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| 8-K - THERMOENERGY CORP | v172471_8k.htm |
ThermoEnergy
Corporation
Executive
Employment Agreement
AGREEMENT,
dated the 27th day
of January 2010, by and between ThermoEnergy Corporation, a Delaware corporation
(together with all of its subsidiaries, the “Company”) and Cary G. Bullock (the
“Executive”).
WHEREAS,
the Company desires to engage the services of the Executive as President and
Chief Executive Officer of the Company on the terms herein set forth and the
Executive is willing to be employed by the Company in such capacities on such
terms;
NOW,
THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:
ARTICLE
I
EMPLOYMENT
DUTIES AND BENEFITS
Section
1.1 Employment. The Company
hereby employs the Executive as President and Chief Executive Officer as of the
date hereof. The Executive accepts such employment and agrees to
perform the duties and responsibilities assigned to him pursuant to this
Agreement.
Section
1.2 Duties
and Responsibilities. The Executive
shall perform such lawful duties and have such responsibilities as are
customarily associated with the office in which he is employed. In
addition thereto, the Executive shall undertake such duties as may reasonably be
assigned to him from time to time by the Board of Directors of the
Company. The Executive shall devote his full professional time and
attention to the business of the Company and shall not be engaged in any other
business activity; provided, however, that the Executive may, with the prior
consent of the Board of Directors of the Company (which consent shall not be
unreasonably withheld), engage in uncompensated charitable, religious or civic
activities and/or serve as a non-executive director for up to one other company
(whether or not compensated), so long as such activities do not materially
interfere with the Executive’s performance of his responsibilities as Chief
Executive Officer of the Company. The Executive will serve as a
member of the Board of Directors of the Company and of the Board of Managers of
the Company’s subsidiary, Babcock - Thermo Carbon Capture LLC.
Section
1.3 Office
Facilities. The Company will
provide to the Executive an appropriate office, which shall initially be located
at the Company’s facilities in Worcester, Massachusetts.
ARTICLE
II
COMPENSATION
AND BENEFITS
Section
2.1 Base
Salary. During the
calendar year ending December 31, 2010, the Company shall pay to the Executive a
salary of $200,000 (the “Base Salary”) payable in equal installments in
accordance with the Company’s payroll and withholding policies. The
Base Salary shall be reviewed annually and shall be subject to adjustment from
time to time to reflect the Executive’s performance of his responsibilities
hereunder, employment market conditions, the Company’s financial condition and
such other factors as the Compensation Committee of the Company’s Board of
Directors deems relevant.
Section
2.2 Performance
Bonus. In addition to
the Base Salary, the Executive shall be eligible to receive performance bonuses,
from time to time, in accordance with incentive compensation arrangements to be
established by the Compensation Committee of the Company’s Board of Directors
(the “Compensation Committee”) in consultation with the
Executive. Such performance bonuses shall be payable in cash, in
shares of the Company’s Common Stock, in options to purchase shares of the
Company’s Common Stock, or in a combination thereof, at the discretion of the
Compensation Committee of the Company’s Board of Directors; provided, however,
that, except under extraordinary circumstances, the Company will not
pay performance bonuses in cash until such time as the Company’s business
operations are cash flow positive.
Section
2.3 Expense
Reimbursement. The Company will,
in accordance with the Company’s general policies with respect to business
expenses, reimburse the Executive for all expenses (including travel and
lodging) reasonably incurred by the Executive in the performance of this duties
under this Agreement.
Section
2.4 Benefit
Plans. From and after
the date of this Agreement, the Executive shall be entitled to receive, during
the term of the Executive’s employment and at the expense of the Company, health
insurance for himself and his family and to participate in any and all other
benefit plans (including life and disability insurance plans and retirement
programs) provided generally to executive employees of the
Company. The Executive may, in lieu of participation in the Company’s
health insurance plan, elect to have the Company reimburse him for premiums paid
to continue in force the health insurance carried by the Executive for himself
and his family on the date of this Agreement.
