DISSOLUTION AGREEMENT

THIS DISSOLUTION AGREEMENT (the “Agreement”) is entered into effective as of the
2nd day of March 2012, by and among Babcock-Thermo Clean Combustion LLC f/k/a
Babcock-Thermo Carbon Capture LLC, a Delaware limited liability company (the
“Company”), Babcock Power Development, LLC, a Delaware limited liability company
(“Babcock”), Babcock Power Inc., a Delaware corporation (the “Babcock
Affiliate”, and together with Babcock, the “Babcock Parties”), ThermoEnergy
Power Systems, LLC, a Delaware limited liability company (“TEPS”) and
ThermoEnergy Corporation, a Delaware corporation (the “TEPS Affiliate”, and
together with TEPS, the “TEPS Parties”). The Company, Babcock, the Babcock
Affiliate, TEPS and the TEPS Affiliate are sometimes referred to herein
individually as a “Party” and collectively as the “Parties”.

WHEREAS, Babcock and TEPS have entered into that certain Limited Liability
Company Agreement of Babcock-Thermo Carbon Capture LLC dated as of February 25,
2009, as amended on April 12, 2011 to change the name of the Company to
Babcock-Thermo Clean Combustion LLC (as in effect from time to time, the “LLC
Agreement”); and

WHEREAS, pursuant to the LLC Agreement, the Parties thereto have agreed to
terminate the relationships contemplated by the LLC Agreement and dissolve the
Company.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements set
forth below, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:

1.                  Defined Terms. Defined terms used in this Agreement without
definition have the meanings given to such terms in the LLC Agreement, or if not
defined in the LLC Agreement, as defined in the other applicable Related
Agreement. In addition, the following defined terms have the following meanings:

“Affiliate” means, with respect to any referenced Person (i) such Person or a
member of his immediate family; and (ii) any Person directly or indirectly
Controlling, Controlled by, or under direct common Control with the Person in
question. For purposes of this Agreement, the Company shall not be deemed an
Affiliate of any Member of the Company.

“Agreement” means this Dissolution Agreement, including the recitals and
premises and any exhibits and schedules hereto, as in effect from time to time.

“Control(s)(led)(ing)” mean, as applied to a referenced Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of that Person, whether through ownership of voting
securities, by contract or otherwise.

“Delaware Act” means the Delaware Limited Liability Company Act, as amended
(6 Del. C. § 18-101, et seq.).

“Person” means any individual, partnership, limited liability company,
corporation, trust or other entity.

 

 

“Related Agreements” means each of the LLC Agreement, the Babcock License
Agreement, the TEPS License Agreement, the Master Non-Disclosure Agreement, the
Dispute Resolution Agreement and any other agreement among the Company, any of
the Members or their Affiliates which specifies that it is a Related Agreement
for purposes of the LLC Agreement or this Agreement.

2.               Termination and Dissolution.

2.1.            Termination of LLC Agreement. Babcock and TEPS hereby elect to
dissolve the Company pursuant to Section 12.01 of the LLC Agreement.

2.2.            Dissolution Process. Babcock and TEPS agree that the Company
shall be liquidated and dissolved in accordance with Section 12.02 of the LLC
Agreement and the Delaware Act. The dissolution will be effected by the Board of
Managers, which will remain in place until the dissolution is complete. The
Board of Managers will prepare or cause to be prepared and furnish to each
Member the statement setting forth assets and liabilities of the Company and the
manner in which the Company Property was liquidated and distributed, in
accordance with Section 12.02 of the LLC Agreement.

3.                Intellectual Property and Work Product.

3.1.            Company Developed IP. The Parties agree that no Company
Intellectual Property has been developed by the Members, other than the
trademark “ZEBS”, which trademark, and all rights therein, Babcock hereby agrees
shall be assigned exclusively to TEPS, and, accordingly, no joint ownership
agreement contemplated by Section 12.02(B) of the LLC Agreement is required.

3.2.            Babcock License Agreement. The Parties acknowledge that the
Babcock License Agreement is hereby terminated pursuant to Section 11.1 of the
Babcock License Agreement and Section 12.01 of the LLC Agreement. As provided in
Section 11.2 of the Babcock License Agreement, the provisions named therein
shall survive such termination, except Article 6 of the Babcock License
Agreement, which shall terminate. With respect to Section 11.2 of the Babcock
License Agreement, the Parties acknowledge that no sublicenses have been granted
pursuant to Article 6 of the Babcock License Agreement.

