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EXHIBIT 10.15.2
SEPARATION AGREEMENT AND GENERAL RELEASE
This Agreement is entered into by and between AMERICAN TECHNOLOGY
CORPORATION ("Employer"), a Delaware corporation, and XXXX XXXXXXXX, an
individual ("Employee").
RECITALS
A. Employee has been employed by Employer in the positions of
Chairman of the Board, President and Chief Executive Officer.
B. Employer and Employee desire to terminate Employee's
employment and to have Employee resign from such positions.
C. Employee has previously hereto received consideration in the
amount of $19,340.01 representing Employee's accrued and unused vacation
benefits through June 12, 1998, together with Employee's final paycheck through
June 12, 1998 and final expense reimbursement.
D. Employer and Employee are desirous of entering into a
Consulting Agreement (the "Consulting Agreement") and provide for the settlement
and release of Employer for any claims related to Employee's employment or the
termination of that employment.
NOW, THEREFORE, in consideration of the terms, conditions and agreements
set forth below, the parties agree as follows:
1. Review Period. Employee shall have until the close of business
on July 3, 1998 to accept the terms of this Separation Agreement and General
Release ("Separation Agreement"). Employee has been encouraged to consult with
an attorney before signing the Release. Employee understands that whether or not
to do so is Employee's decision.
2. Termination of Employment. Employer agrees to accept
Employee's resignation. By entering into this Separation Agreement, Employee
tenders and Employer accepts Employee's resignation from employment effective on
June 12, 1998 ("Termination Date"). Employer will ensure that all of its records
reflect a resignation from employment on the Termination Date. Employee also
agrees to concurrently submit his resignation as a member of Employer's Board of
Directors and, in connection therewith, shall cease being Chairman of the Board.
3. Payments and Benefits. Employer will provide to Employee the
Consulting Agreement generally described in subparagraph 3.1 below. Employee
understands that the amounts to be paid to Employee pursuant to the Consulting
Agreement are all that Employee is entitled to receive from Employer. Employee
acknowledges that the payments to be made pursuant to the Consulting Agreement
below are being made by Employer in lieu of the remaining payments under
Employee's Employment Agreement, dated as of September 1, 1997 (the "Employment
Agreement") and , in connection therewith, hereby forfeits and releases any
claim that Employee may have as to any regular or incentive compensation
including, without limitation, vested or unbelted options and bonuses.
3.1 Consulting Agreement. In lieu of receipt of the
remaining payments under the Employment Agreement and the stock options
currently exercisable under that certain Stock Option Agreement between the
parties dated as of September 1, 1997 (the "Option Agreement") entered into in
connection with the Employment Agreement, each of which agreements may be
canceled for cause without payment of additional consideration, Employee and
Employer agree to (i) terminate the Employment Agreement (ii) amend the Option
Agreement as set forth below and (iii) enter into the Consulting Agreement. In
consideration for Employee's agreement to be available and consult with the
Company for a period of four months upon the terms and conditions set forth
therein, and for a covenant by Employee not to compete with Employer for the
term thereof, Employee will receive compensation equal to $10,000 per month,
plus retain an option (the "Option") to purchase up to 120,000 shares of
Employer's common stock at a price of $5.81 per share, representing the closing
bid price on August 29, 1997 (the original date of grant), with such Option to
be exercisable until 5:00 p.m. PDT, June 12, 1999. In connection therewith, the
Option Agreement shall be amended to cancel all options previous granted in
excess of 120,000 option shares. Employer shall register the option shares
pursuant to a Registration Statement on Form S-8 as soon as practicable after
the execution hereof, but in no event later than July 31, 1998 and, in
connection therewith, shall submit a copy of the Registration Statement to its
accountants for review no later than July 15, 1998.
3.2 Medical Coverage. Employer has given Employee written
notification of his rights to continuation of insurance coverage under the
provisions of the Consolidated Omnibus Budget Reconciliation Act of 1986
("COBRA"). Employee will be responsible for the full cost of continued coverage
in accordance with the provisions of COBRA.
4. Press Release. Employer and Employee shall jointly agree on
the form and content of the press release to be issued in connection with
Employee's termination.
