EXHIBIT 10.6
EMPLOYMENT AND CONFIDENTIALITY AGREEMENT
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This Agreement made and executed on December __, 2001, by and between
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (hereinafter "Employee") and COHESANT TECHNOLOGIES INC., a
Delaware corporation (hereinafter "Company").
WHEREAS, the Company desires to employ Employee as its President and
Chief Executive Officer upon the terms and conditions contained herein;
WHEREAS, the Employee desires to accept employment with the Company
upon the terms and conditions contained herein;
WHEREAS, the execution of this Agreement is a condition precedent to
the Company's offer of employment to Employee;
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged, Company and the Employee agree as
follows:
Section 1 - Definitions.
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Capitalized terms in this Agreement not otherwise defined in this
Agreement will have the meanings set forth in this Section 1.
(a) "Affiliate" means, collectively and individually, the Employee's
spouse and children or any trust for the benefit of the Employee, his spouse
and/or children, or a sole proprietorship, partnership, corporation, limited
liability company, firm, joint venture, trust or other entity or person which,
directly or indirectly, through one or more intermediaries, is controlled by or
is under common control with the Employee or his spouse or children.
(b) "Business" means the design, development, manufacture and sale of
(i) plural-component spray finishing and coating equipment, replacement parts
and supplies used in the operation of this equipment in applying polyesters,
polyurethanes, polyureas and epoxies; and (ii) specialty plural-component epoxy
coatings and grouts, and related application equipment, providing protection
from corrosion caused by infiltration, atmospheric conditions and chemical
attack, and used in the construction, repair, rehabilitation and maintenance of
water and wastewater treatment, distribution and collection systems, food and
beverage, industrial and recreational facilities.
(c) "Company Affiliate" means any sole proprietorship, partnership,
corporation, limited liability company, firm, joint venture, trust or other
entity, or division thereof, or
person which, directly or indirectly, is controlled by or under common control
with the Company or of which the Company, its stockholders (individually or in
combination) or any Company Affiliate is the legal or beneficial owner of ten
percent (10%) or more of any class of equity securities (or the legal or
beneficial holder of debt convertible into ten percent (10%) or more of any
class of equity securities).
(d) "Compete" means to own, manage, operate, control or participate in,
or have any ownership interest in or make loans to, or act as a guarantor,
surety or indemnitor for or aid or advise as an employee, director, officer,
consultant, or otherwise, whether directly or indirectly, any business (whether
a sole proprietorship, partnership, corporation, limited liability company,
firm, joint venture, trust or other entity) that is engaged in the Business at
any time during the Employment Period.
(d) "Good Reason" means (i) a material and continuing failure to pay to
Employee compensation and benefits that have been earned, if any, by Employee,
(ii) any downward adjustment by the Board of Directors in Employee's base
salary, (iii) a material reduction in Employee's title, position or
responsibilities, or (iv) any breach by the Company of this Employment Agreement
which is material and which is not cured within thirty (30) days after written
notice thereof to the Company from Employee.
(f) "Restricted Period" means the period during which the Employee is
employed by the Company and for a period of one (1) years thereafter.
Section 2 - Employment and Term.
The Company hereby employs the Employee, and the Employee hereby
accepts such employment, for an initial term commencing on December 1, 2001 and
ending on December 31, 2002, unless sooner terminated in accordance with Section
6 or Section 9 herein; with such employment to continue in accordance with the
terms of this Agreement from year to year thereafter unless one party gives the
other party at least six months advance written notice of its election not to
renew this Agreement (said initial term and any continuation thereof being
hereinafter referred to as the "Employment Term"). Notwithstanding the
foregoing, Employee shall not assume the title of President and Chief Executive
Officer until January 1, 2002.
During the Employment Term, Employee agrees to devote such time and
attention to his employment by Company, as the parties mutually agree, and to
perform all duties assigned by Company faithfully and industriously and to the
best of Employee's ability. The parties recognize that Employee may engage in
unrelated business ventures, provided such additional outside employment does
not interfere with his duties or responsibilities to the Company.
Notwithstanding the foregoing, it is specifically agreed that the Employee's
current scope of activities with and through ▇▇▇▇▇▇▇▇ Road LLC will not be
deemed to be prohibited by this Section.
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Section 3 - Duties and Authority.