3.3.            TEPS License Agreement. The Parties acknowledge that the TEPS
License Agreement is hereby terminated pursuant to Section 11.1 of the TEPS
License Agreement and Section 12.01 of the LLC Agreement. As provided in Section
11.2 of the TEPS License Agreement, the provisions named therein shall survive
such termination, except Article 6 of the TEPS License Agreement, which shall
terminate. With respect to Section 11.2 of the TEPS License Agreement, the
Parties acknowledge that no sublicenses have been granted pursuant to Article 6
of the TEPS License Agreement.

3.4.            Work Product. If, after the dissolution is complete pursuant to
the terms of Section 2.2 above, either Party identifies any work product that
was created for the benefit of the Company that may be of interest to such
Party, then the Party identifying such work product shall notify the other Party
within a reasonable period of time thereafter of its interest in such work
product. The Parties shall endeavor in good faith to agree on reasonable terms
whereby the requesting Party may use all or a portion of such work product in
the future consistent with this Agreement and the surviving provisions of the
Related Agreements.

 

 

4.                  Master Non-Disclosure Agreement. As provided in Section 9 of
the Master Non-Disclosure Agreement: (i) the Babcock Parties shall return to the
TEPS Parties immediately upon request, all TEPS Confidential Information,
however embodied; (ii) the TEPS Parties shall return to the Babcock Parties
immediately upon request, all Babcock Confidential Information, however
embodied; (iii) the Babcock Parties and the TEPS Parties shall cause the Company
Parties to immediately return to them the Babcock Confidential Information,
however embodied, and the TEPS Confidential Information, however embodied,
respectively; provided that, with respect to Confidential Information consisting
of analyses, compilations, excerpts, summaries, studies or other documents and
writings prepared by or for a Party for its own use, the preparing Party may
destroy such Confidential Information in lieu of returning it if such
destruction is certified in writing to the Party to whom it would otherwise be
returned. The return and/or destruction of such Confidential Information as
provided above shall not relieve the Parties of any of their respective
obligations under the Master Non-Disclosure Agreement. A Party shall confirm to
another Party in writing at any time upon written request that it has complied
with all of the terms of this Section 4 and Section 9 of the Master
Non-Disclosure Agreement.

5.                  Dispute Resolution Agreement. The Parties acknowledge that
the Dispute Resolution Agreement shall remain in full force and effect and shall
apply to any disputes arising under this Agreement or any remaining obligations
under the Related Agreements.

6.                  Releases.

6.1.            Release By Babcock Parties. Each of the Babcock Parties, both
for itself and for its Affiliates, and any successors and assigns of any of the
foregoing (collectively, the “Babcock Entities”), and for good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, hereby
fully and completely forever release and discharge the TEPS Parties, and each of
their respective subsidiaries, affiliates, and any successors and assigns of any
of the foregoing (collectively, the “TEPS Entities”), from any and all claims,
actions, causes of action, suits, debts, dues, sums of money, accounts,
reckonings, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, expenses, executions, affirmative
defenses, demands and other obligations or liabilities whatsoever (collectively,
“Babcock Claims”), in law or equity, whether known or unknown to any Babcock
Entity, fixed or contingent, which any of the Babcock Entities ever had, now
have or may have against any of the TEPS Entities, based on or arising out of
any matter, cause, act or omission whatsoever, occurring or existing at any time
up to and including the date hereof; provided, however, that the foregoing shall
not release any Person from (x) any obligation of such Person under any
provision of this Agreement arising on or after the date hereof, including any
liabilities assumed by such Person thereunder or to be settled by such Person as
provided in accordance with the provisions of this Agreement, and (y) any
obligation of such Person under any provision of any of the Related Agreements
arising on or after the date of this Agreement.

6.2.            Release by TEPS Parties. Each of the TEPS Parties, both for
itself and for the TEPS Entities, and for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, hereby fully and
completely forever release and discharge the Babcock Entities, from any and all
claims, actions, causes of action, suits, debts, dues, sums of money, accounts,
reckonings, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, expenses, executions, affirmative
defenses, demands and other obligations or liabilities whatsoever (collectively,
“TEPS Claims”), in law or equity, whether known or unknown to any TEPS Entity,
fixed or contingent, which any of the TEPS Entities ever had, now have or may
have against any of the Babcock Entities, based on or arising out of any matter,
cause, act or omission whatsoever, occurring or existing at any time up to and
including the date hereof; provided, however, that the foregoing shall not
release any Person from (x) any obligation of such Person under any provision of
this Agreement arising on or after the date hereof, including any liabilities
assumed by such Person thereunder or to be settled by such Person as provided in
accordance with the provisions of this Agreement, and (y) any obligation of such
Person under any provision of any of the Related Agreements arising on or after
the date of this Agreement.

 

 

7.                Expenses. Each of the Parties hereby shall be responsible for
their own fees and expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement, including fees and expenses of
their respective accounting, financial, legal and other advisors.

