AGREEMENT

 

This Agreement (hereinafter the “Agreement”) is made as of June 20, 2012 in
Milan, Italy.

 

BY AND BETWEEN

 

ThermoEnergy, a Delaware Corporation, having its principal office at 10 New Bond
Street, Worcester, MA 01606, USA, represented by Mr. Cary Bullock (hereafter
“ThermoEnergy”);

 

and

 

Itea S.p.A., a company organised and existing under the laws of Italy, having
its principal office at Via Santa Margherita n. 18-40136 Bologna, Italy,
represented by Mr. Alvise Bassignano (hereafter “Itea”);

 

ThermoEnergy and Itea shall be jointly referred to as the “Parties”, and
individually referred to as a “Party”.

 

FOREWORD

 

WHEREAS,

 

A.On 3/7/2012 the Parties entered into the Term Sheet (hereafter the “Term
Sheet”) for the Development of Pressurized Oxy-Combustion in North America (USA,
Canada and Mexico or other specific projects to be agreed on case by case basis)
(hereafter the “Territory”) under which the Parties agreed to collaborate in
order to advance, develop and promote the use of the coal application of
pressurized oxy-combustion in the Territory through the realization of a pilot
plant and subsequent demonstration facility based on this technology.

 

B.In accordance with the Term Sheet the Parties shall create a new Project
Venture called Unity Power. For this purpose ThermoEnergy created Unity Power
Alliance LLC, a Delaware limited liability company (hereafter “UPA”), a company
100% owned by ThermoEnergy. Itea may acquire 50% of the participation in UPA in
accordance with the terms of this Agreement.

 

C.In accordance with the Term Sheet, UPA is seeking to be awarded of the Funding
Opportunity DE-FOA-0000636 (hereafter the “F.O.”). UPA and Itea entered into the
Contract Agreement under which Itea is a nominated contractor for certain
services to be provided to UPA in case of the award of the F.O.

 

D.In consideration of the foregoing, Parties wish to determine their rights and
obligations in regard to the management of UPA by the Parties and other related
issues.

 

NOW, therefore, in consideration of the premises and mutual covenants set forth
herein, the Parties hereby agree as follows:

 

 

1                    ACQUISITION OF UPA BY ITEA

 

1.1The Parties hereby agree that Itea shall be entitled to purchase 50%
ownership of UPA within 2 (two) months or any longer period with a maximum of 6
months from the signature of this Agreement and subject to Itea Board and any
Italian regulatory body approvals for the price equal to $1,250.00 (one thousand
two hundred and fifty) US Dollars (hereafter the “Acquisition”) and ThermoEnergy
is obliged to sell 50% ownership of UPA to Itea for the price indicated in this
Article 1.1.

 

1.2Upon Acquisition, UPA shall immediately take all necessary steps to register
the changes in ownership, if required, and making all necessary steps hereof
under applicable laws.

 

1.3In case of the Acquisition, the Parties agree to govern UPA in accordance
with this Agreement as set forth below.

 

2                    LOCATION AND PURPOSE AND SCOPE OF BUSINESS OF UPA

 

2.1Unless otherwise agreed by the Parties, UPA’s principal office will not be
changed after the Acquisition and shall remain at 10 New Bond Street, Worcester,
MA 01606, USA.

 

2.2UPA shall be a limited liability company operating under the terms and
conditions of this Agreement. The purpose of UPA is limited to: (i) advance,
develop and promote the use of the coal application of pressurized
oxy-combustion in the Territory for the realisation of a pilot plant; (ii) the
realisation of a pilot plant; (iii) subsequent demonstration facility based on
the technology as per item (ii); and (iv) implementation of F.O., should it be
awarded to UPA. The Term Sheet defines in detail the conditions under which the
above three purposes are to be implemented by UPA and respective ThermoEnergy’s
and Itea’s rights and obligations hereof.

 

2.3The Parties shall assume their due responsibilities, share the profits and
assume risks and losses of UPA during the implementation of the purpose in
accordance with Article 2.2 pro rata.

