Exhibit 10.6
EMPLOYMENT AGREEMENT
THIS AGREEMENT dated November 18,
1998, between Alexander G. Fassbender (the “Executive”)
and ThermoEnergy Corporation (the “Company”), with its
principal office at 1300 Tower Building, 323 Center Street, Little
Rock, Arkansas 72201.
WHEREAS, Company desires to employ
Executive as its Executive Vice President and Senior Vice President
of Corporate Technology, and Executive desires to accept such
employment, for the term and upon the other conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of
the agreements and covenants contained herein, Executive and
Company hereby agree as follows:
ARTICLE I
Employment
Section 1.01. Position: Term:
Responsibilities . Company shall employ Executive as its
Executive Vice President and Senior Vice President of Corporate
Technology for a term commencing on January 1, 1999 and ending on
December 31, 2001 provided, however, that such terms shall be
extended, as of the end of each year beginning 1/1/1999, for one
additional year (the result of which will be a continuous
three-year term), unless either Executive of Company shall have
terminated this provision by written notice to the other party at
least 60 days prior to such extension; and provided further that in
no event shall such term extend beyond the term of employment in
effect from time-to-time as prescribed in the preceding sentence is
hereinafter called the “Employment Period.” Subject to
the powers, authorities, and responsibilities vested in the Board
of Directors (the “Board”) of Company under the general
corporation law of the State of Arkansas and in duly-constituted
committees of the Board, Executive shall have the responsibility
and authority for formulation and execution of the corporate
policy, and of the administration of the corporate affairs of
Company, and such other responsibilities and authorities as are
customarily exercisable by the Executive Vice President and Senior
Vice President of Corporate Technology. Initially, Executive shall
serve as Executive Vice President and Senior Vice President of
Corporate Technology. Executive shall also perform such
other
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executive and administrative duties (not
inconsistent with the position of Executive Vice President) as
Executive may reasonably be expected to be capable of performing on
behalf of Company, its subsidiaries and affiliates (collectively,
including Company, “ Companies”), as may from time-to-time be
authorized or directed by the Board. Executive agrees to be
employed by Company in all such capacities for the Employment
Period, subject to all the covenants and conditions hereinafter set
forth.
Section 1.02. Duties . During
the Employment Period, Executive shall perform faithfully the
duties assigned to him hereunder to the best of his abilities and
devote his full and undivided business time and attention to the
transaction of Companies businesses and not engage in any other
business activities except with the approval of the Board;
provided, however, that Executive may serve as a director of other
corporations not in competition with Companies, subject to the
approval of the Board.
ARTICLE II
Compensation
Section 2.01. Basic
Compensation . As compensation for his services thereunder,
Company shall pay to Executive during the Employment Period a
minimum annual salary of $135,000, payable in installments in
accordance with Company’s normal payment schedule for senior
management of Company. As of the first day of each fiscal year of
Company during the Employment Period, commencing January 1, 2000.
Executive’s minimum annual salary shall be increased 15
percent for the next succeeding year until Executive’s salary
is $250,000. Thereafter, Executive’s salary will be adjusted
by multiplying $250,000 by a fraction the numerator of which is the
Consumer Price Index for All Urban Consumers (“the
CPI-U”) for the month of November of the preceding fiscal
year of Company, as published by the United States Department of
Labor’s Bureau of Labor Statistics, and the denominator of
which is the CPI-U for November of the year in which
Executive’s Salary becomes $250,000.
However, in no event shall
Executive’s base salary after switching to the CPI-U based
index be less than $250,000. Executive’s annual salary in
effect from time-to-time under this Section 2.01 is for partial
achievement of the performance standards. In the absence of
manifest error, the determination
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of the amount of Incentive Compensation by the
Board of the Compensation Committee in accordance shall be binding
upon Executive and Company.
Section 2.02. Incentive
Compensation .
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A.
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Formula for
Determining . In addition
to Basic Compensation, Company shall pay to Executive as incentive
compensation (“Incentive Compensation”), in respect of
each fiscal year of Company or portion thereof included within the
Employment Period, an amount (not to exceed 50 percent of his Basic
Compensation) determined in accordance with a formula to be
established annually in good faith by the Board of a committee (the
“Compensation Committee”) thereof authorized to act on
compensation matters and, in the case of each fiscal year
commencing January 1, 1999 communicated to Executive prior to the
beginning of such fiscal year, such formula to give a 50 percent
weight to Company’s performance (measured by such method or
combination of methods as the Board of the Compensation Committee
shall deem fair and equitable) during each fiscal year, and a 50
percent weight to Executive’s performance (determined by the
Board or the Compensation Committee on the goals established for
Executive) during each fiscal year. The formula shall be
established so that Executive will have a reasonable opportunity,
through diligent performance of his duties, to earn the maximum
Incentive Compensation, with partial Incentive Compensation being
earned for partial achievement of the performance standards. In the
absence of manifest error, the determination of the amount of
Incentive Compensation by the Board of the Compensation Committee
in accordance shall be binding upon Executive and
Company.
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B.
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Manner of
Payment . Incentive
Compensation earned hereunder shall be determined by the
Compensation Committee as soon as reasonably practicable after the
end of each fiscal year of Company and shall be paid promptly
thereafter to the Executive. However, if the Committee in its
judgment concludes that Company’s financial position is such
that it cannot pay Incentive Compensation due Executive currently,
it may give a written notice (a “Deferral Notice”) to
Executive to the effect that all or a designated percentage of his
Incentive Compensation for such fiscal year shall be deferred. Each
Deferral Notice shall specify that the Incentive Compensation (or a
designated percentage thereof) earned in respect of the applicable
fiscal year shall be paid to Executive in a designated number of
equal monthly installments (not less than 12 and not more than 36)
and the date upon which such installment payments shall
commence.