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During the Employment Term, the Employee agrees (i) to perform such
duties as may be reasonably requested by the Company's Board of Directors and
(ii) to comply with all policies and directives now or hereafter issued by the
Company's Board of Directors; (iii) to perform well and faithfully all of the
duties referred to above in accordance with the rules and regulations
established and to be established by the Company.
Section 4 - Compensation.
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During the Employment Term, the Company will pay or provide, as the
case may be, to the Employee the following (collectively, "Compensation"):
(a) Effective December 1, 2001, a base salary ("Base Salary"), payable
bi-weekly (and subject to normal and customary payroll deductions), at the rate
of Seventy Five Thousand Dollars ($75,000) per annum; provided, however,
effective as of the anniversary date of this Agreement, the Employee's Base
Salary shall be increased annually by the greater of (i) an amount determined by
the Board of Directors or (ii) the increase in the cost of living as determined
by reference to the Consumer Price Index for Urban Wage Earners and Clerical
Workers (Cleveland/Akron), published by the U.S. Government comparing the index
at December 1 of one year to December 1 of the preceding year;
(b) Reimbursement (or payment on the Employee's behalf) of the
Employee's reasonable business travel, entertainment or other expenses incurred
in the performance of the Employee's duties hereunder;
(c) Medical, hospitalization and dental insurance for the Employee and
his dependents consistent with the insurance provided to other executive
officers employees of the Company and its subsidiaries and participation in any
pension, profit sharing, 401(k), or any other benefit plan adopted by the
Company in which the Company's and its subsidiaries' executive officers or
employees are generally eligible to participate;
(d) Two (2) weeks of paid vacation per year;
(e) Automobile allowance of $500 per month, and reimbursement for all
insurance, repairs, and other business related expenses in connection therewith;
and
(f) If, and to the extent, determined by the Board of Directors of the
Company, in its sole and absolute discretion, an annual bonus.
Section 5 - Stock Options
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As of the date of this Agreement, the Employee shall be granted
non-qualified options (the "Options") to purchase up to fifty thousand (50,000)
Common Shares of the Company
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at an exercise price of the fair market value on the date of this Agreement (as
determined under the option plan). The Options shall expire on the tenth (10th)
anniversary of the date hereof. The Options shall vest and become exercisable as
follows: (i) 25% upon execution of this Agreement by Employee, and (ii) 25% per
year thereafter following the first full year of the Employment Term. Any
unvested Options shall vest fully on a Change in Control. Except as provided
below, if Employee's employment is terminated, then to the extent any portion of
the Options is not yet vested, such portion of the Options shall terminate on
the date of termination of employment. If the Employee is terminated for "cause"
(as defined herein), the entire Option shall terminate on the date of
termination.
Section 6 - Disability and Death.
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(a) In the event of the permanent disability of Employee, as
hereinafter defined, the Company shall have the right thereafter to terminate
this Agreement with Employee by sending written notice of such termination to
Employee, and thereupon this Agreement shall terminate. For purposes hereof,
"permanent disability" shall mean the inability of Employee to perform his
duties hereunder due to physical or mental illness, including drug abuse and
alcoholism, for four (4) months in any twelve (12) consecutive month period. In
addition, the "permanent disability" of Employee shall also have been deemed to
have occurred if the Employee shall have had appointed a guardian or conservator
for him or such appointment shall have been made by a court of competent
jurisdiction.
(b) The parties hereto hereby agree that if a disagreement arises as to
whether a condition of disability exists hereunder, Employee shall submit to a
physical examination by a physician of the Company's choice affiliated with
either The Cleveland Clinic or University Hospitals, or their successors. The
physician's determination shall be conclusive upon all parties. The Company
shall bear the expense of the physician. Employee hereby consents to the
examination provided for herein and waives, if applicable, any privilege that
exists between any physician and Employee as a result of such examination.
(c) This Agreement shall also terminate upon and as of the date of
death of the Employee at any time during the Employment Term. In the event of
the death of Employee, all Compensation due Employee up to the date of death, as
well as salary due through the remainder of the current employment year, shall
be paid to Employee's estate or beneficiaries.
(d) Notwithstanding anything contained herein to the contrary, Employee
shall be compensated as set forth in this Agreement, through the date of
termination of this Agreement due to permanent disability or death; provided,
however, in the event of permanent disability any such compensation shall be
reduced by any amounts payable to Employee from or in respect of disability
insurance plan for which the Company has paid any portion of the premiums
therefore and which payments are received by the Employee for the period of such
incapacity or illness.
