Exhibit 10.6
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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
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This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement"), dated as
of August 1, 2004 ("Effective Date"), is between Competitive Technologies, Inc.,
a Delaware corporation (the "Company") and John B. Nano (the "Executive").
RECITALS:
1. The Company and Executive previously entered into an Employment
Agreement dated June 17, 2002 (the "Prior Agreement").
2. The Company and Executive desire to make certain revisions to the terms
and conditions of Executive's employment by Company, such revised terms and
conditions to be effective as of the date of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the parties agree as follows:
1. Employment. The Company hereby employs the Executive, and the Executive
hereby continues his employment with the Company, upon all the terms and
conditions set forth below. Executive represents and warrants that: (a) he has
full power and authority to enter into this Employment Agreement, (b) he is not
restricted in any manner whatsoever from performing the duties described below,
and (c) no agreement, covenant or other matter prohibits or limits his ability
or authority to enter into this Agreement or perform all of the duties described
below. Executive's employment with the Company shall include service for the
Company's direct and indirect subsidiaries and affiliated entities (the
"Subsidiaries").
2. Employment Term. The "Employment Term" and Executive's employment under
this Agreement shall commence on the Effective Date and shall continue for a
period of three years from the Effective Date, ending at the close of business
on July 31, 2007, provided, however, that the Employment Term shall
automatically extend for successive one-year periods (such extensions also being
referred to as the "Employment Term"), as long as neither party has given
written notice to the other party at least sixty days prior to the end of the
then current term that such term shall not be extended, and further provided
that the Agreement has not been earlier terminated in accordance with the
provisions of Section 8 below. If the Executive's employment terminates for any
reason, with or without Cause, the Executive shall not be entitled to any
payments, benefits, damages, awards, or compensation other than as provided in
Section 8 below or as otherwise provided by law or by any applicable employee
benefit plan in which he participates. The parties acknowledge that certain
obligations under this Agreement survive the end of Executive's employment.
3. Position and Duties.
(a) President and Chief Executive Officer. The Company shall employ
the Executive as its President and Chief Executive Officer. Executive shall
report to the Company's Board of Directors (the "Board") or the Board's
designee. Under the terms of the Prior Agreement, Executive was appointed to the
Board, and without any additional compensation, Executive will continue to serve
as a member of the Board and as an officer and/or director of any Subsidiaries.
Executive shall have such responsibilities and duties as are commensurate with
the position of chief executive officer in an entity comparable to the Company,
including, without limitation, developing and implementing an overall strategic
plan for the company and annual business plans, raising new capital, and
supervising day-to-day operations of the Company. The Board shall have the right
to modify Executive's duties and responsibilities from time to time as the Board
may deem necessary or appropriate.
(b) Manner of Employment. Executive shall faithfully, diligently
and competently perform his responsibilities and duties. The Executive shall
devote his exclusive and full business efforts and time to the Company. This
Section 3(b), however, shall not preclude the Executive, outside normal business
hours, from engaging in appropriate civic or charitable activities, or from
serving as a director of any not-for profit entity, as long as such activities
do not interfere or conflict with his responsibilities to the Company. With the
Board's written consent, Executive may serve as a director of a for-profit
entity.
4. Base Compensation. Commencing on the Effective Date, the Company shall
pay the Executive base compensation in the gross amount of $350,000 per year,
subject to reviews and increases in the sole discretion of the Board ("Base
Compensation"). Base compensation shall be paid periodically in accordance with
normal Company payroll practices.
5. Employment Benefits. Executive shall be entitled to the following
benefits during the Employment Term:
(a) Expense Allowance. Executive shall be reimbursed for business
related expenses reasonably and necessarily incurred and advanced by Executive
in performing his duties for the Company, subject to review by the Chairman of
the Board or his designee and in accordance with Company policy as it exists
from time to time.
(b) Car Allowance. The Company will provide Executive a car allowance
or lease for his use a car equal to a 5-Series BMW or other vehicle reasonably
acceptable to the parties.
(c) Other Benefits. Executive may participate in all other employee
benefit plans and programs as the Company may, from time to time, offer to its
executive employees, subject to the same terms and conditions as such benefits
are generally provided by the Company. All such benefits are subject to plan
documents (where applicable) and the Company's policies and procedures. Nothing
in this Section 5(c) guarantees that any specific benefit will be provided or
offered by the Company which has the right to add, modify, or terminate benefits
at any time.
