ThermoEnergy Corporation

 

Bridge Loan Agreement

 

This Agreement is made by and among ThermoEnergy Corporation, a Delaware
corporation (the “Corporation”) and the individual and entities identified on
Schedule I hereto (each, an “Investor”) this 2nd day of December 2011.

 

Whereas, the Board of Directors of the Corporation has proposed the designation
and issuance of a new series of the Corporation’s authorized Preferred Stock
(the “New Preferred Stock”) on substantially the terms set forth in the Term
Sheet attached hereto as Exhibit A (the “Term Sheet”); and

 

Whereas, the Corporation may not issue or sell the New Preferred Stock unless
the holders of the Corporation’s Series B Convertible Preferred Stock (the
“Series B Stock”) consent thereto and waive the application of the anti-dilution
adjustment to the conversion price of the Series B Stock as set forth in the
Corporation’s Certificate of Incorporation, as amended; and

 

Whereas, in anticipation of the designation and issuance of the New Preferred
Stock, each of the Investors is willing to make a loan to the Corporation in the
principal amount set forth opposite the name of such Investor on Schedule I
hereto;

 

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.          Bridge Loans. Until the designation and issuance of the New
Preferred Stock, each of the Investors hereby agrees to make a loan to the
Corporation in the principal amount set forth opposite the name of such Investor
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 B (the “Bridge Notes”).

 

2.          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 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. 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.

 

(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.

 

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(e)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.

 

(f)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.

 

3.          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
Bridge Note to be issued to him or it pursuant hereto for his or its own
account, for investment purposes and not with a view toward resale or
distribution.

 

4           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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5.          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.

 

6.          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.

 

7.          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 Agreement;

 

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 Agreement

 

Investor’s Signature Page

 

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

  

        Print Investor’s Name         By:       Authorized Signature            
  Print Name and Title of Signatory

  

 

 

 

ThermoEnergy Corporation

 

Bridge Loan Agreement

 

Schedule I

  

Investor  Bridge Loan  Robert S. Trump  $750,000  Empire Capital Partners, L.P. 
 255,500  Empire Capital Partners, Ltd.   130,000  Empire Capital Partners
Enhanced Master Fund Ltd.   114,500