SEPARATION AGREEMENT AND RELEASE
 
This Separation Agreement and Release (the “Agreement”), is made and entered as
of the 14th day of April, 2008 (the “Effective Date”), by and between Avantair,
Inc. (the “Company”) and John Waters (the “Executive”).

WHEREAS, the Executive was an employee of the Company holding the position of
Chief Financial Officer, and was a member of the Board of Directors of the
Company; and
 
WHEREAS, the Company and the Executive severed their employment relationship
with the Executive on April 11, 2008 (the “Separation Date”);
 
NOW, THEREFORE, in consideration of the promises herein contained, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Executive, intending to be legally bound
hereby, agree as follows:
 
1. Other than for the payment of salary and benefits through the Separation
Date, which the Company agrees to pay, the Executive acknowledges that he is
entitled to no damages, payments, benefits, compensation, remuneration, back
pay, front pay, costs, expenses or fees of any kind as a result of his
employment with the Company and/or the termination of that employment, except as
provided in this Agreement.
 
2. Simultaneously with the delivery by Executive to Company of an executed copy
of this Agreement, Company shall deliver to Executive (a) warrants for One Cent
($.01) exercisable for an aggregate of Two Hundred Thousand (200,000) shares of
the Company’s common stock and (b) a stock certificate for Thirty-Three Thousand
Three Hundred Thirty-Four (33,334) shares of the Company’s common stock.
 
3. In consideration for the Executive’s promises contained herein, and in full
satisfaction of the Company’s obligations, if any, described in the Employment
Agreement between the Executive and the Company (the “Employment Agreement”),
the Company shall:
 

 
a.
within a reasonable time, not to exceed ten (10) days from the Effective Date,
pay the Executive an amount equal to eight (8) months pay at the Executive’s
salary on the Separation Date; and

 

 
b.
reimburse the Executive for all premiums for COBRA benefits upon presentation of
documentary evidence of payment of same by the Executive, for a period of eight
(8) months from the date of this Agreement or until such time that Executive
obtains employment providing health benefits, whichever time period is shorter,
and the Executive agrees to notify the Company immediately of any employment
during this eight (8) month period which provides health insurance benefits.

 
4. Executive agrees not to transfer by any method any or all of the shares of
the Company’s stock under his ownership or control for a period of six (6)
months following the date this Agreement becomes effective, subject to its terms
(“Trading Restriction Period”). Notwithstanding the prior sentence, however, the
Trading Restriction Period shall become null and void should Barry J. Gordon,
Chairman of the Board of the Company, Arthur H. Goldberg, a director of the
Company, or Steven F. Santo, Chief Executive Officer of the Company transfer by
any method any or all of their respective shares during the Trading Restriction
Period.
 
 
1

--------------------------------------------------------------------------------

 
 
5. At the conclusion of the Trading Restriction Period, Executive’s unrestricted
shares shall be freely tradable in the open market, subject to the Company’s
“Right of First Refusal” described in Paragraph 6 below, and in compliance with
applicable securities laws.
 
6. For a twelve (12) month period following the conclusion of the Trading
Restriction Period, the Company shall have a superior right to that of any third
party to purchase the Executive’s shares of the Company’s common stock (“Right
of First Refusal”). The Company shall have five (5) days after Executive
provides notice of his intent to sell his shares in the open market or pursuant
to a bona fide offer in a private transaction, to exercise its Right of First
Refusal, in accordance with the following provisions:
 

 
a.
If the Executive intends to sell his shares in the open market, such sale(s)
shall be limited to 20,000 shares during any two-week period and the notice
Executive provides to the Company pursuant to this Paragraph 6 shall state that
Executive intends to sell his shares in the open market. If the Company
exercises its Right of First Refusal in response to Executive’s notice of his
intent to sell the shares in the open market, the Company shall pay Executive
the higher of (a) the market price of the Executive’s shares at 4:00 p.m.
Eastern Standard Time on the day Executive provides notice of his intent to sell
his shares and (b) the highest market price of Executive’s shares during the
period from the time Executive provides notice of his intent to sell his shares
and the Company exercises its Right of First Refusal;

 

 
b.
In the event the Executive desires to sell any or all of his shares in private
transaction, the notice Executive provides to the Company pursuant to this
Paragraph 6 shall state that Executive intends to sell his shares pursuant to a
bona fide offer in a private transaction and further shall provide sufficient
facts to afford the Company notice of the number of shares to be sold and the
purchase price of those shares. If the Company exercises its Right of First
Refusal in response to Executive’s notice of his intent to sell any or all of
his shares in a private transaction, the Company shall pay the same price per
share, and purchase all of the shares encompassed by the bona fide offer; and

 

 
c.
Any transfer of Executive’s shares made in violation of this Agreement shall be
null and void.