 

3                    MANAGEMENT OF UPA

 

3.1The Parties shall implement the scope of business of the Company as set forth
in Article 2 and for this purpose shall establish management bodies provided for
below which shall be responsible to the Parties and their decisions shall be
approved by ThermoEnergy and Itea where required by this Agreement within 10
(ten) days from the date ThermoEnergy and Itea are informed about such decision.

 

3.2The Parties agree to establish the following management bodies:

 

2

 

·the Board of Directors;

·the Managing Director.

 

3.3The Board of Directors

 

A. Composition of the Board of Directors

 

1) The Board of Directors (hereafter the “Board”) shall consist of 4 (four)
Directors of whom 2 (two) Directors shall be nominated by ThermoEnergy and the
remaining 2 (two) Directors shall be nominated by Itea. The Chairman of the
Board shall be a Director nominated by Ikea.

 

2) The Board of Directors is the highest power authority of the Company, which
is responsible for all decision of importance of the Company.

 

3) The Chairman of the Board is the legal representative of UPA. Should the
Chairman of the Board be unable to perform its functions due to some reasons,
other members of the Board may be authorised temporarily to act on behalf of the
Chairman of the Board.

 

4) The Parties agree to nominate the Directors and the Chairman of the Board
within 2 (two) weeks of the Acquisition in accordance with Article 1.1 of this
Agreement.

 

5) If ThermoEnergy or Itea ceases to hold its ownership in UPA, it shall procure
the resignation of relevant Directors appointed by it.

 

6) The right of appointment of the Directors conferred on the Parties shall
include the right at any time to remove from office and to replace any such
persons appointed by them and from time to time to determine the period which
such persons shall hold office as Director.

 

7) Should the Chairman of the Board of Directors cease to serve as a Director by
any reason whatsoever, the Party, who appointed that Director shall appoint a
new Director within (20) twenty days of the vacancy.

 

8) Any appointment or removal of Directors as aforesaid shall be made in writing
and be signed by the duly authorised officer of the appointer and shall take
effect as from the date of its receipt at the office of UPA or on the date of
appointment specified in the notice, whichever is later.

 

9) A Director may at any time appoint any other person (other than a Director)
to be his alternate and to remove such alternate Director. All appointments and
removals of alternate Directors made by any Director shall be in writing under
the hand of the Director making the same and shall take effect as of its receipt
at the office of UPA or on the date of the appointment specified in the notice,
whichever is the later.

3

 

 

10) The annual remuneration of the Chairman of the Board of Directors and
Directors will be subject to approval of the Board.

 

B. Proceedings of the Board

 

1) Meetings of the Board shall be held at least once a year, to be convened and
presided over by the Chairman of the Board. Upon proposal by 1 (one) member of
the Board, the Chairman of the Board shall convene a temporary meeting of the
Board, with minutes of the meeting recorded, filed and preserved.

 

2) The Parties shall use all reasonable endeavours to procure a quorum to be
present at and throughout each meeting of the Board. The quorum for holding all
meetings of the Board shall be 3 (three) Directors each present personally or by
his alternate (also via video/teleconference). Each Director shall have one
vote.

 

3) The Directors may meet at any place for the despatch of their business,
adjourn and otherwise regulate their meetings as they deem fit. At least 5
(five) Business Days’ notice in writing of each meeting of the Board shall be
given to each Director at the address from time to time provided by him for such
purpose and such notice shall be accompanied by an agenda of the matters to be
considered at the meeting. No decision shall be taken on any matter at a meeting
of the Board unless notice of such matter shall have been given in the manner
aforesaid or waiver of such notice has been given in respect of such matter by
all of the Directors of the Board.

 

4) A resolution in writing, signed by a majority of Directors for the time being
entitled to receive notice of a meeting of the Directors, shall be valid and
binding as if it had been passed at a meeting of Directors duly convened and
held. Any such resolution may consist of several documents in like form, each
signed by one or more Directors.

 

3.4The Managing Director

 

1) The Board shall appoint the Managing Director of UPA from the Director
appointed by ThermoEnergy. The Board at any time may remove the Managing
Director for any reason whatsoever and ThermoEnergy shall appoint a new Managing
Director.

