Exhibit 10.1

ThermoEnergy Corporation

Bridge Loan and Warrant Amendment Agreement;
Consent, Waiver and Notice of Exercise

This Agreement is made by and among ThermoEnergy Corporation, a Delaware
corporation (the “Corporation”) and the undersigned holders of the shares of the
Corporation’s Series B Convertible Preferred Stock (the “Series B Stock”) and/or
the Common Stock Purchase Warrants issued by the Corporation (the “Warrants”) as
set forth on Schedule I hereto (each, an “Investor”), and the Consent, Waiver
and Notice made herein are given by the Investors, this 17th day of June 2011.

Whereas, to induce the Investors to exercise the Warrants, the Corporation
desires to amend each of the Warrants to provide that such Warrant shall be
exercisable for the purchase of shares of Series B Stock rather than shares of
the Corporation’s Common Stock (the “Common Stock”) and to adjust the exercise
price of such Warrant as hereinafter provided (the “Warrant Amendment”); and

Whereas, the Board of Directors of the Corporation has recommended that the
Corporation’s Certificate of Incorporation, as previously amended (the
“Certificate of Incorporation”), be amended to modify the description of the
Series B Stock as hereinafter provided to permit the holders of the Series B
Stock to waive the application of the anti-dilution adjustment to the conversion
price of the Series B Stock (the “Charter Amendment”); and

Whereas, the Investors are willing to consent to the Charter Amendment and, upon
the effectiveness thereof, to waive the application of the anti-dilution
adjustment to the deemed issuance of Common Stock upon the effectiveness of the
Warrant Amendment or upon the issuance of shares of Series B Stock upon exercise
of the Warrants in accordance with their terms, as amended by the Warrant
Amendment (the “Anti-Dilution Waiver”); and

Whereas, the Investor desires to exercise the Warrants upon the effectiveness of
the Warrant Amendment; and

Whereas, in anticipation of the exercise of the Warrants and subject to the
effectiveness of the Charter Amendment and the making of the Anti-Dilution
Waiver by the holders of a sufficient number of the outstanding shares of Series
B Stock, each of the Investors is willing to make a loan to the Corporation in
the principal amount equal to the exercise price of the Warrants held by such
Investor;

Now, therefore, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Corporation and the Investors hereby agree as follows:

1.           Consent to Charter Amendment.  Pursuant to Section 228 of the
Delaware General Corporation Law and Section 1.10 of the By-Laws of the
Corporation, the Investors hereby consent to the adoption of the following
resolution by written consent in lieu of a meeting of the stockholders of the
Corporation:
 
 
 
 

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Resolved:
That the Certificate of Incorporation of this Corporation, as heretofore
amended, be further amended by (i) deleting the word “and” from the end of
Section 6(g)(ii)(F) of the Description of Series B Convertible Preferred Stock
attached as Exhibit A to the Certificate of Designation, Preferences and Rights
filed in the Office of the Secretary of State of the State of Delaware on
November 18, 2009 (the “Description”), (ii) by deleting the period from the end
of Section 6(g)(ii)(G) of the Description and substituting in place there of a
semi-colon and the word “and” and (iii) by adding at the end of Section 6(g)(ii)
of the Description the following new provision:  “(H) shares of Common Stock
issued or deemed issued upon the issuance or exercise of options, warrants or
other rights to acquire shares of Common Stock or other securities convertible
into or exchangeable for shares of Common Stock or upon the issuance or
conversion of securities convertible into shares of Common Stock in a
transaction or series of related transactions approved by the holders of a
majority of the then-outstanding shares of Series B Convertible Preferred
Stock.”

 
Promptly following receipt of the written consent to the foregoing Charter
Amendment from the requisite holders of the Corporation’s voting securities, the
Corporation shall prepare and distribute to all of the Corporation’s
stockholders a Notice in compliance with Section 228(e) of the Delaware General
Corporation Law and an Information Statement in compliance with Regulation 14C
promulgated by the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934 (the “Exchange Act”) (“Regulation 14C”) and thereafter
shall file in the Office of the Secretary of State of the State of Delaware a
Certificate of Amendment effecting the Charter Amendment (the “Certificate of
Amendment”).  The Corporation shall, upon filing of the Certificate of Amendment
in the Office of the Secretary of State of the State of Delaware, promptly give
notice of such filing to all Investors.
 