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(d) Reimbursement for Post-Retirement Health Coverage. In the event
that Executive remains employed by the Company through his 65th birthday, and
thereafter his employment with the Company terminates for any reason other than
Cause (as defined below), the Company shall, at that time, reimburse Executive
in an amount not to exceed $120,000.00 for the one-time premium expended by
Executive for the purchase of post-retirement health insurance for Executive and
his family, such reimbursement to be made upon receipt by the Company of a copy
of the premium statement therefor.
6. Bonus. For fiscal years during the Employment Term commencing with the
Effective Date, Executive shall be eligible to receive a bonus of up to 50% of
his Base Compensation for such year, based upon the Company's performance and
Executive's performance of objectives during that time period as determined by
the Compensation Committee of the Board, in its reasonable discretion. Such
objectives will be established by the Compensation Committee of the Board,
subject to Board approval, after consultation with Executive, and may relate to,
without limitation, financial performance, raising new capital, successful
resolution of certain outstanding matters that have been discussed with
Executive, development and implementation of a strategic plan, and management of
the Company.
7. Stock Options and Other Equity Grants. It is the intent of the Company
that Executive shall have the opportunity to acquire, whether through
incremental grants of stock options or other forms of equity grants as
determined by the Compensation Committee of the Board, an "ownership percentage"
equal to or greater than five percent (5%) of the Company's common stock
("Common Stock") issued and outstanding from time to time. Executive's
"ownership percentage" shall be computed from time to time by dividing (a) the
sum of the shares previously acquired by Executive pursuant to prior options or
other equity grants plus shares covered by then currently outstanding options or
equity grants held by Executive by (b) the number of shares of Common Stock
issued and outstanding. Any future options or equity grants to Executive shall
be subject to (i) such action being lawfully permitted, (ii) evaluation of the
performance of Executive by the Compensation Committee, and (iii) in the
reasonable determination of the Compensation Committee, not detrimental to the
Company or its shareholders in any significant manner. Any options granted
hereunder to Executive shall be granted at the mean average of the high and low
price for such shares on the date of grant, and shall vest twenty-five percent
(25%) on each of the first four anniversaries of the date of grant and in each
twenty-five percent (25%) which may vest, the maximum number of such options as
permitted by law shall be Incentive Stock Options ("ISOs") and the remainder
shall be Non-statutory Stock Options ("NSOs"). The grant and exercisability of
the options described in this Section 7 shall be pursuant and subject to: (a)
the terms and conditions contained in any Company stock option plan then
maintained by the Company, as such plan may be amended from time to time in the
Company's sole discretion ("Option Plan"); and (b) the terms and conditions of a
definitive Stock Option Agreement (the "Option Agreement") to be entered into as
of the date of grant between the parties pursuant to the Option Plan that will
set forth all of the rights, duties and obligations regarding such options.
8. Termination and Severance Benefits.
(a) Death. The death of Executive shall automatically terminate
the Company's obligations under this Agreement; provided however, that: (i) the
Company shall pay to Executive's estate Executive's Base Compensation and
accrued benefits through the date of termination; and (ii) any unvested Plan
Options granted under this Agreement or the Prior Agreement will upon such
termination become fully vested and immediately exercisable.
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(b) Disability. If Executive is unable, in the reasonable determination
of the Board, to render services of substantially the kind and nature, and to
substantially the extent, required to be rendered by Executive under this
Agreement due to illness, injury, physical or mental incapacity or other
disability, for 120 days, whether consecutive or not, within any 12 month
period, Executive's employment may be terminated by the Company and: (i) the
Company's sole obligation shall be to pay to Executive his Base Compensation and
accrued benefits through the date of termination; and (ii) any unvested Plan
Options granted under this Agreement or the Prior Agreement will upon such
termination become fully vested and immediately exercisable.
(c) Resignation. If Executive resigns his employment during the
Employment Term other than for Good Reason (as defined below), the Company shall
have no liability to Executive except to pay Executive's Base Compensation and
any accrued benefits through his last day worked, and Executive shall not be
entitled to receive severance or other benefits. Notice given by Executive of
non-renewal of this Agreement as provided for in Section 2 shall be treated as a
resignation for purposes of this Section 8.
(d) Resignation for Good Reason. If Executive resigns his employment
for Good Reason, he shall be entitled to receive all accrued but unpaid salary
and benefits through the date of termination plus the Severance Benefit (as
defined below).
(e) Termination By Company for Cause. If the Executive's employment
is terminated for Cause (as defined below), the Company shall have no liability
to Executive except to pay Executive Base Compensation and any accrued benefits
through his last day worked and Executive shall not be entitled to receive
severance or other benefits.