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Section 7 - Indemnification/Insurance.
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In addition to the Compensation, the Company will provide the Employee
during the Employment Term with the same indemnification protection provided
under applicable law and/or the Company's governing documents, as well as the
same liability insurance (if any) currently in effect or hereafter obtained by
the Company, for its directors and officers.
Section 8 - Ownership of Programs and Materials.
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Employee acknowledges that Intellectual Property developed for Company
use, in whole or in part, is proprietary and confidential information of
Company, developed at great expense to Company. Employee acknowledges and agrees
that all Intellectual Property relating to the Business developed by the
Employee during Employee's employment that is subject to copyright protection
shall be deemed "work made for hire" pursuant to the Copyright Act, as amended,
17 U.S.C. ss. 101, et seq. and shall be the sole property of Company. Provided,
further, that, to the extent that any Intellectual Property relating to the
Business, that is subject to protection under the Copyright Act, is not deemed
"work-for-hire," Employee hereby assigns to Company all rights that the Employee
may have or acquire with respect to such Intellectual Property, including all
copyright rights with respect thereto. Employee further hereby assigns to
Company all patent and all other ownership rights to the Intellectual Property
to Company. Employee hereby agrees to execute any and all documents necessary to
carry out the aforesaid assignment. Employee further agrees that if Employee
fails to execute any such documents or is unavailable at the time necessary for
such execution, Company is hereby appointed as Employee's attorney-in-fact for
the purpose of executing such documents.
Section 9 - Termination.
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In addition to the termination provisions set forth in Section 6 of
this Agreement, the Company may terminate this Agreement at any time with or
without "cause". If the Company terminates Employee's employment for reasons
other than "cause", Employee shall be entitled to a lump-sum severance payment
equal to the payments and benefits under this contract on the remaining
Employment Term, but in no event less than 6 months. No severance pay is due
under this Agreement if Employee terminates his employment voluntarily or is
terminated for "cause". Any termination by the Employee for Good Reason shall be
deemed to be a termination by the Company without "cause." Employee acknowledges
that the potential severance payment hereunder is attributable, in part, to his
agreement to the noncompetition provision set forth in Section 8, which is
applicable regardless of the reason for his termination of employment.
For purposes of this Section 9, "Cause" will mean (i) fraud,
embezzlement, theft, or misappropriation of funds or other property of the
Company or any Company Affiliate; (ii) gross negligence in the performance by
the Employee of his duties pursuant to this Agreement; or the willful failure or
refusal by the Employee to perform his duties to the
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Company as provided herein, which gross negligence, failure or refusal is not
corrected within 30 days after notice from the Board of Directors; (iii) the
conviction of the Employee of a felony or other criminal act involving
dishonesty, whether or not relating to his employment with the Company; ; or
(iv) the breach by the Employee of any of the restrictive covenants contained in
Section 10 or covenants of non-disclosure contained in Section 11 of this
Agreement. Any termination of the Employee's employment by reason of the
activities or events described in the prior sentences will not be in limitation
of any other right or remedy which the Company may have under this Agreement, at
law, or in equity.
Should Employee's termination for reasons other than "cause" occur
within a two-year period after a "Change-in-Control," Employee shall be entitled
to a lump-sum severance payment equal to two (2) years' Base Salary. A "Change
in Control" means the occurrence during the Employment Term of the following
events:
(i) the Company merges or consolidates with, another
entity and as a result of such merger or
consolidation less than 51% of the voting power of
the then-outstanding voting securities of the
surviving or resulting entity immediately after such
transaction are directly or indirectly beneficially
owned in the aggregate by the former stockholders of
the Company immediately prior to such transaction;
(ii) a person or group acting in concert within the
meaning of Section 3(a)(9) or 13(3)(3) (as in effect
on the date of this Agreement) of the Securities
Exchange Act of 1934, becomes the beneficial owner
(as defined in Rule 13d-3) of 50% or more of the
voting power of the then outstanding voting
securities of the Company without prior approval of
the Company's Board of Directors; provided that the
foregoing shall not apply to any existing ownership
interest of more than 50% of the Company's Common
Stock;
(iii) a sale of all or substantially all of the Assets of
the Company.
