not carry workers'
compensation insurance or any health or accident insurance to cover Staples nor
pay any amounts on account of Staples for purposes of social security or social
insurance, unemployment insurance, or Federal, state or local withholding and
employment taxes, and, except for the COBRA Reimbursements, shall not provide
any other contributions or benefits on account of the Staples which might be
required or customary in connection with an employer employee relationship.
19. Staples acknowledges that he has acquired, and will, acquire
knowledge of information relating to the confidential affairs of EST, including,
but not limited to, technical information, intellectual property, business and
marketing plans, strategies, customer information, supplier information, sales
representative information, distributor information, process material,
methodologies, technical materials, manuals and strategic options and models
(collectively, "Confidential Information"), provided that Confidential
Information shall not include information that: (i) was in Staples' possession
prior to his employment with EST (and its predecessor entities); (ii) is now, or
hereafter becomes, through no act or failure to act on the part of Staples,
generally known to the public; (iii) is rightfully obtained by Staples from a
third party, without breach of any obligation of such third party to EST; or
(iv) is independently developed by Staples without use of or reference to such
information. Staples agrees that during the Promotion Term, he (i) will hold
inviolate, keep secret and will not divulge, transmit or
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otherwise disclose the Confidential Information (except as legally compelled by
court order, and then only to the extent required, after prompt notice to EST of
any such order), directly or indirectly, without the prior written consent of
EST, and (ii) will not use, directly or indirectly, any Confidential Information
for the benefit of anyone other than EST.
20. During the Promotion Term, Staples shall not take any action to
disparage or criticize EST, its products or the employees, officers, directors,
shareholders or customers of EST or to engage, directly or indirectly, in any
other action that injures or hinders the business of EST, including, without
limitation, the solicitation of employees, customers, suppliers, sales
representatives or distributors of EST or its products. During the Promotion
Term, EST shall not take any action to disparage or criticize Staples.
21. In the event of the breach or threatened breach of paragraphs 19
and 20 of this Agreement by Staples, Staples acknowledges that EST would have no
adequate remedy at law and, in the event of such breach, EST would be
irreparably harmed and shall, therefore, be entitled to injunctions, both
preliminary and final, enjoining and restraining such breach or threatened
breach. Such remedies shall be in addition to all other remedies available at
law, in equity or as provided below in paragraph 22.
22. In the event that EST believes that Staples has breached his
obligations under paragraphs 19 and 20 of this Agreement, EST shall provide
Staples with written notice of such belief and shall specify the basis therefor.
In the event EST delivers such a notice, one or more board members of EST and
Staples shall meet in person at EST's offices within eight (8) business days of
the mailing of such notice to discuss the contents of such notice and to provide
Staples with an opportunity to refute EST's belief. If, after giving effect to
such meeting, EST continues to believe that Staples has breached his obligations
under paragraphs 19 and 20 of this Agreement and Staples continues to believe
that he has not breached his obligations under paragraphs 19 and 20 of this
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Agreement, then either party shall have the right to refer the matter to
arbitration in Los Angeles, California before one arbitrator and arbitrated in
accordance with the streamlined arbitration rules of the Judicial Arbitration
and Mediation Service. In the event that Staples acknowledges the breach of his
obligations under paragraphs 19 and 20 of this Agreement or such a finding is
made by an arbitrator in the manner described above, EST shall have the right,
but not the obligation, to terminate (i) the Promotion Term and (ii) further
payments under this Agreement, and Staples shall promptly remit back to EST an
amount equal to the sum of all amounts received by him from EST following the
date of breach.
23. This Agreement is non-exclusive, and in no way restricts Staples
from performing other business activities during the Promotion Term; provided,
however, that in doing so, Staples does not violate his agreements set forth in
this Agreement.
24. Each of Staples and EST represents and acknowledges that in
executing this Agreement, he or it, as the case may be, does not rely and has
not relied upon any representation or statement made by the other party or by
any of the other party's shareholders, directors, officers, employees or
representatives with regard to the subject matter, basis, or effect of this
Agreement or otherwise, other than those specifically stated in this written
Agreement.
25. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and upon their respective heirs, administrators,
representatives, executors, successors, and assigns. Staples expressly warrants
that he has not and will not transfer to any person or entity any rights, causes
of action, or claims released in this Agreement.
26. Should any provision of this Agreement be declared or be
determined by any court of competent jurisdiction to be illegal, invalid, or
unenforceable, the legality, validity, and
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enforceability of the remaining parts, terms, or provisions shall not be
affected thereby, and said illegal, unenforceable, or invalid part, term, or
provision shall be deemed not to be a part of this Agreement.
27. This Agreement sets forth the entire agreement between the parties
hereto and fully supersedes any and all prior agreements or understandings,
written or oral, between the parties hereto pertaining to the subject matter
hereof.
* * *
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28. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of California.
PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL
KNOWN AND UNKNOWN CLAIMS.
Dated: March 8, 2007 /s/ Xxxxxx X. Xxxxxxx
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Xx. Xx Xxxxxxx
Dated: March 8, 2007 ELECTRONIC SENSOR TECHNOLOGY, INC.
By: /s/ Xxxxxx Xxx
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Its: Chief Financial Officer
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