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5. Release of Claims. Subject only to paragraph 6, Employee on
his own behalf, and on behalf of his successors and assigns, releases the
Employer and its officers, directors, employees, agents, and attorneys and any
parent, subsidiary, affiliated or related companies and their respective
successors and assigns, ("Released Parties") from all claims, demands, actions,
or other legal responsibilities of any kind which Employee may have based on, or
pertaining to Employee's employment with the Employer or the termination of that
employment. This release includes (but is not limited to) any claims Employee
may have to indemnification pursuant to paragraph 4 of the Employment Agreement,
Employer's Bylaws, and California Corporate and Labor Codes, respectively, which
rights are hereby expressly terminated and/or waived, as well as, the Age
Discrimination in Employment Act, which prohibits age discrimination in
employment, Title VII of the Civil Rights Act, which prohibits discrimination in
employment based on race, color, sex, religion or national origin, or any other
federal, state or local law or regulation prohibiting employment discrimination.
This release also includes any claim for wrongful discharge arising under public
policy or any contract or policy of the Employer.
6. Claims Not Affected by Release. This Release does not affect
Employee's right to receive benefits under and to apply for continuation of
conversion of insurance coverage to the extent that the Employer's insurance
plans or applicable law provide for such continuation or conversion. In
addition, this Release does not apply to any claim for workers' compensation
under any federal or state workers' compensation or occupational disease law.
Finally, this Release does not waive any rights or claims that Employee may have
under the Age Discrimination in Employment Act which arise after the date
Employee signs this Agreement.
7. Unknown Claims. Employee understands that the release of
claims set forth in paragraph 6 above covers claims which the Employee knows
about and those he may not know about. Employee expressly waives all rights
under Section 1542 of the California Civil Code, which Section Employee has read
and understands, and which provides as follows:
Section 1542. 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.
8. Agreement not to Xxx. Employee promises never to file a
lawsuit asserting any claims that are released in paragraph 5 above.
9. Representations and Warranties. Employee represents and
warrants that (i) he has not assigned to any other person or entity the claims
which are the subject of paragraph 5 above, (ii) except for matters specifically
set forth in Section 13, there is no litigation, arbitration or proceeding
pending or, to the best of Employee's knowledge, threatened against or relating
to the properties or business of Employer, nor has any person manifested to
Employee an awareness of a reasonable basis for any claim against Employer which
could have a material adverse effect on the business or financial condition of
Employer, (iii) Employee has delivered to Xxxxxx Xxxxxx, Treasurer, all
corporate equipment, property and documents in Employee's possession, including,
without limitation, a list of all vendor, customer and prospective customer
names, contacts and phone numbers, (iv) such documents include all purchase
orders, invoices, notices, contracts and agreements entered into by Employee on
behalf of Employer, (v) Employee has provided a written list and description of
any verbal agreements made be Employee with any employees, consultants, vendors,
customers, agents or other parties, (vi) Employee has submitted final expense
reports through the Termination Date and such expense reports reflect only
reasonable and necessary expenses on behalf of Employer and (vii) Employee has
delivered all corporate credit and identification cards to Xxxxxx Xxxxxx and
further warrants that there are no charges other than those set forth in
Employee's final expense report.
10. Consequences of Employee's Violation of Promises. If Employee
violates Employee's promises contained in paragraphs 5 or 8 above, Employee will
pay for all costs incurred by Employer, any related companies, or the directors
or employees of any of them, including reasonable attorneys' fees, in defending
against Employee's claim.
11. Confidentiality. Employee and Employer both agree not to
disclose the terms and conditions of this Agreement nor the substance of any
discussions or negotiations leading up to this Agreement for any reason to any
person or entity not a party hereto unless such communication is required by law
or is necessary to comply with the law including, without limitation, federal or
state tax or securities laws (e.g., communications to a tax preparer for
purposes of submitting a tax return to the Internal Revenue Service, disclosures
which are required by the rules of the Securities and Exchange Commission, etc.)
or otherwise further or comply with a legal, material or contractual interest or
obligation of Employer or Employee.