Upon the expiration of the Employment Term, Employee will return to the
Company all property of the Company, including, but not limited to, keys, credit
cards, financial reports, source codes, object codes, programs, flow charts,
formulae, customer and supplier information and all other materials relating to
the Business. The aforesaid obligations include all media containing such
information including any magnetic or optical media or other storage device.
Section 10 - Covenant Not to Compete.
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(a) The Employee covenants and agrees that during the Restricted
Period, the Employee will not, directly or indirectly, Compete
anywhere that the Company engages in Business; Employee
recognizing that a
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substantial portion of the Company's business is outside North
America. Without limiting the generality of the foregoing
restrictive covenant, the Employee further covenants and
agrees that during the Restricted Period, he will not,
directly or indirectly (whether as owner, principal, employee,
partner, director, officer, member, lender, guarantor, surety,
indemnitor, or consultant to any person, firm, partnership,
corporation or other legal entity): (i) promote the business
of any person, firm, association or corporation or other
entity engaged in a business which Competes with the Business;
(ii) solicit, divert, take away or attempt to solicit, divert
or take away any of the Company's customers; (iii) cause or
attempt to cause any of the Company's customers to cease
transacting business with the Company; or (iv) induce or
attempt to induce any employee of the Company to terminate
such employment. Notwithstanding the foregoing, recognizing
that Employee and his Affiliates' other activities include
investments in private and public corporations and other
entities, nothing in this Agreement shall preclude Employee or
his Affiliates, directly or indirectly, from providing capital
to other businesses, including businesses that may Compete
with the Company or its subsidiaries; provided that Employee
may not (i) have more than a 10% equity interest, on a fully
diluted basis, in any entity that Competes with the Company or
its subsidiaries, (ii) nor serve as an officer, director or
advisor to such entity.
(b) REASONABLENESS OF RESTRICTIONS. Employee acknowledges that: (1) his
experience and capabilities are such that the provisions of this Section 10 will
not prevent Employee from earning a livelihood or applying his professional
skills and knowledge; (ii) the terms and conditions contained in this Section 10
and in Section 11 hereof are reasonable and necessary for the protection of the
Business by the Company; and (iii) the nature of the employment arrangement
contemplated hereby is such that the Company may not be adequately compensated
with monetary damages for any violation by the Employee of any of the provisions
of this Section 10 or Section 11 hereof.
Accordingly, the Employee agrees and consents that if Employee violates
any of the provisions contained in this Section 10 or Section 11 hereof, the
Company will be entitled to apply for an injunction, to be issued by any court
of competent jurisdiction, restraining the Employee from committing or
continuing any violation of this Section 10 or Section 11 hereof, and that any
such remedy sought or obtained by the Company will not be considered a waiver of
the rights of the Company to assert any other remedies it may have under this
Agreement, at law or, in equity.
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(c) SEVERABILITY. The Employee agrees that each of the covenants set
forth in this Section 10 is separate and distinct, independent of others, and
that the illegality or invalidity of any one or more of them or any part of one
or more of them will not render the others illegal or invalid, and that if the
invalidity or unenforceability is due to the unreasonableness of the time or
geographical area covered by said covenants and restrictions, said covenants and
restrictions will nevertheless be enforced to the maximum extent permitted by
law and effective for such period of time and for such area as may be determined
to be reasonable by a court of competent jurisdiction, and the Employee hereby
consents and agrees that such scope may be judicially modified, accordingly, in
any proceeding brought to enforce such covenants and restrictions.
(d) INDEPENDENT SIGNIFICANCE. The restrictive covenants set forth in
this Section 10 and the covenants of confidentiality contained in Section 11
below on the part of the Employee are of the essence of this Agreement and will
be construed as independent of any other of the provisions of this Agreement
(other than the Company's monetary obligations to Employee under Sections 4 or
9), and the existence of any claim or cause of action of the Employee against
the Company (other than a claim under Section 4 or 9 hereof), whether predicated
on this Agreement or otherwise, will not constitute a defense to the enforcement
by the Company of any of said restrictive covenants.
Section 11 - Confidential Information.
