SEVERANCE AGREEMENT AND GENERAL RELEASE
Exhibit
10.70
SEVERANCE
AGREEMENT AND GENERAL RELEASE
THIS SEVERANCE AGREEMENT AND GENERAL
RELEASE (this “Agreement”), dated as
of May 16, 2008, is made and entered into by and between Kronos Advanced
Technologies, Inc., a Nevada corporation (the “Company”), and Xxxxxx
X. Xxxxxx, an individual resident of the State of Massachusetts (“Xxxxxx”).
WHEREAS, Xxxxxx is a
stockholder, officer, director and employee of the Company;
WHEREAS, Xxxxxx is a party to
the following agreements with the Company: Employment Agreement,
dated November 15, 2001 (“Employment
Agreement”); a Promissory Note, dated March 31, 2004 made by the Company
in favor of Xxxxxx (“Note”); Stock Option
Agreement, dated June 19, 2007 (“Stock Option
Agreement”); and Indemnification Agreement, dated August 11, 2000 (“Indemnification
Agreement”);
WHEREAS, the Company has informed
Xxxxxx that his role as President and Chief Executive Officer is being
terminated effective June 20, 2008 (“Termination Date”),
which is a termination for “Good Reason” under the Employment
Agreement;
WHEREAS, in connection with
the foregoing, Xxxxxx and the Company desire to evidence in writing the terms
and conditions of such termination.
NOW, THEREFORE, in
consideration of the foregoing and the respective representations, warranties,
covenants, agreements, and conditions set forth herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. EMPLOYMENT
TERMINATION. Xxxxxx will take his five (5) weeks of accrued
vacation beginning on May 19, 2008 and continuing until June 20,
2008. Dwight’s Company employment will end on June 20, 2008 (“Termination Date”)
and by executing this Agreement, Xxxxxx resigns as an officer and director of
the Company effective as of the date hereof. During his employment,
Xxxxxx participated in certain Company-provided benefits, and he also purchased
his own health, life and disability insurance benefits through third-party
insurance companies, for which he was reimbursed by the Company (“Third-Party Benefit
Plans”). As of the Termination Date, any entitlement Xxxxxx
had or might have had under a Company-provided benefit plan shall cease, except
as required by law. The Termination Date shall be the qualifying
event under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”). Xxxxxx
understands that his rights and continued participation in those
Company-sponsored plans will be governed by the terms of such plans, and that
Xxxxxx generally will become ineligible for those plans on the Termination
Date. Thereafter, Xxxxxx will be able to purchase continued coverage
under certain of such Company-provided plans and to continue his current health
and other benefits with his existing Third-Party Benefit Plans; provided,
however, that to the extent Xxxxxx purchases continuation coverage under certain
of Company-provided and/or continues his benefits under his Third-Party Benefit
Plans, the Company shall reimburse Xxxxxx for such coverage on a monthly basis
during the 12-month period after the Termination Date within thirty (30) days of
Dwight’s written reimbursement request for such benefits. By
executing this Agreement both parties acknowledge and agree that the Employment
Agreement is hereby terminated and of no further force and effect; provided, however, that
the parties acknowledge and agree that Sections 4 (Confidentiality/Covenant
Against Unfair Competition), 5 (Company Property) and 8 (Indemnification)
thereof shall survive such termination and remain in full force and effect in
accordance with the terms thereof. Xxxxxx agrees that all provisions
of that certain Voting Agreement dated as of June 20, 2007, by and among Xxxxxx,
the Company and the other parties thereto (“Voting Agreement”)
shall continue to be in full force and effect after the Termination
Date.
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Xxxxxx /s/
DRD
Company
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2. PAYMENTS
AND BENEFITS.
(a) Severance
Payment. The Company shall pay to Xxxxxx twenty-four equal
severance payments each in the amount of Nine Thousand Three Hundred
Seventy-Five Dollars ($9,375.00), minus applicable federal, state, and local tax
withholdings, the first payment of which shall be paid on the first regularly
scheduled payroll period following the Termination Date, and each subsequent
payment shall be paid immediately thereafter in accordance with the Company’s
regular payroll procedures until the entire severance payment is paid in
full. At the appropriate time, as required by law, the Company shall
issue an IRS Form W-2 reflecting such payments. Such payments will
not be taken into account in determining Dwight’s rights or benefits under any
other program.