12. Confidential Information. Employee agrees to return all
documents, disks, programs, computer equipment or other items or materials that
he has received during his employment. Employee further agrees to maintain the
confidentiality of all confidential, proprietary and trade secret information
that Employee learned during his employment.
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13. Indemnification. Each of the parties agrees to indemnify and
hold the other party harmless against any and all liabilities of any nature
arising after the date of this Agreement, whether known or unknown, accrued,
absolute, contingent or otherwise including, without limitation, any claims,
damages, fines, penalties, assessments or similar charges (collectively
"liabilities"), which arise out of or are related to any breach of this
Agreement. Employee, in addition, agrees to further indemnify and hold Employer
harmless against all Liabilities related to any activity by Employee during the
course and scope of his retention pursuant to the terms of the Consulting
Agreement which is either ultra xxxxx or unauthorized or which may constitute a
breach of fiduciary duty, duty of loyalty or other duty owed to Employer.
Notwithstanding anything in this Agreement or the Consulting Agreement to the
contrary, Employer may withhold and set off against amounts due to Employee
hereunder or under the Consulting Agreement any amount as to which Employee is
obligated to indemnify Employer pursuant to this Agreement or otherwise.
14. No Waiver. Nothing herein shall constitute a waiver or
relinquishment of any right, power or claim that Employer may have against
Employee of any kind or nature, whether known or unknown, accrued, absolute,
contingent or otherwise including, without limitation, any claims, damages,
fines, penalties, assessments or similar charges, which arise out of or are
related to any activity by Employee during the course and scope of his
employment or otherwise including actions which may have been ultra xxxxx or
unauthorized or which may have constituted a breach of fiduciary duty, duty of
loyalty or other duty owed to Employer.
15. Amendments. No addition, modification, amendment or waiver of
any part of this Agreement shall be binding or enforceable unless executed in
writing by both parties hereto.
16. Severability. Should any part of this Agreement be declared
invalid, void or unenforceable, all remaining parts shall remain in full force
and effect and shall in no way be invalidated or affected.
17. Survival. The representations, warranties, covenants and
agreements made in this Agreement shall survive the execution hereof and shall
be binding upon and inure to the benefit of the respective parties hereto.
18. Non-Admissions. Employer and Employee agree that neither this
Agreement nor the consideration given shall be construed as an admission of any
wrongdoing or liability by Employer or Employee, and that all such liability is
expressly denied.
19. Arbitration. Any dispute arising out of or related to this
Agreement shall be submitted to arbitration in San Diego County, California,
before an arbitrator selected in accordance with the rules and procedures of the
American Arbitration Association and shall be conducted in accordance with the
provisions of California Code of Civil Procedure Sections 1280 et seq., as the
exclusive remedy of such dispute; provided, however, that provisional injunctive
relief may, but need not, be sought in a court of law while arbitration
proceedings are pending, and any provisional injunctive relief granted by such
court shall remain effective until the matter is finally determined by the
Arbitrator. Final resolution of any dispute through arbitration may include any
remedy or relief which the Arbitrator deems just and equitable, including
permanent injunctive relief or specific performance, or both, and the Arbitrator
is hereby empowered to award such relief. Any award or relief granted by the
Arbitrator hereunder shall be final and binding on the parties hereto and may be
enforced by any court of competent jurisdiction.
20. Future Employment. Employee waives any rights to future
employment with the Employer or any of its affiliated or related companies.
21. Entire Agreement. This is the entire Agreement between
Employee and Employer. Employer has made no promises other than those set forth
in this Agreement and the Consulting Agreement.
EMPLOYEE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT,
UNDERSTANDS IT AND IS VOLUNTARILY ENTERING INTO IT WITH THE INTENTION OF
RELINQUISHING ALL CLAIMS AND RIGHTS OTHER THAN THOSE SET FORTH HEREIN.
"EMPLOYER" "EMPLOYEE"
AMERICAN TECHNOLOGY CORPORATION,
a Delaware corporation By: /s/ XXXX XXXXXXXX
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Xxxx Xxxxxxxx
By: /s/ XXXXXX XXXXXX
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Title: Vice President Date:______________________
Date: June 19, 1998
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