Exhibit 10.3
 
THERMOENERGY CORPORATION
VOTING AGREEMENT

This Voting Agreement (the “Agreement”) is made and entered into as of this
19th  day of November, 2009, by and among ThermoEnergy Corporation, a Delaware
corporation (the “Company”), The Quercus Trust (“Quercus”), Empire Capital
Partners, LP and its affiliates (“Empire”), Focus Fund, L.P. (“Focus”)
and Robert S. Trump (“Trump” and with Quercus, Empire and Focus, collectively
referred to herein as the “Series B Preferred Stockholders”), .
 
Witnesseth
 
Whereas, the Series B Preferred Stockholders are the beneficial owners of the
majority of the outstanding shares of the Series B Convertible Preferred Stock,
$.01 par value, of the Company (the “Series B Preferred Stock”);
 
Whereas, the Series B Preferred Stockholders acquired their shares of Series B
Preferred Stock pursuant to the terms of the Securities Purchase Agreement of
even date herewith (the “Purchase Agreement”);
 
Whereas, the Certificate of Designation for the Series B Preferred Stock
provides that the holders of Series B Preferred Stock are entitled to elect four
(4) directors to the Board of Directors of the Company (the “Series B
Directors”); and
 
Whereas, in connection with the Purchase Agreement, the Series B Preferred
Stockholders have agreed to provide for the future voting of their shares of the
Series B Preferred Stock for the Series B Directors as set forth below.
 
Now, Therefore, in consideration of these premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree, intending to be legally bound, as
follows:
 
AGREEMENT
 
1.
Voting.

 
1.1           Series B Preferred Stockholders Voting Agreement; the Shares.  The
Series B Preferred Stockholders agree to hold all their shares of Series B
Preferred Stock registered in their respective names or beneficially owned by
such stockholder as of the date hereof and any and all other shares of Series B
Preferred Stock legally or beneficially acquired by such stockholder after the
date hereof subject to, and to vote all such shares of Series B Preferred Stock
in accordance with, the provisions of this Agreement.  For purposes of this
Agreement, “Shares” shall mean shares of Series B Preferred Stock held by the
Series B Preferred Stockholders.
 
1.2           Election of Series B Directors.  On all matters relating to the
election and removal of the Series B Directors, the Series B Preferred
Stockholders agree to vote all the Series B Preferred Stock held by them (or to
consent pursuant to an action by written consent of the holders of the Series B
Preferred Stock of the Company) so as to maintain the authorized size of the
Company’s Board of Directors at seven (7) members, consisting of four (4) Series
B Directors and three (3) directors to be elected by the holders of the
Company’s common stock and to elect such Series B Directors as follows:

 
1.

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(a)           So long as shares of Series B Preferred Stock remain outstanding,
the Series B Preferred Stockholders shall vote all of their respective shares of
Series B Preferred Stock so as to elect three (3) Series B Directors to be
designated by Quercus (the “Quercus Series B Directors”) and one (1) Series B
Director to be designated by Trump (the “Trump Series B Director”), or their
respective designees.  The initial Quercus Series B Directors shall be David
Anthony, Joseph Bartlett and David Gelbaum.  The initial Trump Series B Director
shall be Shawn Hughes.  Any vote taken to remove any director elected pursuant
to this Section 1.2(a), or to fill any vacancy created by the resignation,
removal or death of a director elected pursuant to this Section 1.2(a), shall
also be subject to the provisions of this Section 1.2(a).  Upon the request of
any party entitled to designate a Series B Director as provided in this
Section 1.2(a), each Series B Preferred Stockholder agrees to vote its Series B
Preferred Stock for the removal of such Series B Director.
 
(b)           Any Series B Director may be removed from the Company’s Board of
Directors or any committee thereof only upon the vote or written consent of the
Series B Preferred Stockholder entitled to designate such Series B Director as
provided herein and each holder of Series B Preferred Stock shall take all
action reasonably necessary, including voting their Shares, to remove any such
Series B Director.
 
