employagreementkrotine.htm


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    EMPLOYMENT
AGREEMENT

     

    


     

    THE AGREEMENT is made as of
the 21st day of September, 2009 (the “Effective Date”) by and between Ecology
Coatings, Inc., a Nevada corporation (the "Company"), and F. Thomas  Krotine
(the "Executive").

     

    WITNESSETH

     

    WHEREAS, the Company is
engaged in the business of the developing, producing and selling nanotechnology
coatings;

     

    WHEREAS, the Company desires
to employ the Executive as its President and Chief Operations
Officer;

     

    WHEREAS, the parties desire to
memorialize the employment of the Executive in the Agreement.

     

    NOW THISEFORE, in
consideration of the premises and the mutual covenants and agreements contained
herein, the parties mutually covenant and agree as follows:

     

    1. Employment.

     

    The
Company hereby agrees to employ the Executive as its Chief Operating Officer and
the Executive hereby accepts such employment upon the terms and conditions set
forth in the Agreement.

    


    2. Duties.

     

    2.1 During
the term of the Agreement, the Executive shall diligently perform all services
consistent with his position as may be assigned to his by or under the direction
of the Board of Directors of the Company and such other members of senior
management designated by the Board.  The Executive's duties shall
include overall responsibility for the affairs of the Company, legal and SEC
compliance and other requirements of a public company.  In the
performance of his duties, the Executive shall report to the Board of Directors
and the Chief Executive Officer.

     

    2.2 (b)           The
Executive shall devote his full working time and attention to the business and
affairs of the Company, render such services in a competent and efficient
manner, and use his reasonable and appropriate best efforts to faithfully
promote the interests of the Company.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    3. Term
of Employment.

     

    3.1 Term.  The term of
employment shall begin upon execution of the Agreement and extend for a period
of one (1) year (the "Initial
Term").  It shall thereafter be automatically renewed for
successive periods of one (1) year, each upon the terms and conditions set forth
in the Agreement, unless, at least thirty (30) days prior to such renewal date,
either party shall have delivered to the other party written notice of
termination of the Agreement.

     

    3.2 Termination Without
Cause.  The Company shall have the right to terminate the
Executive's employment under the Agreement by written notice to the Executive at
any time; provided, however, that, upon
such termination without Cause, as such term is defined below, the Company shall
pay to Executive the full value of the remaining unpaid compensation owed to the
Executive for the balance of the Initial Term, including medical and dental
insurance coverage that the Company provides to its other
executives.  If the Agreement is terminated without Cause by the
Company during the final year of the Initial Term or during any subsequent
one-year extension term, a full year's compensation, including medical and
dental insurance coverage, shall be due and payable.  The Company
shall have no further liability under the Agreement, other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination.  The Company shall be deemed to have terminated the
Executive's employment pursuant to this Section 3.2 if such employment is
terminated:  (i) by the Company without Cause; or (ii) by the
Executive voluntarily for "Good Reason."  For purposes of the
Agreement, "Good
Reason" means any breach by the Company of any of the terms or provisions
of the Agreement which is not cured within thirty (30) business days of written
notice by the Executive.

     

    3.3 Termination for
Cause.  The Company may terminate the Agreement and the
Executive's employment hereunder immediately upon written notice to the
Executive for "Cause" (as hereinafter defined).  For purposes of the
Agreement, the term "Cause" shall mean (i)
the repeated failure or refusal of the Executive to perform the duties or render
the services reasonably assigned to his from time to time by the Board of
Directors (except during reasonable vacation periods or sick leave); (ii) the
charging or indictment of the Executive in connection with a felony or willful
misfeasance or nonfeasance; (iii) the association, directly or indirectly, of
the Executive, for his profit or financial benefit, with any person, firm,
partnership, association, entity or corporation that competes, in any material
way, with the Company; (iv) the disclosing or using of any material
"Confidential Information", "Trade Secrets"  or “Material, Non-Public
Information” (as those terms are defined in Section 9) of the Company at any
time by the Executive, except as required in connection with his duties to the
Company, (v) the breach by the Executive of his fiduciary duty or duty of trust
to the Company, including the commission by the Executive of an act of fraud or
embezzlement against the Company, (vi) trading, directly or indirectly, in the
Company’s securities while in possession of material, non-public information
(vii) any other material breach by the Executive of any of the terms or
provisions of the Agreement or any other agreement between the Company and the
Executive, which other material breach is not cured within thirty (30) business
days of notice by the Company; or (vii) any other action by the Executive,
which, in the good faith and reasonable determination of all of the members of
the Company's Board of Directors, has the effect of materially injuring the
reputation or business of the Company.  In which event,
notwithstanding any other provision in the Agreement to the contrary, the
Executive shall have no further rights or entitlements under the Agreement, the
Company shall have no further obligations to the Executive, and the Agreement
shall be null and void, provided, however, that the
Executive shall be entitled to be receive all unpaid, earned salary, wages and
benefits, including accrued vacation pay and reimbursement for reasonable
business expenses incurred prior to the date of termination, to the date of
termination.  It shall be the Company's burden to show that good
"Cause" existed for termination under the Section by clear and convincing
evidence, and any failure by the Company to carry the burden shall convert the
termination into a termination without "Cause."