 

2) The Managing Director is responsible for the daily business activity of UPA,
execution of the various resolutions of the Board. The Board shall supervise the
activities of the Managing Director and may determine some day to day management
responsibilities to the Managing Director. The Managing Director shall
periodically report to the Board the operating status of UPA.

 

4                    GENERAL MEETINGS OF THE PARTIES

 

4.1No business shall be transacted at any meeting unless a quorum is present at
the time when the meeting proceeds to business. A quorum for the valid holding
of meetings shall consist of the holder or holders present in person or by proxy
of not less than 51 (fifty-one)% of the ownership. Save as otherwise provided in
Article 4. 2 below or agreed by the Parties all resolutions passed at such
meetings shall require the favourable vote of the majority of the ownership of
UPA represented at the meeting.

 

4

 

 

4.2The Parties shall decide unanimously on:

 

·changing initial scope of business of UPA;

·the termination, winding up, liquidation or dissolution of UPA;

·the merger or consolidations of UPA with any other entity;

·increasing or decreasing the capital of UPA;

·transferring the ownership of UPA, participation and/or contribution of any
kind by any third parties in UPA and the rights and obligations to be granted to
such third parties;

·the issuance of additional ownership interests;

·the distribution of profits/ losses;

·the sale of substantially all of the assets of UPA.

 

4.3The Shareholders may meet in person or may meet through means of telephone
conference, video conference or other methods of simultaneous communication by
computer, electronic, audio visual or other means by which all persons
participating are able to hear and be heard by all participants. The minutes of
such a meeting signed by the Chairman of the General Meeting shall be prima
facie evidence of any resolution of any meeting so conducted. A meeting
conducted as aforesaid shall be deemed to be held at the place agreed upon by
the Shareholders attending the meeting.

 

5                    TRANSFER OF LICENSE

 

5.1Upon Acquisition under Article 1.1 of this Agreement, the Parties shall grant
to UPA a non-exclusive, royalty free right to use their respective IP
exclusively for the purposes indicated in Article 2. 2 of this Agreement and in
accordance with the principles agreed in Article 4 of the Term Sheet.

 

5.2Within 20 (twenty) days of Acquisition under Article 1.1 of this Agreement,
the Parties shall enter into the detailed License Agreement defining the licence
to be granted by ThermoEnergy to Itea and the licence to be granted by Itea to
ThermoEnergy, it being understood that in regard to: (i) the royalties for the
equipment and construction shall follow the principles agreed by the Parties in
the Term Sheet; (ii) the royalties for the use of the Itea’s technology by
ThermoEnergy for the first 4 Plants developed in the Territory, shall be divided
on 50%¬50% basis; the royalties for the further Plants developed by ThermoEnergy
in the Territory based on the Itea’s technology shall be divided as per Term
Sheet; (ii) the royalties for the use of the ThermoEnergy’s technology by Itea
for the Plants developed in the Territory shall be divided as per Term Sheet.

 

5.3Unless otherwise set forth in this Agreement or agreed in the License
Agreement, each Party shall keep the ownership of all its own information, of
all the inventions, discoveries, concepts and ideas, whether copyrightable or
not, whether patentable or not, made or conceived, including any of their
improvements or enhancements, resulting from the use or knowledge of the
information disclosed by it. Neither Party acquires any intellectual property
rights under the matter of this Agreement, through use of knowledge, even
partially, of any confidential information disclosed by the other Parties.

 

5

 

6                    CONTRIBUTIONS

 

6.1The contribution of the Parties to the management costs of UPA shall be as
per Article 5.b v of the Term Sheet.

 

6.2Any activities of UPA as per Article 2.2 of this Agreement shall be financed
from the external sources. Such third parties contributions may not be divided
by the Parties, being understood that they may cover the management costs of UPA
under Article 6.1 of this Agreement.

 

7                    DISTRIBUTION OF PROFITS

 

7.1Distributions from UPA (if any) shall be made only if approved by the Board
in accordance with the principles agreed in the Term Sheet.