1.3           No Liability for Election of Recommended Director. None of the
parties hereto and no officer, director, shareholder, partner, employee or agent
of any party makes any representation or warranty as to the fitness or
competence of the nominee of any party hereunder to serve on the Board of
Directors by virtue of such party’s execution of this Agreement or by the act of
such party in voting for such nominee pursuant to this Agreement.
 
1.4           Failure to Designate Board Member. In the absence of any
designation from the persons or groups with the right to designate a director as
specified above, the Series B Director previously designated by them and then
serving shall be re-elected if still eligible to serve as provided herein.
 
1.5           Legend.
 
(a)           Concurrently with the execution of this Agreement, there shall be
imprinted or otherwise placed, on certificates representing the Shares the
following restrictive legend (the “Legend”):
 
“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS OF A VOTING AGREEMENT WHICH PLACES CERTAIN RESTRICTIONS ON THE VOTING
OF THE SHARES REPRESENTED HEREBY.  ANY PERSON ACCEPTING ANY INTEREST IN SUCH
SHARES SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS
OF SUCH AGREEMENT.  A COPY OF SUCH VOTING AGREEMENT WILL BE FURNISHED TO THE
RECORD HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST TO THE
COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS.”
 
(b)           The Company agrees that, during the term of this Agreement, it
will not remove, and will not permit to be removed (upon registration of
transfer, reissuance of otherwise), the Legend from any such certificate and
will place or cause to be placed the Legend on any new certificate issued to
represent the Shares theretofore represented by a certificate carrying the
Legend.
 
1.6           Successors.  The provisions of this Agreement shall be binding
upon the successors in interest to any of the Shares.  The Company shall not
permit the transfer of any of the Shares on its books or issue a new certificate
representing any of the Shares unless and until the person to whom such security
is to be transferred shall have executed a written agreement, substantially in
the form of this Agreement, pursuant to which such person becomes a party to
this Agreement and agrees to be bound by all the provisions hereof as if such
person were Querus, Empire, or Trump, as applicable.

 
 

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1.7           Other Rights.  Except as provided by this Agreement or any other
agreement entered into in connection with the Purchase Agreement, each Series B
Preferred Stockholder shall exercise the full rights of a holder of capital
stock of the Company with respect to the Series B Preferred Stock.
 
1.8           Proxy.  Each party to this Agreement hereby constitutes and
appoints the President and Secretary of the Company, and each of them, with full
power of substitution, as the proxies of the party with respect to the matters
set forth herein, including without limitation, election of persons as members
of the Company’s Board of Directors in accordance herewith, and hereby
authorizes each of them to represent and to vote, if and only if the party
(i) fails to vote or (ii) attempts to vote (whether by proxy, in person or by
written consent), in a manner which is inconsistent with the terms of this
Agreement, all of such party’s Shares in favor of the election of persons as
members of the Company’s Board of Directors determined pursuant to and in
accordance with the terms and provisions of this Agreement.  The proxy granted
pursuant to the immediately preceding sentence is given in consideration of the
agreements and covenants of the Company and the parties in connection with the
transactions contemplated by this Agreement and, as such, is coupled with an
interest and shall be irrevocable unless and until this Agreement terminates or
expires pursuant to Section 2 hereof.  Each party hereto hereby revokes any and
all previous proxies with respect to the Shares and shall not hereafter, unless
and until this Agreement terminates or expires pursuant to Section 2 hereof,
purport to grant any other proxy or power of attorney with respect to any of the
Shares, deposit any of the Shares into a voting trust or enter into any
agreement (other than this Agreement), arrangement or understanding with any
person, directly or indirectly, to vote, grant any proxy or give instructions
with respect to the voting of any of the Shares, in each case, with respect to
any of the matters set forth herein.
 
2.
Termination.

 
2.1           This Agreement shall continue in full force and effect from the
date hereof through the earliest of the following dates, on which date it shall
terminate in its entirety:
 
(a)           the conversion of all of the outstanding shares of Series B
Preferred Stock held by the Series B Preferred Stockholders;
 
(b)           upon a liquidation of the Company; and
 
(c)           the date as of which the parties hereto terminate this Agreement
by written consent of the holders of a majority of the Shares.
 