     

    4. Compensation.

     

    4.1 Base Salary.  The
Company shall initially pay the Executive an annual salary of $65,000 for his
services under the Agreement starting November 1, 2009.  Such salary
shall be payable semi-monthly, subject to applicable withholding and other taxes
and subject to annual adjustment by the Company’s Compensation Committee or its
Board of Directors.  For calendar year 2010 and beyond, the
Executive’s salary shall be reviewed by the Compensation Committee or the Board
of Directors for possible increase.

     

    4.2 Bonus and Other
Compensation.  Executive shall be entitled to participate on
the same terms as other directors and officers in any applicable bonus, stock
option, restricted stock, pension or profit sharing plan, or any other type of
plan adopted by the Company for the benefit of its officers, directors and
employees.

     

    5. Grant of Stock
Options.  The Company will grant an additional 169,000 options
to purchase shares of the Company’s common stock at a price per share equal to
the closing price of the Company’s stock on the date the Company’s Board of
Directors approves this Agreement with vesting as
follows:  one-quarter of which shall vest on 6 months, 12 months, 18
months and 24 months from the date of this Agreement.  The Company
shall provide in its stock option plan and/or stock option agreements with
Executive that all of Executive’s stock options shall vest upon a “Change in
Control” of the ownership or composition of the Company’s Board of
Directors.

     

    6. Place
of Employment.

     

    The
Executive's regular place of work shall be 1238 Brittain Rd., Akron,
OH  44310, or such other place that it may designate from time to
time.  However, if the Company desires to move its office out of such
area, or any other area it thereafter designates, the Company shall provide
Executive with no less than one (1) year’s time to complete his
relocation.  The Company shall pay the Executive's reasonable moving
expenses.

     

    7. Executive
Benefits.

     

    7.1 Holidays.  The
Executive shall be entitled to fifteen (15) paid holidays
annually.  The Company will notify the Executive as much in advance as
practical with respect to the holiday schedule to be observed by the
Company.

     

    7.2 Vacations.  During the term
of the Agreement, the Executive shall be entitled to four (4) weeks of paid
vacation annually.  The Executive agrees not to utilize vacation
and/or compensatory time at a time when to do so could adversely affect the
Company's business.

     

    7.3 Personal Insurance
Benefits.  The Executive shall be entitled to participate in
all medical, dental and hospitalization, group life insurance, and any and all
other such plans as are presently and hereafter provided by the Company to its
executives.

     

    8. Expenses.

     

    During
the term of the Executive's employment hereunder, the Company, upon the
submission of proper substantiation by the Executive, shall reimburse the
Executive for all reasonable expenses actually and necessarily paid or incurred
by the Executive in the course of and pursuant to the business of the
Company.  The payments will be made within ten (10) days after the
Executive provides the Company with an itemized statement of all
charges.

     

    9. Confidentiality.

     

    9.1 The
Executive shall not divulge, communicate, use to the detriment of the Company or
for the benefit of any other person or persons, or misuse in any way, any
"Confidential Information" pertaining to the Company or its
affiliates.  Any confidential information or data now known or
hereafter acquired by the Executive with respect to the Company or its
affiliates shall be deemed a valuable, special and unique asset of the Company
that is received by the Executive in confidence and as a fiduciary, and the
Executive shall remain a fiduciary to the Company with respect to all of such
information.  For purposes of the Agreement, the following terms when
used in the Agreement have the meanings set forth below:

     

    9.1.1                      "Confidential
Information" means confidential data and confidential information
relating to business of the Company or its affiliates, including the
nano-engineered, ultraviolet curable coatings and technology owned or developed
by the Company, (which does not rise to the status of a Trade Secret under
applicable law) which is or has been disclosed to the Executive or of which the
Executive became aware as a consequence of or through his employment with the
Company and which the Executive knows or has reason to know has value to the
Company or its affiliates and is not generally known to the competitors of the
Company.  Confidential Information shall not include any data or
information that (i) has been voluntarily disclosed to the general public by the
Company or its affiliates, (ii) has been independently developed and disclosed
to the general public by others, or (iii) otherwise enters the public domain
through lawful means.