Section
2.5 Equity
Incentive. Effective as of
the date of this Agreement, the Executive shall be granted a stock option for
the purchase of 8,159,401 shares of the Company’s common stock at an exercise
price per share equal to the closing price of a share of such common stock in
the over-the-counter market on the trading day immediately preceding the date of
this Agreement (the “Stock Option”). The shares subject to the Stock
Option represent 5% of the Company’s fully-diluted capital stock on the date of
this Agreement. The Stock Option shall have a term of ten years,
subject to the Executive’s continued employment by the Company, and will include
a net surrender cashless exercise provision. To the extent that the
Stock Option may be treated as an Incentive Stock Option (an “ISO”) under the
Internal Revenue Code and the Treasury Regulations promulgated thereunder (the
“ISO Rules”), the Stock Option shall be granted under the Company’s 2008
Incentive Stock Plan (the “Plan”). The right to exercise the Stock
Option shall vest, with respect to 2,039,851 shares, on December 31, 2010, and
thereafter, with respect to an additional 509,962.5 shares on the last day of
each subsequent calendar quarter through and including December 31, 2013,
subject to the Executive’s continued employment by the Company; provided,
however, that if, prior to December 31, 2010, a Change of Control occurs and the
Executive remains employed by the Company through the day immediately preceding
the date of such Change of Control, then, effective immediately prior to such
Change of Control, the Stock Option shall vest with respect to 2,039,851 shares;
and provided, further, that in the event the Executive’s employment is
terminated prior to December 31, 2010 for any reason other than (i) by the
Company during the Probationary Period (as such term is hereinafter defined),
(ii) by the Company for Cause (as such term is hereinafter defined) or (iii)
voluntarily by the Executive without Good Reason (as such term is hereinafter
defined), then, effective as of the date on which the Executive’s employment is
terminated, the Stock Option shall vest with respect to 2,039,851
shares. Except to the extent that the Plan or the ISO Rules limit the
right to exercise the ISO portion of the Stock Option following termination of
the Executive’s employment, the vested portion of the Stock Option may be
exercised at any time prior to January 26, 2020 notwithstanding the earlier
termination of the Executive’s employment. As used herein, the term
“Change of Control” shall mean any of the following: (i) the completion by the
Company of a reorganization, merger, consolidation, share exchange, or a sale,
lease, exchange or other disposition of all or substantially all of the
Company’s assets, unless
immediately following such transaction the holders of the Company’s
voting stock immediately prior to the transaction own voting securities
representing a majority of the votes entitled to be cast for the election of
directors of the successor entity; (ii) the acquisition, after the date of this
Agreement, by any person or “group” (as defined under the federal securities
laws) of “beneficial ownership” (as defined under the federal securities laws)
of a majority of (a) the outstanding shares of the Company’s common stock or (b)
the combined voting power of the then outstanding voting securities of the
Company which are entitled to elect a majority of the members of the Board of
Directors of the Company; or (iii) the approval by the Company’s shareholders of
a complete liquidation or dissolution of the Company; provided, however, that if
an event that otherwise would constitute a Change of Control results from or
arises out of a purchase or other acquisition of the Company, directly or
indirectly, by a corporation or other entity in which the Executive has a
greater than five percent (5%) direct or indirect equity interest, such event
shall not constitute a Change of Control.
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Section
2.6 Vacation. The Executive
shall be entitled to four weeks of paid vacation per calendar
year. The Executive may roll over up to one week per year of unused
vacation time.
ARTICLE
III
TERM
OF EMPLOYMENT AND TERMINATION
Section
3.1 Term. The term of the
Executive’s employment hereunder shall commence on the date of this Agreement
and shall continue indefinitely, subject to a probationary period of ninety days
commencing on the date of this Agreement (the “Probationary
Period”).
Section
3.2 Termination
of Employment. The Executive’s
employment hereunder may be terminated, at any time, by either party upon thirty
days’ written notice; provided, however, that the Company may terminate the
Executive’s employment immediately for Cause and the Executive may terminate his
employment immediately with Good Reason. As used herein, the term
“Cause” for termination of the Executive’s employment by the Company shall mean
any of the following: (a) willful disloyalty to the Company; (b) substantial
inattention to or neglect of duties and responsibilities consistent with the
terms of this Agreement that have been reasonably assigned to the Executive by
the Company's Board of Directors, which inattention or neglect continues for a
period of at least ten days after the Executive receives written notice thereof
from the Company’s Board of Directors; (c) failure to comply with lawful
directives of the Company's Board of Directors not inconsistent with the terms
of this Agreement; or (d) commission by the Executive of a crime
involving deceit, dishonesty or fraud; provided, however, that any action taken
by the Executive in his capacity as an officer of the Company will not be deemed
to constitute Cause even if subsequently determined to be criminal if, prior to
taking such action, the executive consulted with the Company’s Board of
Directors or legal counsel and was advised that such action was
permissable. As used herein, the term “Good Reason” for the Executive’s
voluntary termination of his employment shall mean either of the following:
(a) the Company’s failure to perform the terms of this Agreement,
other than an isolated, insubstantial and inadvertent failure not occurring in
bad faith and remedied by the Company promptly (but not later than ten days)
after receiving written notice thereof from the Executive; (b) the assignment to
the Executive of any duty or to any position inconsistent with the Executive’s
training and experience; or (c) a material reduction of the Base
Salary.