8.                Disclosures and Publicity. The Parties hereby agree that all
public disclosures concerning the parties or transactions contemplated by this
Agreement and the Related Agreements, such as press releases or written
information distributed to financial intermediaries, shall require unanimous
prior approval of the Babcock Affiliate and the TEPS Affiliate. However, to the
extent any Party determines in the exercise of its good faith judgment that any
such disclosure is required by law, such Party shall be entitled after notice to
the other Parties to make such disclosure even if it has not obtained such
approval.

9.                Miscellaneous.

9.1.            Entire Agreement. This Agreement, together with those provisions
of the Related Agreements that survive the execution and delivery of this
Agreement, constitute the entire agreement among the Parties with respect to the
subject matter hereof and merges and replace all prior negotiations,
discussions, offers, representations, warranties, covenants, and agreements of
the Parties in respect of such subject matter.

9.2.            Amendment; Waiver. This Agreement may be amended only by a
written instrument signed by all of the Parties. The failure of any Party to
insist on one or more occasion upon strict performance by the other Party of any
of its obligations hereunder shall not constitute a waiver, release, or
amendment of such Party’s right to insist upon strict performance of such
obligations on future occasions.

9.3.            Notices. Notices to any of the Parties pursuant to, or in
connection with, this Agreement shall be given in accordance with the notice
provisions provided by the LLC Agreement, and initially, at the address set
forth below in respect of each Party:

 

 

If to either or both of the Babcock Parties, to:

c/o Babcock Power Inc.
One Corporate Place

55 Ferncroft Road
Danvers, Massachusetts 01923

Attention: William J. Ferguson, Jr.

with a copy sent contemporaneously to:

Bingham McCutchen LLP
One Federal Street
Boston, Massachusetts 02110

Attention:John R. Utzschneider, Esq.

 

If to either or both of the TEPS Parties, to:

c/o ThermoEnergy Corporation

10 New Bond Street

Worcester, Massachusetts 01606

 

Attention:Cary G. Bullock

with a copy sent contemporaneously to:

Nixon Peabody LLP
100 Summer Street
Boston, Massachusetts 02110

Attention:William E. Kelly, Esq.

9.4.            Governing Law, Etc. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the Commonwealth of
Massachusetts, all rights and remedies being governed by such laws, including
all legal and equitable relief, without regard to its conflict of laws rules.

9.5.            Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY RIGHTS THAT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY OF THE
RELATED AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR
ACTIONS OR ANY OF THEM RELATING THERETO.

9.6.            Waiver of Certain Damages. EACH OF THE PARTIES HERETO TO THE
FULLEST EXTENT PERMITTED BY LAW IRREVOCABLY WAIVES ANY RIGHTS THAT IT MAY HAVE
TO PUNITIVE, EXEMPLARY, SPECIAL OR CONSEQUENTIAL DAMAGES IN RESPECT OF ANY
LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY OF THE RELATED
AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR ACTIONS OF
ANY OF THEM RELATING THERETO.

 

 

9.7.           Sections and Section Headings. The headings of sections and
subsections are for reference only and shall not limit or control the meaning
thereof.

9.8.           Assigns. This Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective heirs, successors and
permitted assigns. Neither this Agreement nor the obligations of any Party
hereunder shall be assignable or transferable by such Party without the prior
written consent of the other Parties hereto.

9.9.           Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

9.10.        Construction. The language used in this Agreement will be deemed to
be the language chosen by the Parties to express their mutual intent, and no
rule of strict construction will be applied against any Party.

9.11.        Severability. The invalidity or unenforceability of any particular
provision of this Agreement or any Related Agreement shall not affect the other
provisions hereof or thereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision was omitted from such
agreement.

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of
the date first set forth above.

BABCOCK-THERMO CLEAN COMBUSTION LLC

 

 

By:   /s/ Earl B. Mason                           

Name: Earl B. Mason

Title: Chief Financial Officer, Treasurer and Secretary

 

 

BABCOCK POWER DEVELOPMENT, LLC

 

 

 

By:   /s/ William J. Ferguson, Jr.             

Name: William J. Ferguson, Jr.

Title: Vice President, General Counsel and Secretary

 

THERMOENERGY POWER SYSTEMS, LLC

 

 

 

By:   /s/ Cary G. Bullock                        

Name: Cary G. Bullock

Title: President and Chief Executive Officer

 

BABCOCK POWER, INC.

 

 

By:   /s/ Anthony A. Brandano               

Name: Anthony A. Brandano

Title: Sr. Vice President, Chief Financial Officer and Treasurer

 

THERMOENERGY CORPORATION

 

 

By:   /s/ Cary G. Bullock                        

Name: Cary G. Bullock

Title: President and Chief Executive Officer