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C.
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Deferred
Compensation . Deferred
Basic Compensation and deferred Incentive Compensation shall bear
interest on the unpaid balance thereof from the last day of the
fiscal year in respect of which it was earned at the average prime
commercial lending rate at Boatmen’s National Bank of
Arkansas, or its successor, for 90-day loans to commercial
borrowers of the highest credit standing, as supplied to Company
annually by Boatmen’s National Bank of Arkansas. Such
interest shall be computed annually in arrears, shall be added as
of the last day of each fiscal year of Company to the deferred
Basic Compensation and deferred Incentive Compensation with respect
to which it was earned, and shall thereafter bear interest as
above-provided. In the event of the death of Executive, deferred
Basic Compensation and deferred Incentive Compensation and the
interest earned thereon shall be paid to such person or persons or
the executors, administrators, or other legal representatives of
such person or persons (and in such order of priority) as Executive
may have designated in a written instrument filed with the
Secretary of the Company (all such persons, executors,
administrators, and other legal representatives being hereinafter
collectively called his “Designated Successors”); and
in the event of the legal incompetence of Executive, deferred Basic
Compensation and deferred Incentive Compensation and the interest
earned thereon shall be paid to his lawfully appointed
guardian.
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D.
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Right to
Payment of Deferred Amounts Unconditional . Anything in this Agreement to the contrary
notwithstanding, Company’s obligation to make payments of
Basic Compensation and Incentive Compensation earned by Executive
and either not paid as provided in Section 2.01 and 2.02(A) or
deferred in accordance with paragraph (B) of this Section 2.02,
together with interest earned thereon in accordance with paragraph
(C) of this Section 2.02, shall be absolute and unconditional,
irrespective of the termination of this Agreement for any reason,
and shall survive any termination of this Agreement.
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E.
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Other
Compensation . The
Company shall pay the Executive an automobile allowance equivalent
to seven hundred 1999 dollars per month ($700/mo.). This allowance
shall continue throughout the term of employment and be adjusted
for inflation on an annual basis using the CPI-U index.
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F.
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Stock Option
Plan . Company agrees to
include Executive as a participant in the incentive stock option
plan established by Company on January 3, 1997. Executive’s
rights in shares issued by Company and committed to that plan shall
be governed by the terms of that plan.
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Section 2.03. Incapacity . If
at any time during the Employment Period Executive is unable to
perform fully his duties hereunder by reason of illness, accident,
or other disability (as confirmed by competent medical evidence),
during the first 12 months of such incapacity he shall be entitled
to receive his Basic Compensation, Incentive Compensation, and any
stock options to which he would be entitled under Section 2.01 and
2.02, and during any remaining period of such incapacity (but in no
event beyond the end of the Employment Period determined without
regard to any action taken by Company pursuant to Section 3.01 (i),
he shall be entitled to receive 50 percent of his Basic
Compensation, but no Incentive Compensation or stock options. If
Executive shall resume the full performance of his duties hereunder
following any period of incapacity, Executive shall be entitled to
receive his Basic Compensation and Incentive Compensation.
Notwithstanding the foregoing provisions of this Section 2.03, the
amounts payable to Executive hereunder shall be reduced by any
amounts received by Executive with respect to any such incapacity
pursuant to any insurance policy, plan, or other employee benefit
provided to Executive by Company. For the purposes of this Section
2.03, more than one occurrence of incapacity during the Employment
Period shall be treated as a single period of incapacity regardless
of any interruption in such incapacity, except that a new and
separate period of incapacity shall be deemed to have commenced if
(i) the illness, accident, or other disability giving rise to the
latest occurrence of incapacity is totally unrelated to any prior
incapacity; or (ii) notwithstanding that the illness, accident, or
disability giving rise to the latest occurrence of incapacity is
related to any prior incapacity, Executive has performed his duties
hereunder for a continuous period of at least six months since the
termination of such prior incapacity.
Section 2.04. Life Insurance
. During the Employment Period, Company shall pay all premiums for
one or more insurance policies upon the life of Executive in an
aggregate face amount of $250,000, the death benefit or benefits to
be payable to such beneficiary or beneficiaries as Executive shall
designate in writing to Company. Executive shall aid Company in
procuring such insurance, as well as in obtaining any other life,
health, accident, disability, or other insurance which Company
should at any time apply for, in its own name and at its own
expense, to ensure Company’s obligations hereunder, by
submitting to the usual and customary medical examinations and by
completing, executing, and delivering such applications and other
instruments in writing as may be reasonably required by any
insurance company or companies.
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Section 2.05. Other Employee
Benefits . Company shall pay or shall reimburse Executive for
his reasonable expenses in connection with (i) obtaining from
time-to-time of financial planning advise; (ii) preparation of his
federal and state income tax returns; and (iii) cost of his annual
medical examination. During the Employment Period Company shall
also pay the initiation fee and the annual dues and assessments for
Executive’s membership in a social or business club in the
Washington State area. Executive shall also be entitled to
participate in all employee benefit plans and to receive all other
fringe benefits as are from time-to-time made generally available
to the senior management of Company.
ARTICLE III
Incapacity and
Termination
Section 3.01. Expense
Reimbursements . In the event that during the Employment Period
there should occur (i) “Total and Permanent Incapacity”
(as hereinafter