2.           Approval of Warrant Amendment; Waiver of Anti-Dilution
Adjustment.     Effective upon the filing in the Office of the Secretary of
State of the State of Delaware of the Certificate of Amendment, the Investors
hereby approve the Warrant Amendment contemplated by this Agreement, it being
the intention of the Investors that the shares of Common Stock deemed issued
upon the Warrant Amendment or upon the exercise of the Warrants following the
Warrant Amendment shall not be deemed to be “Additional Stock” (as such term is
defined in the Description) and that no anti-dilution adjustment to the
conversion price of the Series B Stock shall be made pursuant to Section 6(g)(i)
of the Description upon the effectiveness of the Warrant Amendment or upon
exercise of the Warrants as amended.

3.           Warrant Amendment.     Upon the effectiveness of the Charter
Amendment, and provided that the holders of at least a majority of the
outstanding shares of Series B Stock (including the Investors) approve, each of
the Warrants shall automatically be, and hereby are, amended (i) to provide that
such Warrant is exercisable for the purchase of shares of Series B Stock (and no
longer for the purchase of shares of Common Stock), (ii) to provide that the
number of shares of Series B Stock for which such Warrant is exercisable shall
be equal to (x) the number of shares of Common Stock for which such Warrant had
theretofore been exercisable divided by (y) 10, and (iii) to change the exercise
price thereof to $1.30 per share of Series B Stock.  In all other respects the
Warrants shall remain in full force and effect without amendment or
alteration.  For purposes of clarification, the parties agree that the term
“Warrants”) refers only those Common Stock Purchase Warrants listed on Schedule
I hereto and does not include any other warrants, options or similar rights held
by the Investors or by any other person or entity (the “Non-Participating
Warrants”).  The Warrant Amendment effected by this Section 3 shall in no way
alter or amend any of the Non-Participating Warrants.

4.           Warrant Exercise.     The Investors hereby give notice of exercise
of all of the Warrants, immediately upon the effectiveness of the Warrant
Amendment, and hereby authorize the Corporation to cancel the Bridge Loans (as
such term is hereinafter defined) in full satisfaction of the Investors’
obligation to pay the exercise price for the Warrants.
 
 
 

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5.           Bridge Loans.     Pending the effectiveness of the Warrant
Amendment, and until the Warrants, as amended, are exercised, each of the
Investors hereby agrees to make an interest free loan to the Corporation in the
principal amount equal to the exercise price of such Investor’s Warrants (as
amended by the Warrant Amendment) as shown on Schedule I hereto (each, a “Bridge
Loan”).  The Bridge Loans shall be evidenced by Promissory Notes in
substantially the form attached hereto as Exhibit A (the “Bridge Notes”) and, if
not cancelled in payment of the exercise price for the Warrants on or before
February 29, 2012, shall become immediately due and payable upon demand by the
Investors given at any time on or after March 1, 2012.
 

6.           Representations and Warranties of the Corporation.     The
Corporation hereby represents and warrants to the Investors as follows:

 
(a)
Organization and Qualification.  The Corporation is duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, with the
requisite power and authority to own and use its properties and assets and to
carry on its business as currently conducted.  The Corporation is not in
violation of any of the provisions of its Certificate of Incorporation or
By-Laws.  The Corporation is duly qualified to conduct its business and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, would not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect, and no proceedings have been
instituted in any such jurisdiction revoking, limiting or curtailing, or seeking
to revoke, such power and authority or qualification.  For purposes of this
Agreement, the term “Material Adverse Effect” shall mean any of (i) a material
and adverse effect on the legality, validity or enforceability of any of this
Agreement, the Warrants, the Warrant Amendment, the Charter Amendment or the
Bridge Notes (collectively, the “Transaction Documents”), (ii) a material and
adverse effect on the results of operations, assets, prospects, business or
condition (financial or otherwise) of the Corporation, or (iii) a material
impairment of the Corporation’s ability to perform on a timely basis its
obligations under any Transaction Document.