     

    9.1.2                      "Trade Secrets" means
information of the Company or its affiliates including, but not limited to,
technical or non-technical data, formulas, patterns, compilations, programs,
financial data, financial plans, product or service plans or lists of actual or
potential customers or suppliers which (i) derives economic value, actual or
potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.

     

    9.1.3  “Material, Non-Public
Information” means financial, business or strategic information that may
have a material effect on the Company and which has not been previously publicly
disclosed by the Company.  “Material Non-Public Information” includes
“Confidential Information” and “Trade Secrets”.

     

    9.2 In
addition, during the Initial Term and during the periods described in the last
sentence of this Section 9.2, the Executive (i) will receive and hold all
Confidential Information and Trade Secrets (collectively, the "Company Information")
in trust and in strictest confidence, (ii) will take reasonable steps to protect
the Company Information from disclosure and will in no event knowingly or
wrongfully take any action causing, or fail to take any action reasonably
necessary to prevent, any Company Information to lose its character as Company
Information, and (iii) except as required by the Executive's duties in the
course of his employment by the Company, will not, directly or indirectly, use,
disseminate or otherwise disclose any Company Information to any third party
without the prior written consent of the Company, which may be withheld in the
Company's absolute discretion.  The provisions of this Section 9 shall
survive the termination of the Executive's employment for a period of two (2)
years with respect to Confidential Information, and, with respect to Trade
Secrets, for so long as any such information qualifies as a Trade Secret under
applicable law.

     

    10. Restrictive
Covenants.

     

    10.1 Non-competition.  The
Executive agrees that, at all times during the term of the Agreement, any
subsequent one-year extension term and for a period of one (1) year after
termination of his employment under the Agreement, howsoever brought about, he
will not, directly or indirectly, (whether as owner, principal, agent,
shareholder, employee, partner, lender, venture with or consultant to any
person, firm, partnership, corporation, limited liability company or other
entity), whether or not compensation is received:  (i) engage or
participate in the development, design and production of nano-engineered,
ultraviolet curable coatings which compete with the products of the Company; or
(ii) engage or participate in any activity for any business or entity which is
or plans to engage in the marketing and sale of any products or services which
are under active development or are marketed or sold by the Company, or other
business in which the Company is engaged, during the term of the Agreement
anywhere in the United States.  In the event that the provisions of
the Section 10 ever be deemed to exceed the time, geographic or occupational
limitations permitted by the applicable laws, then such provisions shall be
reformed to the maximum time, geographic or occupational limitations by the
applicable laws.

     

    10.2 Non-solicitation of
Clients.  The Executive agrees that, during the term of the
Agreement, any subsequent one-year extension term, and for a period of one (1)
year after termination of his employment under the Agreement, howsoever brought
about, he will not directly or indirectly, for himself or for any other person,
firm, corporation partnership, association or other entity:  (i)
induce any person who is an actual client or a known targeted prospective client
of the Company to patronize any competing firm; (ii) canvass, solicit or accept
any business relationship from any person who is an actual client or a known
targeted prospective client of the Company; (iii) directly or indirectly request
or advise any person who is an actual client or a known targeted prospective
client of the Company to withdraw, curtail or cancel such business with the
Company; or (iv) directly or indirectly disclose to any other person, firm or
corporation the names or addresses of any of the actual clients or known
targeted prospective clients of the Company.

     

    10.3 Non-solicitation of
Employees.  The Executive agrees that, during the term of the
Agreement, any subsequent one-year extension term, and for a period of two (2)
years after termination of his employment under the Agreement, howsoever brought
about, he will not, directly or indirectly, for himself or for any other person,
firm, corporation, partnership, association or other entity, attempt to employ
or enter into any contractual arrangement with any person known by the Executive
to be an employee or former employee of the Company, unless such employee or
former employee has not been employed by the Company for a period in excess of
six months.

     

    10.4 Books and
Records.  All books, records, reports, writings, notes,
notebooks, computer programs, sketches, drawings, blueprints, prototypes,
formulas, photographs, negatives, models, equipment, chemicals, reproductions,
proposals, flow sheets, supply contracts, customer lists and other documents
and/or things relating in any manner to the business of the Company (including
but not limited to any of the same embodying or relating to any Confidential
Information or Trade Secrets), whether prepared by the Executive or otherwise
coming into the Executive's possession, shall be the exclusive property of the
Company and shall not be copied, duplicated, replicated, transformed, modified
or removed from the premises of the Company except pursuant to the business of
the Company and shall be returned immediately to the Company on termination of
the Executive's employment hereunder or on the Company's request at any
time.