 

8                    BOOKS AND RECORDS. ACCOUNTING

 

8.1At all times UPA shall keep true and accurate books of account and all other
records necessary for recording its business and affairs. The accounting methods
and systems employed by UPA shall conform to generally accepted standards
utilised in the country where the principal office of UPA is located, or such
other standards mutually agreed by the Parties. Such books of account shall be
maintained at all times at the principal office of UPA and, upon written
request, such books of account and records shall be open for the inspection and
examination by any Party in person or by its duly authorised representatives at
all reasonable times, and for any reasonable and proper purpose.

 

9                    EXCLUSIVITY

 

9.1The Parties agree to apply the principles set forth in Article 5 of the Term
Sheet regarding the possibility to use of each Parties Intellectual Property
rights granted to UPA.

 

10                REPRESENTATIONS AND WARRANTIES

 

10.1The Parties represent that:

 

·they have the full capacity, authority and legal right to enter into this
Agreement, have taken all necessary actions related to execution of this
Agreement, and this Agreement is enforceable;

·the execution and performance of this Agreement by the Parties does not violate
any applicable laws and does not breach any agreement, covenant, order, judgment
or decree to which any of the Party is bound.

 

6

 

11                INSURANCE

 

11.1UPA shall maintain such insurance policies covering such types and amounts
as is appropriate for the nature of UPA’s business and the scope of its
operations, as determined by the Board.

 

12                TRANSFER RESTRICTIONS AND BUY-OUT PROVISIONS

 

12.1The Parties are aware and acknowledge that new partners may acquire portions
of the ownership of UPA and become partners for the implementation of the scope
of business of UPA as defined in Article 2 of this Agreement. The Parties shall
unanimously agree the names of such partners, their quota of participation,
respective rights and obligations of new partners.

 

12.2Without prejudice to Article 12.1 and unless this Agreement provides
otherwise, neither Party shall assign, mortgage, charge or otherwise transfer
all or any part of its ownership interest in UPA (hereafter the “Transfer”). Any
Transfer or attempted Transfer in contradiction of this Agreement shall be null
and void and of no force or effect, and the ownership interest that is the
subject of such Transfer or attempted Transfer shall be deemed to be offered to
the Non-Offering owner pursuant to provision below, provided that the notice
date as stated below shall be the date that the non-transferring owner learns of
such Transfer or attempted Transfer.

 

12.3Prior to any intended Transfer of an ownership interest by any Party, such
party shall first offer to sell such ownership interest pursuant to this
Section. In the event that some or all of an ownership interest shall become
transferable after being offered as provided in this Section 12.3, such
ownership interest may be offered for Transfer for a period of ninety (90) days
after the expiration of the last day for exercise of the last option to purchase
contained in this Section 12. 3, on terms no more favourable to the buyer and at
a price no less than that at which the non-offering party may purchase it
hereunder. In particular:

 

a.Notice of Proposed Transfer. Written Notice of any proposed Transfer shall be
given to the Non-Offering party. Such Notice shall specifically identify the
ownership interest proposed to be transferred, the identity of the third party,
and a summary of the price and terms of the offer. For purposes of this Section
12.3, the “Notice Date” shall be the date that the Offering Party gives the
Notice required in this Section.

 

b.Exercise of Option. Notice of the intent of the Non Offering party to purchase
the ownership interest proposed shall be delivered to the Offering Party no
later than the close of business on the thirtieth (30th) business day after the
Notice Date. Such Notice shall state the maximum portion of the ownership
interest to be purchased.

 

 

7

 

c.Non Offering party’s Right of Second Refusal. To the extent that the rights of
first refusal granted are not exercised to purchase the entire ownership
interest that is the subject of the proposed Transfer, the Non-Offering party
shall have a second right of refusal to purchase part or all of the ownership
interest that (i) was the subject of the proposed Transfer but (ii) was not
purchased. This right shall be exercised no later than the close of business on
the fortieth (40th) business day after the Notice Date by delivering written
Notice of exercise to the Offering Party.