(f) Termination By Company Without Cause. If the Company terminates
Executive's employment during the Employment Term without Cause (and for reasons
other than death, Disability or Change in Control as provided for in subsection
(g) immediately following), Executive shall be entitled to receive all accrued
but unpaid salary and benefits through the date of termination plus the
Severance Benefit. Notice given by the Company of non-renewal of this Agreement
as provided for in Section 2 shall be treated as a termination without Cause,
unless the Notice specifically sets forth a basis for Cause, for purposes of
this Section 8.
(g) Termination Due to Change in Control. If the Company terminates
Executive's employment without Cause (and for reasons other than death or
Disability) in conjunction with a Change in Control (as defined below),
Executive shall be entitled to receive all accrued but unpaid salary and
benefits through the date of termination plus the Change in Control Benefit (as
defined below).
(h) Cause. The following acts by Executive, as determined by the Board
in its reasonable discretion, shall constitute "Cause" for termination:
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(i) theft or embezzlement, or attempted theft or embezzlement, of money
or material tangible or intangible assets or property of the Company, its
Subsidiaries or its employees or business relations;
(ii) a violation of any law or any act or acts of moral turpitude which
negatively affects the interests, property, business, operations or reputation
of the Company or its Subsidiaries;
(iii) other than as a result of a disability, a material failure to
carry out effectively Executive's duties and obligations to the Company, or
failure to devote to the Company's business the time required in Section 3(b)
above, upon not less than ten (10) days' advance written notice of the asserted
problem and a reasonable opportunity to cure;
(iv) gross negligence or willful misconduct in the performance of
Executive's duties;
(v) Executive's material breach of this Agreement which, after written
notice by the Company of such breach, is not cured within ten (10) days of such
notice.
(i) Resignation for Good Reason. Resignation by Executive of his
employment for "Good Reason" shall mean a resignation by Executive with sixty
(60) days after any of the following events which occur without Executive's
consent:
(i) a material diminution in Executive's position, duties or
responsibilities;
(ii) a relocation of the Company's headquarters more than 50 miles from
its present location;
(iii) a reduction in Executive's then Base Compensation; or
(iv) the Company's material breach of this Agreement.
Prior to a Resignation for Good Reason, Executive shall give the Company written
notice of the basis for his claim that he has Good Reason to terminate his
employment and 10 days to cure.
(j) Change in Control. For purposes of this Agreement, a "Change in
Control" shall mean the occurrence of any of the following events:
(i) a merger or consolidation involving the Company or any subsidiary
of the Company after the completion of which: (A) in the case of a merger (other
than a triangular merger) or a consolidation involving the Company, the
stockholders of the Company immediately prior to the completion of such merger
or consolidation beneficially own (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
comparable successor rules), directly or indirectly, outstanding voting
securities representing less than fifty percent (50%) of the combined voting
power of the surviving entity in such merger or consolidation, and (B) in the
case of a triangular merger involving the Company or a subsidiary of the
Company, the stockholders of the company immediately prior to the completion of
such merger beneficially own (within the meaning of Rule 13d-3 promulgated under
the Exchange Act, or comparable successor rules), directly or indirectly,
outstanding voting securities representing less than fifty percent (50%) of the
combined voting power of the surviving entity in such merger and less than fifty
percent (50%) of the combined voting power of the parent of the surviving entity
in such merger;
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(ii) an acquisition by any person, entity or "group" (within the
meaning of Section 13(d) or 14(d) of the Exchange Act or any comparable
successor provisions), other than any employee benefit plan, or related trust,
sponsored or maintained by the Company or an affiliate of the Company and other
than in a merger or consolidation of the type referred to in clause "(i)" of
this Section 7(b), of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act, or comparable successor rules) of
outstanding voting securities of the Company representing more than fifty
percent (50%) of the combined voting power of the Company (in a single
transaction or series of related transactions); or
(iii) in the event that the individuals who, as of the Effective Date,
are members of the Board (the "Incumbent Board"), cease for any reason to
constitute at least fifty percent (50%) of the Board. (However, if the
subsequent election, or nomination by the Board for election by the Company's
stockholders, of any new member of the Board is approved by a vote of at least
fifty percent (50%) of the Incumbent Board, such new member of the Board shall
be considered as a member of the Incumbent Board.)