3.
Miscellaneous.

 
3.1           Ownership.  The Series B Preferred Stockholders represent and
warrant to each other that (a) such Series B Preferred Stockholder now owns its
respective Shares, free and clear of liens or encumbrances, and has not, prior
to or on the date of this Agreement, executed or delivered any proxy or entered
into any other voting agreement or similar arrangement other than one which has
expired or terminated prior to the date hereof, and (b) such Series B Preferred
Stockholder has full power and capacity to execute, deliver and perform this
Agreement, which has been duly executed and delivered by, and evidences the
valid and binding obligation of, such stockholder enforceable in accordance with
its terms.

 
 

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3.2           Further Action.  If and whenever Shares held by a Series B
Preferred Stockholder are sold, such stockholder or the personal representative
of such stockholders shall do all things and execute and deliver all documents
and make all transfers, and cause any transferee of such Shares to do all things
and execute and deliver all documents, as may be necessary to consummate such
sale consistent with this Agreement.
 
3.3           Specific Performance.  The parties hereto hereby declare that it
is impossible to measure in money the damages which will accrue to a party
hereto or to their heirs, personal representatives, or assigns by reason of a
failure to perform any of the obligations under this Agreement and agree that
the terms of this Agreement shall be specifically enforceable.  If any party
hereto or his heirs, personal representatives, or assigns institutes any action
or proceeding to specifically enforce the provisions hereof, any person against
whom such action or proceeding is brought hereby waives the claim or defense
therein that such party or such personal representative has an adequate remedy
at law, and such person shall not offer in any such action or proceeding the
claim or defense that such remedy at law exists.
 
3.4           Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Delaware, without regard to the principles of conflicts of law thereof. Each
party agrees that all Proceedings concerning the interpretations, enforcement
and of the transactions contemplated by this Agreement and any other Transaction
Documents (whether brought against a party hereto or its respective Affiliates,
employees or agents) shall be commenced exclusively in the state or federal
courts sitting in, or having jurisdiction over, Dover, Delaware (the “Delaware
Courts”). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the Delaware Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of the any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such Delaware Court, or that such Proceeding has been
commenced in an improper or inconvenient forum. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby. If either party shall
commence a Proceeding to enforce any provisions of a Transaction Document, then
the prevailing party in such Proceeding shall be reimbursed by the other party
for its reasonable attorneys’ fees and other costs and expenses incurred with
the investigation, preparation and prosecution of such Proceeding.
 
3.5           Amendment or Waiver.  This Agreement may be amended (or provisions
of this Agreement waived) only by an instrument in writing signed by (i) the
Company, and (ii) holders of a majority of the Shares.  Any amendment or waiver
so affected shall be binding upon the Company, each of the parties hereto and
any assignee of any such party.
 
3.6           Severability.  In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.

 
 

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3.7           Successors.  This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, successors, assigns,
administrators, executors and other legal representatives, and to such
additional individuals or entities that may become shareholders of the Company
and that become parties hereto.
 
3.8           Additional Shares.  In the event that subsequent to the date of
this Agreement any shares or other securities are issued on, or in exchange for,
any of the Shares by reason of any stock dividend, stock split, combination of
shares, reclassification or the like, such shares or securities shall be deemed
to be Shares subject to this Agreement, as the case may be, for purposes of this
Agreement.  Should, after the date hereof, any person become a holder of capital
stock of the Company who is not a party to this Agreement, the Company covenants
that, in connection with such event, the Company shall require such party to
execute a counterpart signature page to this Agreement.
 
3.9           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
shall constitute one and the same agreement.
 
3.10           Waiver.  No waivers of any breach of this Agreement extended by
any party hereto to any other party shall be construed as a waiver of any rights
or remedies of any other party hereto or with respect to any subsequent breach.
 
3.11           Attorney’s Fees.  In the event that any suit or action is
instituted to enforce any provision in this Agreement, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
 
3.12           Notices.  Any notices required in connection with this Agreement
shall be in writing and shall be deemed effectively given:  (i) upon personal
delivery to the party to be notified, (ii) when sent by confirmed electronic
mail or facsimile if sent during normal business hours of the recipient; if not,
then on the next business day, (iii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or
(iv) one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written notification of receipt.  All notices
shall be addressed to the holder appearing on the books of the Company or at
such address as such party may designate by ten (10) days advance written notice
to the other parties hereto.
 