(b) Loan
Repayment. Within ten (10) days of the execution of this
Agreement by all parties, the Company shall repay to Xxxxxx the aggregate amount
of the outstanding principal and all accrued interest on the Note as of the date
hereof, which is Fifty Nine Thousand Nine Hundred Eighty-Six and 29/100 Dollars
($59,986.29). Upon receipt of payment of the Note in full, Xxxxxx
shall return to the Company for cancellation all documentation, including,
without limitation, the Note and any other document, evidencing indebtedness
owed by the Company to Xxxxxx.
3. RELEASE.
(a) Xxxxxx
releases (i.e., gives
up) all known and unknown claims that Xxxxxx presently has (i.e., has as of the
date hereof) against the Company, all current and former parents,
subsidiaries, related companies, partnerships, joint ventures, or other
affiliates, and, with respect to each of them, their predecessors and
successors; and, with respect to each such entity, all of its past, present, and
future employees, officers, directors, stockholders, owners, representatives,
assigns, attorneys, agents, insurers, employee benefit programs (and the
trustees, administrators, fiduciaries, and insurers of such programs), and any
other persons acting by, through, under or in concert with any of the persons or
entities listed in this section, and their successors (“Released Parties”),
except claims that the law does not permit Xxxxxx to waive by signing this
Agreement. For example, Xxxxxx is releasing all common law contract,
tort, or other claims he might have, as well as all claims he might have under
the WARN Act, the Age Discrimination in Employment Act (“ADEA”), Title VII of
the Civil Rights Act of 1964, Sections 1981 and 1983 of the Civil Rights Act of
1866, the Americans With Disabilities Act (ADA), the Employee Retirement Income
Security Act of 1974 (“ERISA”), and similar
state or local laws. Notwithstanding the forgoing, Xxxxxx is not
releasing any rights or claims related to indemnification, which rights are set
forth in Section 8 of the Employment Agreement and the Indemnification
Agreement.
(b) The
Company hereby acknowledges and agrees that as of the Termination Date it has no
knowledge of any claims it may have against Xxxxxx.
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Xxxxxx /s/
DRD
Company
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4. COOPERATION
REQUIRED. If requested by the Company after May 16, 2008 and
until the date that is six (6) months after the date hereof, Xxxxxx shall
cooperate with the Company or any affiliate for up to twenty (20) hours per
month in effecting a smooth transition of his responsibilities to others (“Transition
Services”). The first eight (8) hours in each month that
Xxxxxx works performing Transition Services shall be at no cost to the Company,
but to the extent Xxxxxx works more than eight (8) hours in any month performing
any such Transition Services and/or provides other consulting services as may be
requested by the Company (i.e., consulting services that are not Transition
Services), he will be paid an hourly rate of Three Hundred Dollars ($300) for
each such hour that he works. The parties have evidenced such intent
and terms in that certain Consulting Agreement executed by the parties
simultaneously herewith.
5. MUTUAL
NON-DISPARAGEMENT. Xxxxxx agrees not to criticize, denigrate,
or otherwise disparage the Company, any other Released Party, or any of the
Company’s products, processes, experiments, policies, practices, standards of
business conduct, or areas or techniques of research. Similarly, the
Company, including its employees, agrees not to criticize, denigrate, or
otherwise disparage Xxxxxx. In the event that a prospective employer
or third-party contacts the Company for a reference about Xxxxxx, the Company
agrees that it will only provide such prospective employer or third-party with
the dates of Dwight’s employment with the Company and the positions he held with
the Company. Xxxxxx shall direct any such prospective employer to
contact Xxxxxxx Xxxxxx or Xxxxx Xxxxxxx.
6. OTHER REPRESENTATIONS AND
PROMISES. Xxxxxx and the Company acknowledge and agree as
follows:
(a) The
Company agrees to pay all of Employee’s attorneys’ fees (up to a maximum amount
of Three Thousand Dollars ($3,000)) incurred in connection with the review and
negotiation of this Agreement and all other agreements and/or documents executed
herewith.
(b) This
Agreement is the entire agreement relating to Dwight’s service with the Company
and any claims or future rights that Xxxxxx might have with respect to the
Company and the Released Parties, except for the equity interest agreements
(e.g., Stock Option Agreement and Voting Agreement) described in the attached
Exhibit 6(k),
the Note, the surviving provisions of the Employment Agreement as set forth
herein, the Indemnification Agreement and a Consulting Agreement executed
simultaneously herewith, each of which shall remain in full force and effect in
accordance with their terms.
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Xxxxxx /s/
DRD
Company
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(c) Neither
party relied on any representations that were not in this Agreement when
executing this Agreement.