(k) Severance Benefit. The "Severance Benefit" shall mean: (i)
continuation of Executive's Base Compensation in effect immediately prior to
such termination or resignation for a period of twelve months ("Severance
Benefit Period"); (ii) continuation of Executive's group insurance benefits (to
the extent such can be continued under the terms of the governing plans) for the
Severance Benefit Period; and (iii) continued vesting of the Options granted
under this Agreement or any unvested but outstanding options granted to
Executive under the Prior Agreement, through the end of the Severance Benefit
Period or the next employment anniversary date, whichever is longer.
(l) Change in Control Benefit. The "Change in Control Benefit" shall
mean: (i) continuation of Executive's Base compensation in effect immediately
prior to such termination or resignation for a period equal to the longer of the
Severance Benefit Period or the remainder of the then current Employment Term
("Change in Control Benefit Period"); (ii) continuation of Executive's group
insurance benefits (to the extent such can be continued under the terms of the
governing plans) for the Change in Control Benefit Period; and (iii) any
unvested but outstanding Options granted under this Agreement and any unvested
but outstanding options granted to Executive under the Prior Agreement will
become fully vested and immediately exercisable.
(m) Resignations. Upon the end of Executive's employment for any
reason, Executive shall be deemed to have resigned from any positions which he
holds as a director or officer of the Company and any of its Subsidiaries or
affiliates.
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(n) Release. Payment of the Severance Benefit or the Change in Control
Benefit will be subject to Executive signing an agreement reconfirming his
post-employment obligations contained in this Agreement and releasing the
Company and all Subsidiaries and related parties from any claims, such agreement
to be prepared by the Company or its designee.
9. Key Executive Insurance. The Company, at its discretion, may apply for
and procure in its own name for its own benefit life and/or disability insurance
on Executive in any amount specified by the Company. Executive agrees to
cooperate in any medical or other examination, supply information and execute
such applications as may be reasonably necessary to obtain and continue such
insurance at the Company's expense. Executive represents that he has no reason
to believe his life is not insurable at prevailing rates for men of his age.
10. Confidential and Proprietary Information.
(a) Executive agrees that he will not use or disclose to any person,
entity, association, firm or corporation, any of the Company's Confidential
Information, except with the written authorization of the Board or as necessary
to perform his duties under this Agreement. The term "Confidential Information"
means information and data not generally known outside of the Company (unless as
a result of Executive's breach of any of the obligations imposed by this
Agreement or the Prior Agreement or the duties imposed by any then existing
statute, regulation, ordinance or common law) concerning the Company's business
and technical information, and includes, without limitation, information
relating to: (i) the identities of clients and the Company's other Business
Relations (as defined below) and their purchasing habits, needs, business
information, contact personnel and other information; (ii) suppliers' and
vendors' costs, products, contact personnel and other information; and (iii) the
Company's trade secrets, products, research and development, financial and
marketing information, personnel and compensation information, and business
plans. Executive understands that this Section 10 applies to computerized as
well as written information and to other information, whether or not in written
form. It is expressly understood, however, that the obligations of this Section
10 shall only apply for as long as and to the extent that the Confidential
Information has not become generally known to or available for use by the public
other than by Executive's act(s) or omission(s) in violation of this Agreement
or the Prior Agreement.
(b) Executive agrees that upon the end of his employment with the
Company for any reason, he will not take with him any Confidential Information
that is in written, computerized, machine readable, model, sample, or other form
of capable of physical delivery, without the prior written consent of the Board.
The Executive also agrees that upon the end of his employment with the Company
for any reason or at any other time that the Company may request, he will
deliver promptly and return to the Company all such documents and materials in
his possession or control, along with all other property and documents of the
Company or relating to the Company's employees, suppliers, customers, and
business.
11. Non-Solicitation. Executive agrees that he will not through the date
one year after the end of his employment with the Company for any reason,
directly or indirectly, on his own behalf or on behalf of any other person or
entity, without the express written permission of the Board: (a) solicit or
attempt to solicit any employee or representative of the Company to terminate or
modify his or her relationship with the Company or to work for or provides
services to another person or entity; or (b) solicit or attempt to solicit, any
client, vendor, service provider or other business relation of the Company (each
a "Business Relation"), about whom he learned or with whom he came into contact
during his employment with the Company on behalf of any entity or with respect
to any service or products which is or may be competitive with the Company or
its services or products.
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12. Non-Competition.
(a) Executive agrees that during the Restrictive Period (as defined
below), he will not, without the express written consent of the Board, be
associated with or engage in, directly or indirectly, as employee, consultant,
proprietor, stockholder, partner, agent, representative, officer, or otherwise,
the operation of any business that directly competes with the Company in
business activities that are the same or substantially similar to the business
activities engaged in by the Company within the United States or any other
geographic area in which the Company does business during the Restrictive Period
(the "Restricted Territory").
