SEPARATION AGREEMENT
I, Michael A. Russell ("Employee," "me" or "I"), understand that I ceased to be an officer of American Technology Corporation (the "Company") on December 16, 2005 (the "Termination Date"). I will remain an employee of the
Company from the Termination Date through January 3, 2006 (the "Separation Date"). The Company has agreed that in exchange for my covenants in this Agreement, including my execution of the Release attached as Exhibit C, and the promises, releases, and
covenants herein, the Company will pay me severance in the amount of $46,250 (Forty Six Thousand and Two Hundred and Fifty Dollars and No Cents) payable in accordance with the Company's regular payroll practices at the rate of my base compensation in
effect immediately prior to the Separation Date, until such cash benefit has been paid in full, and will be subject to standard withholdings and deductions. Notwithstanding the foregoing, all amounts which are or will be unpaid as of March 15, 2006, will
be paid on or before that date, subject to standard withholding and deductions. The Company will also pay on my behalf the premiums for continuing health benefits under COBRA, until the earlier to occur of my being eligible for health care coverage through
my next employer, or March 31, 2006. The benefits described in the preceding two sentences are referred to in this Agreement as the "Severance Benefits." I understand that I am not entitled to the Severance Benefits unless and until I sign the Release
in the form attached hereto as Exhibit C (the "Release") within 21 days after the Separation Date, and the revocation period has expired without being exercised. I further understand that I am not entitled to the Severance Benefits unless I remain
an employee of the Company continuously from the Termination Date through the Separation Date. I understand and agree that in addition to these Severance Benefits, the Company will pay me all of my accrued salary and vacation, to which I am entitled by
law.
I acknowledge my continuing obligations under my American Technology Corporation Proprietary Information and Inventions Agreement for Employees (attached as Exhibit A). Pursuant to the American Technology Corporation Proprietary
Information and Inventions Agreement for Employees, I understand that among other things, I must not use or disclose any confidential or proprietary information of the Company and I must immediately return all Company property and documents (including
all embodiments of proprietary information) and all copies thereof in my possession or control. I acknowledge that I have acquired no rights by license or otherwise in any ["Confidential Information"] as such term is defined in the American Technology
Corporation Proprietary Information and Inventions Agreement for Employees. I also acknowledge the Mutual Agreement to Arbitrate (attached as Exhibit B) between myself and the Company dated June 19, 2004, and agree to that Mutual Agreement to Arbitrate's
validity and application to any disputes arising under this Agreement. I also agree that any arbitration regarding this Agreement shall take place in San Diego County, California.
I agree not to make any statement or take any action which would damage the reputation or promotion of the Company or its products.
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