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In the
event the Executive’s employment is terminated for any reason other than (i) by
the Company during the Probationary Period, (ii) by the Company for Cause or
(iii) voluntarily by the Executive without Good Reason, the Executive shall be
entitled to receive, in addition to any unpaid salary and accrued and unused
vacation pay through the last day of the month in which such termination occurs,
as the Executive’s sole and exclusive entitlement upon termination of his
employment under such circumstances, (i) severance payments in the amount of
$16,667 per month for a period of six months commencing on the first day of the
month immediately following the date of termination, payable in accordance with
the Company’s standard payroll and withholding policies and (ii) continuation of
health insurance benefits as set forth in the following sentence. For
a period of six months commencing on the first day of the month immediately
following the date of termination of the Executive’s employment (other than
termination (i) by the Company during the Probationary Period, (ii) by the
Company for Cause or (ii) voluntarily by the Executive without Good Reason) the
Company shall keep in full force and effect all health insurance benefits
afforded to the Executive and his family at the time of the termination of his
employment, which benefits shall be provided on terms identical to those
provided to full time employees of the Company who are in good standing;
provided, however, that the Company’s obligation to provide continuing health
insurance benefits to the Executive and his family shall terminate at such time
as the Executive becomes eligible to receive from another source, at a cost to
the Executive no greater than the cost that would have been borne by the
Executive had he remained a full time employee of the Company, health insurance
benefits with equivalent or better coverage.
ARTICLE
IV
COVENANTS
Section
4.1 Confidentiality
and Non-Use of Proprietary Information. To protect the
Company’s proprietary interest in the Company’s intellectual property and
proprietary information and to protect the goodwill and value of the Company,
the Executive hereby agrees that the Executive will preserve as confidential all
Confidential Information pertaining to the Company’s business that has been or
may be obtained or learned by him by reason of his employment or
otherwise. The Executive will not, without the written consent of the
Company either use for his own benefit or for the benefit of any third parties,
either during the term of his employment hereunder or thereafter (except as
required in fulfilling the duties of his employment), any Confidential
Information pertaining to the business of the Company. As used
herein, the term “Confidential Information” shall include without limitation any
and all financial, cost and pricing information and any and all information
contained in any drawings, designs, plans, proposals, customer lists, records of
any kind, data, formulas, specifications, concepts or ideas related to the
business of the Company. Confidential Information shall not include
information which (a) is disclosed in a publication available to the public, is
otherwise in the public domain at the time of disclosure, or becomes publicly
known through no wrongful act on the part of the Executive, (b) is obtained by
the Executive lawfully from a third party who is not under an obligation of
secrecy to the Company and is not under any similar restrictions as to use, or
(c) is generally disclosed to third parties by the Company without similar
restrictions on such third parties. The Executive acknowledges
that all documents, reports, files, analyses, drawings, designs tools,
equipment, plans (including, without limitation, marketing and sales plans),
proposals, customer lists, computer software or hardware, patents, license
agreements, and similar materials that are made by him or come into his
possession by reason of his employment by the Company are the property of the
Company and shall not be used by him in any way adverse to the Company’s
interests. The Executive will not cause any such documents or other
things, or any copies, reproductions or summaries thereof, to by delivered to or
used by any third party without the specific consent of the
Company. The Executive will deliver to the Chief Executive
Officer of the Company, or his designee, upon demand, and in any
event upon the termination of the Executive’s employment, all such documents and
other things which are in the Executive’s possession or under his
control.