(b) The term "Restrictive Period" shall mean the Employment Term plus a
period of twelve months after the end of the Employment Term; provided that the
twelve month period following the end of the Employment Term shall not apply if:
(i) Executive's employment is terminated by the Company for reasons other than
death, Disability or cause, or (ii) Executive resigns his employment for Good
Reason.
(c) Passive investment in less than two percent of the outstanding
equity securities of an entity which is listed on a national or regional
securities exchange shall not, in itself, constitute a violation of this Section
12.
13. Intellectual Property Rights. Executive will, during the period of his
employment, disclose to the Company promptly and fully all Intellectual Property
made or conceived by Executive (either solely or jointly with others) including
but not limited to Intellectual Property which relate to the business of the
Company or the Company's actual or anticipated research or development, or
result from work performed by him for the Company. All Intellectual Property and
all records related to Intellectual Property, whether or not patentable, shall
be and remain the sole and exclusive property of the Company. "Intellectual
Property" means all copyrights, trademarks, trade names, trade secrets,
proprietary information, inventions, designs, developments, and ideas, and all
know-how related thereto. Executive hereby assigns and agrees to assign to the
Company all his rights to Intellectual Property and any patents, trademarks, or
copyrights which may be issued with respect to Intellectual Property. Executive
further acknowledges that all work shall be work made for hire. During and after
the Employment Term, Executive agrees to assist the Company, without charge to
the Company but at its request and expense, to obtain and retain rights in
Intellectual Property, and will execute all appropriate related documents at the
request of the Company.
Executive understands that this Paragraph 13 shall not apply to any
Intellectual Property for which no equipment, supplies, facilities, trade
secrets, or other confidential information of the Company was used and which was
developed entirely on his own time, and does not relate to the business of the
Company, its actual or anticipated research, and does not result from any work
performed by him for the Company.
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14. Successors and Assignees. This Agreement may be assigned by the Company
to any successor or assignee of a substantial portion of the business of the
Company (whether by transfer of assets or stock, merger or other business
combination). Executive may not assign his rights or obligations under this
Agreement.
15. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties and their respective heirs, successors, legal
representatives and permitted assigns.
16. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and either delivered in person by
reputable messenger or overnight delivery service, by telecopy (with
confirmation of receipt) or sent by certified mail, postage prepaid, if to the
Company at the Company's principal place of business, c/o Chairman of the Board,
and if to the Executive, at his home address most recently filed with the
Company, or to such other address as either party shall have designated in
writing to the other party.
17. Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut for contracts to be
performed in that State.
18. Severability and Construction. If any provision of this Agreement is
declared void or unenforceable or against public policy, such provision shall be
deemed severable and severed from this Agreement and the balance of this
Agreement shall remain in full force and effect. If a court of competent
jurisdiction determines that any restriction in this Agreement is overbroad or
unreasonable under the circumstances, such restriction shall be modified or
revised by such court to include the maximum reasonable restriction allowed by
law.
19. Reasonable Restrictions/Remedies. Executive acknowledges that the
provisions contained in Sections 10 through 13 of this Agreement are reasonable
in scope, area and duration and are necessary for the company to protect its
legitimate business interests, including its confidential information and
business relationships. Executive and Company acknowledge and agree that damages
would not adequately compensate Company if Executive were to breach any of his
covenants contained in Sections 10 through 13 above. Consequently, Executive
agrees that in the event of any such breach, Company shall be entitled to
enforce this Agreement by means of an injunction or other equitable relief, in
addition to any other remedies including without limitation monetary damages,
set off against any amounts due Executive by Company and termination of
Executive's employment for Cause.
20. Waiver. Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition.
21. Entire Agreement; Modifications. This Agreement constitutes the entire
agreement of the parties with respect to its subject matter and supersedes all
prior agreements, oral and written, between the parties with respect to the
subject matter of this Agreement. This Agreement may be modified or amended only
by an instrument in writing signed by both parties.
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22. Employment and Income Taxes. All payments made to Executive by the
Company will be subject to withholding of income and employment taxes and other
lawful deductions, as applicable.
EXECUTIVE COMPETITIVE TECHNOLOGIES, INC.
/s/ John B. Nano By: /s/ Richard E. Carver
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John B. Nano Richard E. Carver, Chairman
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