(d) Xxxxxx
has not suffered any job-related wrongs or injuries, such as any type of
discrimination, for which Xxxxxx might still be entitled to compensation or
relief in the future. Upon the Company’s full payment of the Note and
Dwight’s outstanding business expense reimbursement request(s), which total One
Thousand One Hundred Thirty-Eight and 50/100 Dollars ($1,138.50), Xxxxxx will
have been paid all wages, compensation, benefits, expenses and other amounts
that the Company or any Released Party should have paid Xxxxxx through the date
hereof.
(e) This
Agreement is not an admission of wrongdoing by the Company or any other Released
Party.
(f) Xxxxxx is
intentionally releasing claims that he does not know that he might have and
that, with hindsight, he might regret having released. Xxxxxx has not
assigned, transferred or otherwise given away any of the claims he is
releasing.
(g) If the
Company or Xxxxxx successfully asserts that any provision in this Agreement is
void, the rest of the Agreement shall remain valid and enforceable unless the
other party to this Agreement elects to cancel it.
(h) If Xxxxxx
initially did not think any representation he is making in this Agreement was
true or if Xxxxxx initially was uncomfortable making it, Xxxxxx resolved all his
doubts and concerns before signing this Agreement. Xxxxxx has
carefully read this Agreement, fully understands what it means, is entering into
it knowingly and voluntarily, and confirms that all Dwight’s representations in
this Agreement are true. The consideration period described in the
box above Dwight’s signature started when Xxxxxx first was given this Agreement,
and Xxxxxx waives any right to have it restarted or extended by any subsequent
changes to this Agreement. The Company would not have given Xxxxxx
the payments or benefits he is getting in exchange for this Agreement but for
his representations and promises he is making by signing it.
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Xxxxxx /s/
DRD
Company
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(i) Xxxxxx
shall return to the Company all files, memoranda, documents, records, copies of
the foregoing, Company-provided credit cards, keys, building passes, security
passes, access or identification cards, and any other property of the Company or
any Released Party in Dwight’s possession or control; provided, however, that
the Company has requested that Xxxxxx continue to maintain and store certain of
the Company’s business documents, including, but not limited to, the Company’s
key filings, financial documents, and Company contracts (maintained in 25 filing
cabinets at Dwight’s home office) as well as certain of the Company’s prototype
and test equipment until it can arrange for the transfer of these
documents. The Company agrees that it shall not hold Xxxxxx
personally liable for the maintenance and safekeeping of these documents and the
Company will incur all of the expenses associated with the transfer of these
documents. Xxxxxx shall keep these documents available to the Company
at all times that these documents are maintained and stored by Xxxxxx (subject
to Dwight’s travel schedule, which will require that he not be physically
present at the home office on a regular basis and, as a result, may require a
reasonable period of time for Xxxxxx to respond to any request(s) by the Company
for documents). If the Company requests that Xxxxxx store these
documents beyond June 30, 2008, the Company shall pay to Xxxxxx a monthly
storage fee of $1,500 which shall be paid to Xxxxxx on a monthly basis and which
fee shall be prorated for any period of storage of less than twenty-eight (28)
days. Xxxxxx shall clear all expense accounts, repay everything he owes to the
Company or any Released Party, pay all amounts he owes on Company-provided
credit cards or accounts (such as cell phone accounts), and cancel or personally
assume any such credit cards or accounts. As of the date of the
execution of this Agreement, the parties acknowledge and agree that Xxxxxx does
not owe any such amounts to the Company. Xxxxxx shall not incur any
expenses, obligations, or liabilities on behalf of the Company.
(j) By
executing this Agreement, Xxxxxx, to the maximum extent permitted by law,
irrevocably assigns to the Company all of his rights to all Subject
Inventions. “Subject Invention”
means any Invention that was conceived or first practiced by Xxxxxx, alone or in
a joint effort with others, at any time prior to the execution hereof, which (1)
may be reasonably expected to be used in a product of the Company, or a product
similar to a Company product, (2) results from work that Xxxxxx performed as
part of his duties as an employee for the Company, (3) is in an area of
technology which is the same as or substantially related to the areas of
technology with which Xxxxxx was employed during his time as an employee of the
Company, (4) is useful, or which Xxxxxx reasonably expects may be useful, in any
manufacturing or design process of the Company, or (5) utilizes any Confidential
Information or Trade Secrets. “Invention” means any
discovery, whether or not patentable, including, without limitation, any
process, method, formula, technique, machine, manufacture, composition of
matter, algorithm or computer program, trade secrets, works of authorship, mask
work, circuit, layout, idea, design, know-how and data, as well as improvements
thereto.