 

d.Purchase Price. The purchase price and terms of purchase for an ownership
interest upon the exercise of the rights of first refusal set forth in this
Section shall be the amount of the offer and terms received from a third-party,
if any. If no offer is received from a third party, the terms of payment shall
be by cash at closing and the purchase price shall be the fair market value of
the ownership interest being transferred, as determined by an independent
appraiser selected by the mutual agreement of the parties. If the Parties cannot
agree upon an appraiser, then each Party shall select an appraiser, and the fair
market value shall be the average of the two appraisers’ fair market values. If
one appraiser is selected, the parties shall split the appraiser’s cost. If each
party selects an appraiser, each party shall pay the cost of the appraiser
selected by it.

 

13                CONFIDENTIALITY

 

13.1The content of this Agreement and all information and documents (whether in
written, oral or other form) exchanged by the Parties in connection therewith,
are confidential (hereinafter the “Confidential Information”). Each of the
Parties:

 

·shall treat strictly confidential the provisions of this Agreement, the process
of the negotiations and all information about the other Party obtained or
received by it as a result of entering into or performing its obligations under
this Agreement. It is hereby acknowledged and understood that the Confidential
Information shall include the trademark, the know-how, the technical
information, prototypes, trade secrets, pending or abandoned patent
applications, invention disclosures, designs, programs, plants, documents,
specifications, models, marketing studies, profits, costs, pricing, process
descriptions, manufacturing processes and all other information which a
disclosing party holds confidential;

·shall not, except with the prior written consent of the other Party or as
otherwise set forth below, make use of (save for the purposes of performing its
obligations under this Agreement) or disclose to any person any of the
Confidential Information.

 

13.2For the purposes of this the information is not considered as confidential
if:

 

8

 

 

·such information was in the possession of a receiving Party and at its free
disposal prior to receipt by a disclosing Party; or

·such information is subsequently disclosed without any obligations of
confidence by a third party who has not derived it directly or indirectly from a
disclosing Party; or

·such information is or becomes generally available to the public through no act
or default of a receiving Party or its agents, employees, affiliates or
sub-licensees; or

·such information is available to a receiving Party because of its independent
research made without use or access to the information acquired from a
disclosing Party.

 

13.3If a receiving Party or any of its representatives is required by law or any
directive, decision, order or regulation having the force of law to disclose any
Confidential Information, then a receiving Party or the relevant representative,
as the case may be, shall promptly notify a disclosing Party of such requirement
(and the deadline for disclosure) by written notice confirming the binding
nature of such requirement and the extent to which the Confidential Information
is to be disclosed in accordance with such requirement.

 

14                WINDING UP

 

14.1In the event of the winding-up of UPA, but subject to applicable laws and
the terms of any liquidation agreement, UPA’s property shall be distributed as
follows:

 

·all of UPA’s debts, liabilities and obligations, other than debts, liabilities
and obligations to any shareholder, shall be paid in full or otherwise provided
for, or a reserve therefore (or for any contingent or unforeseen liabilities or
obligations), shall be set aside; and

·the balance of the physical and tangible assets, including the commercial value
hereof, if any, shall be distributed to the Shareholders pro-rata their
respective ownership.

 

15                TERM AND TERMINATION, LIQUIDATION OF UPA

 

15.1This Agreement is legally valid and binding as of the date of its signature.

 

15.2Any Party may terminate this Agreement submitting prior thirty (30) days
written notice to the other Party in the following cases:

9

 

 

 

·Itea will not purchase the 50% of UPA’s share capital within 6 months of the
date of the signature of this Agreement;

·the Parties mutually agree to terminate this Agreement for any reasons;

·a Party commits a material breach of any term or provision of this Agreement
and (if such breach is remediable) fails to remedy such breach within thirty
(30) days or any other period, provided by the other Party;

·any change in law or other governmental action that makes UPA impossible or
impracticable to carry out;

·a Party becomes bankrupt or becomes insolvent, liquidation proceedings are
commenced, has a receiving or administration order made against it, compromises
with its creditors, or carries on business under a receiver, trustee or manager
for the benefit of its creditors, or if any act is done or event occurs which
(under any applicable law) has a similar effect to any of these acts or events.