 
7. Neither party’s performance of its obligations under this Agreement shall be
construed or interpreted as an admission of any wrongdoing, fault, or liability.
 
 
2

--------------------------------------------------------------------------------

 
 
8. In addition to the parties’ obligations described in Paragraphs 1-7 above,
the parties’ obligations under this Agreement are further expressly conditioned
upon the following:
 

 
a.
The Executive’s delivery to the Company of one copy of this Agreement, properly
executed by the Executive and containing his original signature, along with
further execution and/or delivery by the Executive of any and all other
documents necessary to effectuate the provisions of this Agreement;

 

 
b.
The Executive’s agreement to cooperate fully with the Company’s reasonable
requests for assistance from the Executive in transitioning his duties and
responsibilities as former Chief Financial Officer of the Company to the
Company’s designee(s) to ensure an orderly transition of those responsibilities
for a period of eight (8) months following execution of this Agreement provided,
however, that (i) the Company reimburses the Executive for all reasonable
expenses incurred in connection with the Executive’s performance of his
obligations under this Paragraph 8(b), only when such expenses have been
pre-approved by an officer or director of the Company prior to the Executive
incurring any such expense, (ii) the Executive will not have any responsibility
for the accuracy of internal or external financial statements and (iii) the
Company hereby indemnifies, and agrees to hold harmless, the Executive with
respect to any claim or liability arising from, or relating to such assistance,
only upon a final determination by a court of competent jurisdiction that any
liability for such claim is not the result of Executive’s own negligent or
intentionally wrongful conduct.

 

 
c.
The Executive’s representation that he has not instituted, and will not
institute in the future, any actions, suits, claims, appeals, grievances,
arbitration, complaints or charges with any court, tribunal or federal, state or
city agency or other remedial body against the Company, its principals and/or
affiliates relating to matters arising out of or involving the Executive’s
employment with the Company, or the termination of that employment; except that
nothing in this Agreement precludes the Executive from instituting a claim,
charge, suit, action or appeal for the purpose of enforcing his contractual
rights under this Agreement;

 

 
d.
The Executive’s agreement not to solicit or contact any person concerning the
maintenance of any claims or actions whatsoever against the Company, its
principals and/or affiliates; except that nothing in this Agreement precludes
the Executive from responding to legal process. The Executive further agrees
that in the event the Executive or his counsel is served with a subpoena order
or other legal process seeking disclosure of information rendered confidential
by this Agreement, Executive or his counsel will inform the Company by telephone
on the date on which the Executive becomes aware such subpoena or legal process
is served and provide the Company’s counsel a copy of such subpoena or legal
process no later than the third business day from the date that Executive or his
counsel receives same. Executive further agrees that neither he nor his counsel
will voluntarily comply with any such subpoena or legal process until affording
the Company a reasonable opportunity to oppose the disclosure sought by the
subpoena or legal process; provided, however, that nothing herein shall prevent
such disclosure if a court of competent jurisdiction orders such disclosure
after the Company’s application to prevent same is denied, or if the Company
authorizes such disclosure. In the event such subpoena or legal process requires
an immediate response such that it is impracticable to provide the Company with
the opportunity to oppose such disclosure as described herein, then Executive’s
obligations under this paragraph are limited to providing notice to the Company
by facsimile or email as soon as practicable.

 
 
3

--------------------------------------------------------------------------------

 

 

 
e.
The Executive’s representation and warranty that he has not actually or
purportedly, in whole or in part, assigned or transferred to any person or
entity any claim which the Executive may have had or has against the Company or
its principals, agents, officers, employees, attorneys and/or affiliates, and
accordingly hereby agrees to indemnify, defend and hold harmless the Company for
any claim based upon or arising out of such assignment or transfer;

 

 
f.
The Executive’s agreement that he shall comply with Paragraph 7 of the
Employment Agreement, “Non-Competition, Non-Solicitation” for a period of
sixteen (16) months, provided, however, that the Executive shall not be required
to comply with Paragraph 7 of the Employment Agreement, “Non-Competition,
Non-Solicitation” after a Change of Control or upon Sale of the Company; and the
terms “Change-in-Control” and “Sale of the Company” in this Agreement shall mean
the acquisition by another entity and/or person of all or substantially all of
the assets of the Company.