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Xxxxxx /s/
DRD
Company
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(k) Xxxxxx
hereby represents and warrants to the Company that Exhibit 6(k) attached
hereto sets forth a true, correct and complete list of all of the type and
amount of equity interests in the Company owned, directly or indirectly, by
Xxxxxx, including, without limitation, all interests convertible into equity in
the Company, and in the case of the options to acquire shares of the Company’s
capital stock owned, directly or indirectly, by Xxxxxx, the grant date, exercise
price, vesting date, and expiration date of such options, each of which shall
remain in full force and effect in accordance with their respective
terms.
(l) The
Company acknowledges and agrees that it shall immediately take all necessary
steps to change the Company’s general phone number on any public documents,
including any and all SEC filings, which currently lists Dwight’s home office
number.
(m) The
parties agree that they will take all necessary steps to transfer the access to
the Kronos Advanced Bank account from Xxxxxx to Xxxxxxx Xxxxxx as soon as
practicable, but no later than the Termination Date.
7. MISCELLANEOUS.
(a) No
Waiver. The failure of any party to this Agreement to enforce
at any time, or for any period of time, any one or more of the terms of this
Agreement shall not be a waiver of such terms or conditions or of such party’s
right thereafter to enforce each and every term and condition of this
Agreement.
(b) Choice of
Law. This Agreement shall be interpreted and enforced in
accordance with the laws of Massachusetts.
(c) Legal Fees and
Expenses. In the event that either party brings a lawsuit to
enforce their respective contractual rights under this Agreement, the Promissory
Note, the Indemnification Agreement or the Consulting Agreement, the prevailing
party shall be entitled to recover all legal fees and expenses associated with
prosecuting such claim(s).
(d) No Presumption Against
Drafter. This Agreement has been drafted through a cooperative
effort by both parties, and neither party shall be considered the drafter of
this Agreement so as to give rise to any presumption or convention regarding
construction of this document.
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Xxxxxx /s/
DRD
Company
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XXXXXX
MAY NOT MAKE ANY CHANGES TO THE TERMS OF THIS AGREEMENT. BEFORE
SIGNING THIS AGREEMENT, XXXXXX SHOULD READ IT CAREFULLY AND, IF
HE
CHOOSES, DISCUSS IT WITH HIS ATTORNEY. XXXXXX
SHOULD TAKE AS MUCH TIME AS HE NEEDS TO CONSIDER THIS AGREEMENT BEFORE
DECIDING WHETHER TO SIGN IT, UP TO TWENTY-ONE (21) DAYS. BY
SIGNING IT XXXXXX
WILL BE WAIVING HIS KNOWN AND UNKNOWN CLAIMS.
MAY
23, 2008, IS THE DEADLINE FOR XXXXXX
TO DELIVER A SIGNED COPY OF THIS AGREEMENT TO XXXXXXX X. XXXXXX AT 0000
XXX XXXXXX XXXXX 000, XXXXXX, XX, TELEPHONE 0.000.000.0000. IF
XXXXXX
FAILS TO DO SO, HE WILL NOT RECEIVE THE PAYMENTS OR BENEFITS DESCRIBED IN
IT.
XXXXXX
MAY REVOKE THIS SETTLEMENT AGREEMENT IF HE REGRETS HAVING SIGNED
IT. TO DO SO HE MUST DELIVER A WRITTEN NOTICE OF REVOCATION TO
XXXXXXX X. XXXXXX AT 0000 XXX XXXXXX XXXXX 000, XXXXXX, XX, TELEPHONE
0.000.000.0000, BEFORE SEVEN (7) TWENTY-FOUR (24) HOUR PERIODS EXPIRE FROM
THE TIME HE SIGNED IT. IF XXXXXX REVOKES THIS SETTLEMENT
AGREEMENT, IT WILL NOT GO INTO
EFFECT.
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Date:
5-16-08
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By: /s/ Xxxxxx X.
Xxxxxx
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Xxxxxx X. Xxxxxx
Kronos Advanced Technologies,
Inc.
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Date: ____________________
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By: ___________________________________
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Name: Xxxxxxx
X. Xxxxxx
Title: Chief
Operating Officer
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Xxxxxx /s/
DRD
Company
____
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EXHIBIT
6(k)
EQUITY
INTERESTS
Kronos
Advanced Technologies, Inc. (“Kronos”) Common Stock – 1,201,926
Shares
Kronos
Stock Options – 26,000,000 options to purchase 26,000,000 shares of Kronos
Common Stock granted under the Kronos Stock Incentive Plan Stock Option
Agreement dated June 19, 2007. Stock Options are fully vested and
exercisable at an Exercise Price per Share of $0.016 until the Expiration Date
of June 19, 2017.
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Initial
Xxxxxx /s/
DRD
Company
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