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Section
4.2 Non-Competition
and Non-Solicitation. To protect the Company’s proprietary
interest in the Company’s intellectual property and proprietary information and
to protect the goodwill and value of the Company, the Executive hereby agrees
that during his employment by the Company and, following the date on which his
employment is terminated, for a period of (i) one year if the Executive’s
employment is terminated by the Company for Cause or voluntarily by
the Executive without Good Reason or (ii) six months if the Executive’s
employment is terminated for any other reason (in either case, the “Non-Compete
Term”), the Executive will not, individually, or in association or in
combination with any other person or entity, directly or indirectly, as
proprietor or owner, or officer, director or shareholder of any corporation, or
as an employee, agent, independent contractor, consultant, advisor, joint
venturer, partner or otherwise, whether or not for monetary benefit, except on
behalf of the Company, solicit, sell to, provide services to, or assist the
solicitation of, sale to, or providing to, or encourage, induce or entice any
other person or entity to solicit, sell to or provide services to, any person or
entity who is a customer of the Company or who, at any time within 18 months
prior to the date of termination of the Executive’s employment, or whom the
Company has, within six months prior to the date of such termination, solicited
to become a customer of Company, for the purpose of (a) providing such
customer with any product or service which directly competes with the products
or services provided by the Company to such customer or is in substitution for
or in replacement of such products or services; (b) altering, modifying or
precluding the development of such customer’s business relationship with the
Company; or (c) reducing the volume of business which such customer
transacts with the Company. To further protect the Company’s
proprietary interest in the Company’s intellectual property and proprietary
information and to protect the goodwill of the Company (including the Company’s
beneficial business relationships with the Company’s employees), the Executive
hereby agrees that, during the Non-Compete Term, the Executive will not,
individually or in association or in combination with any other person or
entity, directly or indirectly, encourage, induce or entice any employee or
independent contractor of the Company to terminate or modify such person’s or
entity’s employment, engagement or business relationship with the Company or,
without the prior written consent of the Company, hire or retain any employee or
independent contractor then performing services for the Company to perform the
same or substantially similar services.
Section
4.3 Scope of
Covenants. The Executive agrees that the products and services
of the Company can be, and are being designed and developed to be, manufactured,
distributed and/or sold throughout the world. Consequently, the
Executive and the Company agree that it is not possible to limit the geographic
scope of the non-competition covenant contained in this Article IV to particular
countries, states, cities or other geographic subdivisions. Further,
the Executive agrees that the length of the Non-Compete Term is reasonable, in
light of the position in which the Executive is being employed by the Company
and the amount and duration of severance payments payable to him under this
Agreement.
ARTICLE
V
GENERAL
MATTERS
Section
5.1 Governing
Law. This Agreement
shall be governed by the laws of the Commonwealth of Massachusetts and shall be
construed in accordance therewith.
Section
5.2 No
Waiver. No provision of
this Agreement may be waived except by an agreement in writing signed by the
waiving party. A waiver of any term or provision shall not be
construed as a waiver of any other term or provision.
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Section
5.3 Amendment. This Agreement
may be amended, altered or revoked at any time, in whole or in part, only by a
written instrument setting forth such changes, signed by each of the
parties.
Section
5.4 Benefit. This Agreement
shall be binding upon the Executive and the Company, and shall not be assignable
by either party without the other party’s written consent.
Section
5.5 Text to
Control. The headings of
articles and sections are included solely for convenience in
reference. If any conflict between any heading and the text of this
Agreement exists, the text shall control.
Section
5.6 Severability. If any provision
of this Agreement is declared by any court of competent jurisdiction to be
invalid for any reason, such invalidity shall not affect the remaining
provisions. On the contrary, such remaining provisions shall be fully
severable, and this Agreement shall be construed and enforced as if such invalid
provisions had not been included in the Agreement.
Section
5.6 Entire
Agreement. This Agreement
constitutes the entire agreement between the Company and the Executive with
respect to the Executive’s employment by the Company and supersedes any and all
prior agreements and understandings (whether written or oral) between the
parties with respect to such employment.
In
Witness Whereof, the Company and the Executive have executed this Agreement as
of the date first above written.
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ThermoEnergy
Corporation
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/s/ Cary G.
Bullock
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By:
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/s/ Dennis C.
Cossey
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Cary
G. Bullock
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Dennis
C. Cossey
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Chairman
of the Board of Directors
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