 

 
g.
The Executive’s agreement that he shall, within a reasonable time, not to exceed
ten (10) days, return all property of the Company to the Company and the term
“property” in this Paragraph 8(g) shall include, but not be limited to any and
all Company confidential information as that term is defined in the Employment
Agreement;

 

 
h.
The Executive’s agreement that he shall comply with Paragraph 8 of the
Employment Agreement, “Protection of Confidential Information”;

 

 
i.
The Executive’s agreement that he shall provide the Company with notice that he
is resigning as a director and as Chief Financial Officer of the Company
simultaneously with his execution of this Agreement, in the form attached hereto
as Exhibit A;

 

 
j.
The Executive’s employment with the Company is not being terminated for “Cause.
The Executive is not being removed as a director of the Company for “Cause.” The
Executive is resigning as a director and officer of the Company to pursue other
interests. The Company’s Form 8-K filing with the SEC providing notice of
Executive’s termination shall state only that “Mr. John Waters, the Company’s
Chief Financial Officer, has departed the Company, and resigned his position as
a director of the Company, effective April 11, 2008”;

 

 
k.
The parties’ agreement that they will not say, write or cause to be said or
written, directly or indirectly, any statement that may be considered
defamatory, negative, critical, malicious, belittling, unfavorable, pejorative,
deprecatory, derogatory or disparaging with respect to the Executive or the
Company, its principals, agents, officers, employees, attorneys and/or
affiliates to any third party; and

 
 
4

--------------------------------------------------------------------------------

 

 

 
l.
The Company’s agreement that in response to any inquiries from prospective
employers of the Executive, or anyone else, the Company shall state only the
dates of the Executive’s employment with the Company and that the Executive
served as the Company’s Chief Financial Officer, and as a member of the Board of
Directors of the Company.

 
9. In consideration for the above, and except with respect to the performance of
obligations contained in this Agreement, the Executive, on behalf of himself and
all heirs, personal representatives, and assigns does hereby fully, completely
and unconditionally forever release and discharge the Company and its
successors, assigns, current and former employees, directors, officers,
trustees, shareholders, members, agents, parents, affiliates, subsidiaries,
representatives, insurers, attorneys, independent contractors and all other
related or affiliated persons and entities (the “Company Releasees”) of and from
any and all liability, claims, causes, demands, obligations, actions, contracts,
promises, agreements, damages, attorneys’ fees, costs, liabilities, rights and
allegations of whatever kind and nature, known or unknown, whatsoever from the
beginning of the world to the date of this Agreement, including, but not limited
to, such matters based on, arising out of, or related to the Executive’s
employment with the Company or the termination of that employment. This release
includes, but shall not be limited to, any and all claims for breach of
contract, implied or express; impairment of economic or business opportunity;
intentional or negligent infliction of emotional distress; false arrest;
assault; battery; false imprisonment; prima facie tort; defamation; libel;
slander; negligent termination; malicious prosecution; or any other tort,
whether intentional or negligent; or any claim or cause of action known or
unknown under Title VII of The Civil Rights Act of 1964; the Equal Pay Act; the
Fair Labor Standards Act; the Employment Retirement Income Security Act of 1974
(except as to claims pertaining to vested benefits under an employee benefit
plan); the Rehabilitation Act of 1973; the Civil Rights Acts of 1866 and 1871;
the Civil Rights Act of 1991 (Public Law 102-106, 105 Stat. 1071-1100); the
Americans With Disabilities Act of 1990; the Family and Medical Leave Act of
1993; the False Claims Act; the Labor Management Relations Act; the Age
Discrimination in Employment Act of 1967; the Older Workers Benefit Protection
Act of 1990; the United States Constitution or any other federal, state, county
or municipal statute or ordinance relating to employment or any claims growing
out of any restrictions on the Company’s right to terminate its employees,
including, but not limited to, claims relating to wages, bonuses, contract or
wrongful discharge. This Agreement covers claims of which the Executive
currently may or may not have knowledge; provided, however, that this release
specifically excludes a release of any and all of the Company’s obligations
under this Agreement and of any and all obligations of the Company under its
certificate of incorporation, its by-laws, the laws of its state of
incorporation or the applicable laws, if any, of any state in which the Company
does business to indemnify Executive with respect to his acts or admissions as
an employee or director of the Company.
 
 
5

--------------------------------------------------------------------------------

 
 
10. In consideration for the above, the Company, on behalf of itself and all
heirs, personal representatives, and assigns, by execution of this Agreement,
does hereby fully, completely and unconditionally forever release and discharge
the Executive and his heirs, successors, assigns, current and former agents,
affiliates, representatives, insurers, attorneys, independent contractors and
all other related or affiliated persons and entities (“Executive Releasees”) of
and from any and all liability, claims, causes, demands, obligations, actions,
contracts, promises, agreements, damages, attorneys’ fees, costs, liabilities,
rights and allegations of whatever kind and nature, known or unknown, whatsoever
from the beginning of the world to the day of the date of this Agreement,
including, but not limited to, such matters based on, arising out of, or related
to the Executive’s employment with the Company or the termination of that
employment and any and all claims for breach of contract, implied or express;
impairment of economic or business opportunity; intentional or negligent
infliction of emotional distress; false arrest; assault; battery; false
imprisonment; prima facie tort; defamation; libel; slander; negligent
termination; malicious prosecution; or any other tort, whether intentional or
negligent; United States Constitution or any other federal, state, county or
municipal statute or ordinance relating to employment; provided, however, that
this release specifically excludes a release of any and all of the Executive’s
obligations under this Agreement and further specifically excludes a release of
any claims the Company may not release in accordance with its certificate of
incorporation, its by-laws, the laws of its state of incorporation or the
applicable laws, if any, of any state in which the Company does business.
 