3.13           Manner of Voting.     The voting of Shares pursuant to this
Agreement may be effected in person, by proxy, by written consent or in any
other manner permitted by applicable law.
 
3.14           Further Assurances; Interpretation.       At any time or from
time to time after the date hereof, the parties agree to cooperate with each
other, and at the request of any other party, to execute and deliver any further
instruments or documents and to take all such further action as the other party
may reasonably request in order to evidence or effectuate the consummation of
the transactions contemplated hereby and to otherwise carry out the intent of
the parties hereunder. All capitalized terms not otherwise defined herein shall
have the same definition as assigned to such term in the Purchase Agreement.
 
3.15           Entire Agreement.  This Agreement and the Exhibits hereto, along
with the Purchase Agreement and each of the Exhibits and Schedules thereto,
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof and no party shall be liable or
bound to any other in any manner by any representations, warranties, covenants
and agreements except as specifically set forth herein and therein.

 
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In Witness Whereof, the parties hereto have executed this Voting Agreement as of
the date first above written.
 
COMPANY:
     
ThermoEnergy Corporation
         
By:
/s/  Dennis C. Cossey
 
Dennis C. Cossey
 
Chairman and CEO
     
124 West Capital Avenue, Suite 880
 
Little Rock, Arkansas 72201
     
Telephone:  (501) 376-6477
 
Facsimile:  (501) 375-5249
     
With a copy to:
     
Nixon Peabody LLP
 
Attn.:  William E. Kelly, Esq.
 
100 Summer Street
 
Boston, Massachusetts  02110
     
Telephone:  (617) 345-1195
 
Facsimile:  (866) 743-4899
 

VOTING AGREEMENT
SIGNATURE PAGE

 
 

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QUERCUS:
 
The Quercus Trust

  /s/  David Gelbaum
 
David Gelbaum
 
Trustee
 

2309 Santiago Drive
Newport Beach, California 92660

With a copy to:

Joseph P. Bartlett, Esq.
1900 Avenue of the Stars, Suite 2100
Los Angeles, California  90067

Telephone:  (310) 201-7481
Facsimile:  (310) 201-2380

VOTING AGREEMENT
SIGNATURE PAGE

 
 

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EMPIRE:
 
Empire Capital Partners, lp
 
Empire Capital Partners, ltd
By: Empire gp, llc, its General Partner
 
By: Empire Capital Management, llc,
   
its Investment Manager
     
By:
  /s/  Peter J. Richards
     
Peter J. Richards
 
By:
  /s/  Peter J. Richards
     
Peter J. Richards
Empire Capital Partners Enhanced
Master Fund, ltd
   
By: Empire Capital Management, llc,
   
its Investment Manager
               
By:
  /s/  Peter J. Richards
 
  /s/   Peter J. Richards
 
Peter J. Richards
 
Peter J. Richards
               
  /s/  Scott A. Fine
   
Scott A. Fine

c/o J. Markham Penrod
Empire Capital Management, LLC
One Gorham Island, Suite 201
Westport,  Connecticut 06880

Telephone:  (203) 454-6925
Facsimile:  (203) 454-1539
VOTING AGREEMENT
SIGNATURE PAGE

 
 

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FOCUS:
   
Focus Fund, l.p.
     
By:
/s/ J. Winder Hughes III
   
J. Winder Hughes III
 
Hughes Capital
P.O. Box 389
Ponte Vedra, Florida 32004
   
Telephone:  (904) 612-4452

 
VOTING AGREEMENT
SIGNATURE PAGE

 
 

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TRUMP:
   
/s/  Robert S. Trump
 
Robert S. Trump
   
Trump Management Inc.
89 10th Street
Garden City, New York 11530
 
Telephone:  (516) 746-6194

 
VOTING AGREEMENT
SIGNATURE PAGE

 
 

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