 
(b)
Authorization; Enforcement.  The Corporation has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
each of the Transaction Documents and otherwise to carry out its obligations
thereunder. The execution and delivery of each of the Transaction Documents by
the Corporation and the consummation by the Corporation of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Corporation and no further action is required by the Corporation in
connection therewith, except as may be required by Section 228 of the Delaware
General Corporation Law or by Regulation 14C. Each Transaction Document has been
(or upon delivery will have been) duly executed by the Corporation and, when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Corporation enforceable against the Corporation in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general application.

 
 
 
 

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(c)
No Conflicts.  The execution, delivery and performance of the Transaction
Documents by the Corporation and the consummation by the Corporation of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Borrower’s Certificate of Incorporation or By-Laws,
or (ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, or result in the imposition of any lien upon
any of the material properties or assets of the Corporation pursuant to, any
agreement, credit facility, debt or other instrument or other understanding to
which the Corporation is a party or by which any property or asset of the
Corporation is bound or affected, or (iii) result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which the Corporation is subject
(including federal and state securities laws and regulations), or by which any
property or asset of the Corporation is bound or affected; except in the case of
each of clauses (ii) and (iii), such as could not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect.

 
 
(d)
Issuance of the Bridge Notes.  The Bridge Notes have been duly authorized.  Each
Bridge Note, when issued in accordance with this Agreement, will be duly and
validly issued.

 
(e)
Issuance of Series B Stock.  The shares of Series B Stock issuable upon exercise
of the Warrants (as amended by the Warrant Amendment) are duly authorized and
will, when issued upon exercise of the Warrants, be validly issued, fully-paid
and outstanding shares of Series B Stock, entitled to the rights and preferences
set forth in the Description (as amended by the Charter Amendment).

 
(f)
SEC Reports; Financial Statements.  The Corporation has filed all reports
required to be filed by it under the Securities Act of 1933 (the “Securities
Act”) and the Exchange Act for the twelve months preceding the date of this
Agreement (the foregoing materials, being collectively referred to herein as the
“SEC Reports”).  As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder, and none of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.  The
financial statements of the Corporation included in the SEC Reports comply in
all material respects with applicable accounting requirements and the rules and
regulations of the Securities and Exchange Commission with respect thereto as in
effect at the time of filing.  Such financial statements have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved,
except as may be otherwise specified in such financial statements or the notes
thereto, and fairly present in all material respects the financial position of
the Corporation and its consolidated subsidiaries as of and for the dates
thereof and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial, year-end
audit adjustments.

 
 
 
 

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(g)
Brokerage Fees. No brokerage or finder’s fees or commissions are or will be
payable by the Corporation to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other person with respect to
the transactions contemplated by any of the Transaction Documents. The Investors
shall have no obligation with respect to any fees or with respect to any claims
(other than such fees or commissions owed by the Investors pursuant to written
agreements executed by the Investors which fees or commissions shall be the sole
responsibility of the Investors) made by or on behalf of other persons for fees
that may be due in connection with the transactions contemplated by the
Transaction Documents.

7.           Representations and Warranties of the Investors.     The Investors,
severally and not jointly, hereby represent and warrant to the Corporation as
follows, with respect only to themselves and not the other Investors:

 
(a)
Authority. This Agreement has been duly executed by such Investor and
constitutes the valid and legally binding obligation of such Investor,
enforceable against him or it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.

 
(b)
Accredited Investor Status.  Such Investor is an “accredited investor” as
defined in Rule 501(a) under the Securities Act.  Such Investor will acquire the
shares of Series B Stock issued upon exercise of such Investor’s Warrants (as
amended by the Warrant Amendment) for his or its own account, for investment
purposes and not with a view toward resale or distribution.  Such Investor
understands that the shares of Series B Stock issuable upon exercise of the
Warrants (as amended by the Warrant Amendment) and the shares of Common Stock
issuable upon conversion of such shares of Series B Stock have not been
registered under the Securities Act and may not be sold or transferred without
registration under the Securities Act unless an applicable exemption from the
registration requirements of such Act is available.