11. Any breach of this Agreement by either of the parties shall be considered a
material breach. In the event of such a breach or threatened breach, the other
party shall be entitled to appropriate injunctive relief, including an immediate
temporary restraining order and/or permanent injunction without the necessity of
posting a bond. The prevailing party shall be entitled to recover reasonable
attorneys’ fees incurred in seeking relief for any such breach.
 
12. The Executive acknowledges and agrees that in the event of any breach by the
Executive of Paragraphs 8(b), 8(f), 8(h) or 8(k) above, the Company shall be
entitled to the immediate return of all monies paid to the Executive under
Paragraph 3(a) above.
 
13. Both parties acknowledge that they understand that this Agreement is a
legally binding agreement and have reviewed it with legal counsel before
executing the Agreement.
 
14. Both parties represent and acknowledge that in executing this Agreement,
they do not rely, and have not relied, upon any representation not set forth
herein, made by the other party or any of their respective employees, agents, or
attorneys with regard to the subject matter, basis or fact of this Agreement or
otherwise.
 
15. Both parties acknowledge that this Agreement is intended to address and
cover any rights they may have under the governing law. The parties’ signatures
below will confirm that they are entering into this Agreement freely and with a
full understanding of its terms and effect, including that they are giving up
their respective rights to bring any claim against the other in accordance with
Paragraphs 9 and 10 respectively above.
 
16. The Executive acknowledges that he has been given twenty-one (21) days
during which to consider this Agreement and that he executes this Agreement
freely and voluntarily and that he is under no duress at the time of his
execution.
 
 
6

--------------------------------------------------------------------------------

 
 
17. This Agreement shall be construed in accordance with, and governed by, the
law of the State of New York, without regard to New York’s choice of law rules.
 
18. The parties consent to the exclusive jurisdiction of the federal or state
courts of the State of New York to resolve any and all disputes arising out of
or relating to this Agreement; the parties agree that the prevailing party in
any such dispute shall be entitled to recover reasonable attorneys’ fees
 
19. This Agreement sets forth the entire agreement between the parties and
supersedes any and all prior or contemporaneous agreements or understandings
between them pertaining to the subject matter hereof. This Agreement may be
modified only by a subsequent and written instrument, executed by all parties.
 
20. This Agreement shall become effective when the Agreement has been signed by
each of the parties.
 
21. This Agreement may be executed in counterparts and as so executed shall
constitute one agreement, binding on all parties.
 
22. If any provision of this Agreement or the application thereof becomes or is
declared by a court of competent jurisdiction to be illegal, void or
unenforceable, the remainder of this Agreement will continue in full force and
effect; except that if the releases contained herein are declared illegal, void
or unenforceable by a court of competent jurisdiction, the entire Agreement
shall become a nullity and any amounts paid in consideration hereunder shall be
returned to the Company. The parties further agree to replace any other illegal,
void or unenforceable provision of this Agreement with a legal, valid, and
enforceable provision that will achieve, to the extent possible, the economic,
business, and other purposes of such illegal, void or unenforceable provision.
 
23. There are no third-party beneficiaries to this Agreement.
 
 
IN WITNESS THEREOF, the undersigned have executed this Agreement on the dates
noted below.
 

      ON BEHALF OF AVANTAIR, INC.                 /s/ John Waters     /s/ Steven
F. Santo

--------------------------------------------------------------------------------

John Waters    

--------------------------------------------------------------------------------

Steven F. Santo
Chief Executive Officer

        April 14, 2008     April 14, 2008

--------------------------------------------------------------------------------

Date
   

--------------------------------------------------------------------------------

Date
       

 
7

--------------------------------------------------------------------------------

 

 

 
EXHIBIT A
 
 
 

 
8

--------------------------------------------------------------------------------

 
 

April 11, 2008

Mr. Steven F. Santo
Chief Executive Officer
Avantair, Inc.
4311 General Howard Drive
Clearwater, Florida 33762

Dear Steve:

Effective immediately, I hereby resign my positions as a director and Chief
Financial Officer of Avantair, Inc.

Sincerely,

/s/ John Waters

John Waters

 
9

--------------------------------------------------------------------------------