     

    10.5 No Conflict.  The
Executive represents to the Company that his execution and performance of the
Agreement does not violate the provisions of any employment, non-competition,
confidentiality or other material agreement to which he is a party or by which
he is bound.  The Executive also agrees to indemnify and hold harmless
the Company from any and all damages and other obligations or liabilities
incurred by the Company in connection with any breach of the foregoing
representation.

     

    11. Remedies
for Breach of Agreement.

     

    In the
event of the breach or threatened breach of any provision of the Agreement by
either party, the other party shall be entitled to injunctive relief, both
preliminary and final, enjoining and restraining such breach or threatened
breach.  Such remedies shall be in addition to all other remedies
available at law or in equity, including the Company's right to recover from the
Executive any and all damages that may be sustained as a result of Executive's
breach of the Agreement.

     

    12. Intellectual
Property.

     

    12.1 Inventions.  Executive
hereby assigns and agrees to assign to Company, its subsidiaries, successors and
assigns, all intellectual property rights, in all countries of the world, in and
to any invention, patent, trademark, copyright, trade secret, confidential
information and technology developed, authored, conceived, or reduced to
practice solely by the Executive or jointed with others during the term of the
Agreement, which is related to Company's present or prospective business
interests.  The Executive will, without charge to Company, but at its
expense, sign all papers, take all rightful oaths, and do all acts which may be
necessary, desirable, or convenient for securing and maintaining intellectual
property rights in any and all countries and for vesting title thereto with
Company, his successors, assigns, and legal representatives or
nominees.

     

    12.2 Prior
Inventions.  Executive shall disclose to Company in writing any
of his inventions, discoveries and technology that occurred prior to the
execution of the Agreement but during his employment with the Company, which
inventions, discoveries and technology Executive also hereby assigns to the
Company.  The disclosure shall contain sufficient detail to permit
Company to evaluate and quantify the scope of Executive's work prior to the date
of this Agreement.

     

    13. Miscellaneous.

     

    13.1 Severability.  If
any of the provisions of the Agreement shall be invalid or unenforceable, such
invalidity shall not invalidate or render unenforceable the entire Agreement,
but rather the entire Agreement shall be construed as if not containing the
particular invalid or unenforceable provisions, and the rights and obligations
the Company and the Executive shall be construed and enforced
accordingly.

     

    13.2 Notices.  All
communications and notices required by or relating to the Agreement shall be
deemed to have been duly given upon receipt in writing by the addressee
addressed as indicated below:

     

    Ecology Coatings,
Inc.                                                                F.
Thomas Krotine

    Attn:
Chairman                                                                Ecology
Coatings, Inc.

    2701 Cambridge Ct., Suite
100                                                                1238
Brittain Rd.

    Auburn
Hills, MI
48326                                                                Akron,
OH  44310

    The
address to which notices or communications may be given by either party may be
changed by written notice given by such party to the other pursuant to the
Article.  The mailing or transmittance of any notice shall be deemed
complete upon the mailing or transmission of the notice to the address stated
above or any subsequent amended address.

     

    13.3 Law.  The Agreement
shall be governed by and construed in accordance with the laws of the State of
Michigan in all respects, including matters of construction, validity, and
performance.  The parties irrevocably agree that, all actions of
proceedings in any way, manner or respect arising out of or from or related to
the Agreement shall be litigated only in courts located  in the State
of Michigan and hereby consent and submit to the jurisdiction of any local,
State, or Federal court located in the State of Michigan.

     

    13.4 Non-Waiver.  No
course of dealing or failure of either party to strictly enforce any term, right
or condition of the Agreement shall be construed as a waiver of such terms,
right or condition.

     

    13.5 Entire
Agreement.  The Agreement constitutes the entire Agreement
between the parties and may not be modified or amended other than by a written
instrument executed by both parties.  All agreements, oral or written,
entered into by or on behalf of the parties prior to the Agreement are revoked
and superseded hereby.  No representations, warranties, inducements or
oral agreements have been made by any of the parties except as expressly set
forth herein.

     

    13.6 Assignment.  Any
assignment of the Agreement by either party must be approved in writing by the
other party and the assignee must agree in writing to be bound by the terms of
the Agreement.

     

    IN WITNESS WHEREOF, the
foregoing Agreement has been executed by the parties hereto to be effective as
of the day and year first above written.

     

     

    


     

     

    


     

     

    


     

     

    Ecology
Coatings,
Inc.                                                                                                           Executive

     

    


    /s/ JB
Smith                                                      /s/ F. Thomas
Krotine

    JB
Smith                                                                                                                           
 F. Thomas Krotine

    


    Its:
Board Member