8.           Additional Parties.    From time to time prior to the effective
date of the Charter Amendment, this Agreement may be amended by the Corporation
to add as parties hereto one or more persons or entities as additional Investors
and/or to permit any Investor to increase the amount of his or its Warrants to
be amended by the Warrant Amendment and exercised pursuant to Paragraph 4
hereof.  Upon any such amendment, Schedule I hereto shall be amended to reflect
the addition of such additional Investor or Investors and/or such increase in
the number of Warrants subject to the provisions hereof.

9           Entire Agreement.    The Transaction Documents contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings, discussions and representations,
oral or written, with respect to such matters.  No provision of any Transaction
Document may be waived or amended except in a written instrument signed by the
Corporation and by Investors holding at least 66⅔% of the principal amount of
the then outstanding Bridge Notes.  No waiver of any default with respect to any
provision, condition or requirement of any of the Transaction Documents shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement of such
Transaction Document or of any other Transaction Document, nor shall any delay
or omission of any party to exercise any right hereunder in any manner impair
the exercise of any such right.  No consideration shall be offered or paid to
any Investor to amend or consent to a waiver or modification of any provision of
any Transaction Document unless the same consideration is also offered to all
Investors.
 
 
 
 

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10.           Governing Law and Jurisdiction.     This Agreement and the rights
of the parties hereunder shall be construed and enforced in accordance with the
laws of the Commonwealth of Massachusetts applicable to agreements executed and
to be performed wholly within such state and without regard to principles of
conflicts of law.  Each party irrevocably (a) consents to the jurisdiction of
the federal and state courts situated in or having jurisdiction over Boston,
Massachusetts in any action that may be brought for the enforcement of this
Agreement, and (b) submits to and accepts, with respect to its properties and
assets, generally and unconditionally, the in personam jurisdiction of the
aforesaid courts, waiving any defense that such court is not a convenient forum.

11.           Execution.     This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such delivery shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof, notwithstanding any subsequent failure or refusal to
deliver an original signed in ink.

12.           Severability.     If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the parties will attempt to agree upon
a valid and enforceable provision that is a reasonable substitute therefor, and
upon so agreeing, shall incorporate such substitute provision in this
Agreement.  f any provision of this Agreement is held to be invalid or
unenforceable in any respect,  the validity and enforceability of the remaining
terms and provisions of this Agreement shall not in any way be affected or
impaired thereby.

[Signature Pages Follow]
 
 
 

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ThermoEnergy Corporation

Bridge Loan and Warrant Amendment Agreement;
Consent, Waiver and Notice of Exercise

Corporation’s Signature Page

In witness whereof, the Corporation has executed and delivered this Agreement as
of the date and year first above written.

ThermoEnergy Corporation
 
 
By:   /s/  Cary G. Bullock                                  
         Cary G. Bullock, President and CEO
 
 
 
 

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ThermoEnergy Corporation

Bridge Loan and Warrant Amendment Agreement;
Consent, Waiver and Notice of Exercise

Schedule I
 
Investor
Warrant Shares
(Prior to Amendment)
Series B Shares
Exercise Price
Robert S. Trump
11,711,104
1,171,110
$1,522,443.00
Focus Fund L.P.
3,000,000
300,000
$390,000.00
Hughes Capital
153,850
15,385
$20,000.00
Scott A. Fine
500,000
50,000
$65,000.00
Peter J. Richards
500,000
50,000
$65,000.00
Empire Capital Partners, LP
2,197,913
219,791
$285,728.69
Empire Capital Partners, Ltd
2,198,111
218,911
$284,584.43
Empire Capital Partners Enhanced Master Fund, Ltd
2,127,258
212,726
$276,543.54

 
 

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