 

15.3If UPA is not able to secure the funding of the Pilot plant facility as set
forth in Article 6 of the Term Sheet within 24 months from the use of
Acquisition right as per Article 1. 1 of this Agreement, upon Itea’s request,
ThermoEnergy shall buy Itea’s ownership in UPA, on the price agreed by the
Parties in good faith, or the Parties shall proceed with the liquidation of UPA
in accordance to Article 15.4.

 

15.4The Parties expressly agree that after the implementation of the purpose of
UPA as defined in Article 2.2 of this Agreement, UPA shall be liquidated. In
addition, upon termination of this Agreement for any reason UPA will be
liquidated and will immediately cease the use of all rights granted to it under
this Agreement and will immediately return any documents, information and/or
confidential information possessed by it in respect thereto to the Party, which
provided such information. The liquidation of UPA and division by the Parties of
any assets, rights and obligations gained by UPA during its existence shall be
made in accordance to the following principles:

 

(i)all the intellectual property rights owned by Itea, as well the as the
accrued know-how and patentable rights developed based on the pre-existing
flameless technology and the Itea combustion process in the range of 0-50 bars
shall belong exclusively to Itea, with the possible licensing of these rights to
Thermoenergy in accordance to the Term Sheet; (ii) all the intellectual property
rights owned by Thermoenergy, as well the as the accrued know-how and patentable
rights developed on the Thermoenergy combustion process in the range of 50-75
bars shall belong exclusively to Thermoenergy, with the possible licensing of
these rights to Itea in accordance to the Term Sheet; (iii) all the patents
registered under UPA activities, which are not based on either Itea’s or
ThermoEnergy’s patents, intellectual property and accrued know how, will be a
common ownership of the Parties; (iv) the physical and tangible assets,
including the commercial value hereof, of UPA shall be divided as per Article
14.1 of this Agreement.

 

15.5The provisions of this Agreement that by their nature are intended to
survive the termination, cancellation or expiry of this Agreement (including but
not limited to any provision regarding confidentiality or limiting or releasing
liability) shall continue as valid and enforceable notwithstanding any
termination, cancellation and expiry thereof.

10

 

 

 

16                LAW & DISPUTES

 

16.1This Agreement shall be subject to the Laws of the Commonwealth of
Massachusetts, without giving effect to the choice of law rules thereof. Any
disputes which the Parties cannot settle amicably shall be subject to
arbitration in accordance with ICC Rules of Conciliation and Arbitration. The
place of arbitration shall be Delaware, USA, the language of arbitration shall
be English and the arbitration award shall be final and binding on the Parties.

 

17                OTHER PROVISIONS

 

17.1Any notice to be given to ThermoEnergy and/or Itea under this Agreement
shall be in English and transmitted by mail, express carrier, hand carrier,
e-mail, or facsimile to the other Party’s respective address of notification.

 

17.2Any changes, additions, corrections, modifications and amendments to this
Agreement shall only be valid and binding upon the Parties if concluded in
writing and signed by an authorised representative of each of the Parties and
formally expressed as constituting an amendment hereto.

 

17.3This Agreement contains the entire agreement between the Parties in respect
of its subject matter.

 

17.4If any provision of this Agreement is or becomes invalid that shall not
affect the validity of any other provision of this Agreement. The invalid
provision shall be replaced by a lawful provision having a proximate effect.

 

17.5Each Party shall bear its own costs and expenses incurred in connection with
this Agreement.

 

17.6All terms and conditions of the Term Sheet, which are not expressly modified
by this Agreement, remain in full force and effect.

 

The Parties shall not assign or transfer any or all of their rights or
obligations under this Agreement to any third party without the prior written
consent of the other Party.

 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their respective authorised representatives.

 

ThermoEnergy Itea By:   /s/ Cary Bullock By:   /s/ Alvise A. Bassignano Name:
Cary Bullock Name: Alvise A. Bassignano Title: CEO Title: Managing Director

 

 

Annexes

Annex 1 Term Sheet

 

11