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(a) NON-DISCLOSURE IN GENERAL. As a consequence of the Employee's
employment with the Company, the Employee has and will receive and deal with
confidential information and business methods, including, but not limited to,
its unique systems, operations, processes, testing procedures, devices,
formulae, computer programs and data bases, drawings, blueprints, sketches,
records, development data and reports, engineering data and reports, quality
control specifications, cost analyses, flow charts, process sheets, know-how,
information relating to technical matters and information relating to sales,
financial structure, pricing, marketing data, personnel data, and other
information of like nature including but not limited to customer lists and
supplier contracts (collectively, the "Confidential Information"). The Employee
further acknowledges that Confidential Information of the Company, received or
dealt with by the Employee is of such a value and nature as to make it
reasonable and necessary for the protection of the Company that the Employee not
Compete with the Company during the Restricted Period, and that the Company will
be irreparably damaged if the Employee were to disclose (other than as permitted
in this Agreement) any of the Confidential Information that the Employee has
acquired or dealt with as a result of his employment or other association with
the Company, or will acquire or deal with as a result of his involvement with
the Company. The Employee acknowledges that all Confidential Information and
other information regarding the Company compiled or obtained by the Employee, or
furnished to the Employee in connection with his involvement with the Company is
confidential information and the Company's exclusive property. Upon demand by
the Company, and in any event within three (3) days following termination of
this Agreement for any reason, the Employee will surrender to the Company all
Confidential
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Information and all other original and facsimile records, documents and data in
his possession or under his control pertaining to the Company.
(b) EXCEPTIONS. Confidential Information of the Business shall not be
deemed to include information of the Business that:
(i) at the time of disclosure, is properly in the public
domain or thereafter properly becomes part of the
public domain by publication or otherwise through no
fault or act of the Employee;
(ii) the Employee can conclusively establish was properly
in his possession prior to the time of the disclosure
to the Employee of the Confidential Information;
(iii) the Employee independently developed without the use
of any Confidential Information received from the
Company; or
(iv) is required to be disclosed by legal process.
Section 12 - Non-Waiver.
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The failure of either party at any time or from time to time to require
performance of any of the other party's obligations under this Agreement will in
no matter affect such party's rights to enforce any provision of this Agreement
at a subsequent time, and the waiver by either party of any right arising out of
any breach will not be construed as a waiver of any right arising out of any
subsequent breach.
Section 13 - Notices.
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Any notice in writing and shall be personally delivered, mailed by
United States certified mail, return receipt requested, or sent by overnight
courier addressed as follows: or as set forth in any notice of change of address
previously given in writing by the addressee to the addressor:
To the Employee: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
c/▇ ▇▇▇▇▇▇▇▇ Road Capital, LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
To the Company: Cohesant Technologies, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Notice shall be deemed given on the date of receipt of the
communication.
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Section 14 - Miscellaneous.
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(a) NON-DISCLOSURE OF TERMS. Except as required by applicable law, the
parties covenant and agree not to disclose to any third parties any information
regarding, or the existence of, the employment, negotiations or arrangements
between the Company and the Employee unless required by federal or state
securities laws, court order or arbitration. This provision will also bind the
stockholders, directors, officers, employees, agents, representatives and
affiliates of the Company.
(b) AMENDMENTS. This Agreement may be amended only in a writing
executed by both of the parties hereto.
(c) ASSIGNMENT. This Agreement is for personal services to be provided
by the Employee and may not be assigned or transferred by the Employee to, or
the obligations of the Employee performed by, any other party. This Agreement
and the rights and obligations hereunder may not be assigned by the Company to
any other party, except that this Agreement, in whole and not in part, may be
assigned by the Company to any future purchaser of the Company or of its
Business.
(d) ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties hereto regarding the subject matter hereof and supersedes
all prior and contemporaneous agreements, understandings, negotiations, and
discussions, whether oral or written.
(e) HEADINGS. Section and paragraph headings are not to be considered
part of this Agreement. They are included solely for convenience and are not
intended to be full or accurate descriptions of the contents hereof.
(f) GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Ohio.
(g) BINDING EFFECT. This Agreement will be binding upon and inure to
the benefit of the Company, its successors and assigns, and the Employee, his
heirs, executors, administrators, personal representatives and successors.
(h) RECITALS. The recitals hereto are an integral part of this
Agreement and are incorporated herein by reference.
(i) COSTS AND EXPENSES. Each party will bear its or her, as the case
may be, own costs and expenses in connection with the negotiation and
preparation of this Agreement. The Company shall pay any fees and expenses
incurred by the Employee, as and when incurred, in connection with Employee's
enforcement of any provision of this Agreement or any action brought to
interpret the provisions of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
COHESANT TECHNOLOGIES INC.
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman
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