Note Amendment and Forbearance Agreement
Exhibit
10.1
Agreement
dated as of the 4th day of
January 2011 (this “Agreement”) by and between ThermoEnergy Corporation, a
Delaware corporation (“ThermoEnergy”) and _________________.
Whereas,
pursuant to a certain Agreement for the Purchase and Sale of Securities dated as
of July 2, 2007 (the “2007 Agreement”), ThermoEnergy issued to
_________________ a Convertible Promissory Note in the original principal amount
of $____________ (the “2007 Note”); and
Whereas,
the 2007 Note matured on May 31, 2010 and remains outstanding; and
Whereas,
the aggregate amount of $___________ in principal and accrued interested on the
2007 Note remains unpaid; and
Whereas,
ThermoEnergy’s obligations under the 2007 Note are secured by a certain Stock
Pledge Agreement dated as of July 2, 2007 made by ThermoEnergy in favor of
▇▇▇▇▇▇▇ ▇▇▇▇▇ Specialty Group, LLC (“▇▇▇▇▇▇▇ ▇▇▇▇▇”), as agent for itself and
certain other holders of ThermoEnergy’s Convertible Promissory Notes, including
_________________ (the “Pledge Agreement”); and
Whereas,
▇▇▇▇▇▇▇ ▇▇▇▇▇ and ThermoEnergy entered into a forbearance agreement dated as of
December 11, 2009 (the “Forbearance Agreement”) without the participation or
consent of _________________; and
Whereas,
ThermoEnergy has failed to comply with certain of its obligations under the
Forbearance Agreement, and defaults exist under the 2007 Note and the Pledge
Agreement; and
Whereas,
_________________ wishes to agree to forego the existing defaults under the 2007
Note and the Pledge Agreement and to amend the 2007 Note in certain respects
pursuant to the terms of this Agreement; and
Whereas,
ThermoEnergy wishes to provide for the additional forbearance, to amend the2007
Note and to issue to _________________ certain additional consideration in
exchange for its forbearance:, all upon the terms and subject to the conditions
in this Agreement:
Now,
therefore, in consideration of the foregoing, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
ThermoEnergy and _________________ hereby agree as follows:
1. ThermoEnergy
Deliveries. At
a closing (the “Closing”) to be held at the offices of ▇▇▇▇▇ Peabody llp, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ at 10:00 a.m. on January 4, 2011 (or at
such other place and on such other date as ThermoEnergy and _________________
may agree), ThermoEnergy shall, against delivery by _________________ of the
items specified in Section 2 below, deliver to _________________ the
following:
(a) cash
payment, in immediately available funds, of the sum of
$______________;
(b) cash
payment, in immediately available funds, of the additional sum of
$____________;
(c) an
Amended and Restated Promissory Note, in the form attached hereto as Exhibit A,
in the principal amount of $____________ (the “Amended Note”);
(d) a
Common Stock Purchase Warrant, in substantially the form attached hereto as
Exhibit B, entitling the holder to purchase at any time on or before the fifth
anniversary of the date of Closing, up to _____________ shares of ThermoEnergy’s
Common Stock, par value $0.001 per share (the “Common Stock”) at an exercise
price of $0.40 per share (the “$0.40 Warrant”);
(e) _____________
shares of ThermoEnergy’s Series B Convertible Preferred Stock, par value $0.01
per share (the “Series B Shares”); and
(f) a
Common Stock Purchase Warrant, in substantially the form attached hereto as
Exhibit C, entitling the holder to purchase at any time on or before the fifth
anniversary of the date of Closing, up to ____________ shares of Common Stock at
an exercise price of $0.30 per share (the “$0.30 Warrant” and, together with the
$0.40 Warrant, the “Warrants”).
2. _________________
Deliveries. At
the Closing, _________________ shall, against delivery by ThermoEnergy of the
items specified in Section 1 above, deliver to ThermoEnergy the
following:
(a) the
2007 Note; and
(b) a
forbearance letter in the form of Exhibit D (the “New Forbearance Letter”),
agreeing to extending the maturity date of the 2007 Note until February 29, 2012
(the “New Maturity Date”) and forbearing action under the Pledge Agreement until
such New Maturity Date;
3. Forbearance. In
consideration of ThermoEnergy’s entering into and complying with the terms and
conditions of this Agreement, _________________ hereby agrees that during the
period commencing on the date hereof and terminating on the earlier of either
February 29, 2012 or the date on which any Termination Event (as defined below)
first occurs, and provided ThermoEnergy (i) makes, on a timely basis, the
payments required under the Amended Note, (ii) otherwise complies with the terms
of the Amended Note and (iii) complies with all obligations of ThermoEnergy
under this Agreement, _________________ will forbear from exercising any and all
of the rights and remedies which it has or may have against ThermoEnergy or any
of its assets under the Amended Note or the Pledge Agreement or at law or in
equity as a result of the maturity of, or the occurrence or continuance of any
Event of Default under, the 2007 Note.
4. Allocation of
Consideration. It
is the intention of ThermoEnergy and _________________ that:
(a) the
cash payment pursuant to Section 1(a) above is in partial repayment of the
principal amount of the 2007 Note;
(b) the
cash payment pursuant to Section 1(b) above is by way of a
penalty;
(c) the
issuance of the Series B Shares and the Warrants are in consideration of
_________________’s agreements in Section 3, above.
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5. ThermoEnergy’s
Representations and Warranties. ThermoEnergy
hereby represents and warrants to _________________ as follows:
5.1 Organization and
Qualification. ThermoEnergy
is a corporation duly organized, 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. ThermoEnergy is not in violation of any of the provisions
of its Certificate of Incorporation or bylaws. ThermoEnergy is duly
qualified to conduct business and is in good standing as a foreign corporation
in each jurisdiction in which the failure to be so qualified and in good
standing could have or could reasonably be expected to result in a material
adverse effect on ThermoEnergy or its business, and no proceedings have been
instituted in any such jurisdiction revoking, limiting or curtailing, or seeking
to revoke, such power and authority or qualification.
5.2 Authorization and
Enforceability. The
execution and delivery by ThermoEnergy of this Agreement, and performance by
ThermoEnergy of the transactions contemplated by this Agreement, have been duly
authorized by all necessary corporate action on the part of ThermoEnergy, its
Board of Directors and its shareholders. This Agreement has been duly
executed by ThermoEnergy and constitutes the valid and legally binding
obligation of ThermoEnergy, enforceable against ThermoEnergy in accordance with
its terms. The amendments to the 2007 Note, as embodied in the
Amended Note, and the Warrants have been duly authorized and, when
issued as contemplated by this Agreement, will be the legal, valid and binding
obligations of ThermoEnergy, enforceable against ThermoEnergy in accordance with
their respective terms.
5.3 Other
Agreements. Neither
the execution and delivery of this Agreement nor the performance of this
Agreement by ThermoEnergy will (a) result in a violation or breach of any term
or provision of or constitute a default (or an event which, with notice or lapse
of time or both, would result in a default) under, or result in the termination
or in a right of termination, or cancellation of, or accelerate the performance
required by, or result in being declared void or voidable, any of the terms,
conditions or provisions of ThermoEnergy’s Certificate of Incorporation or
bylaws or any instrument, commitment or obligation to which ThermoEnergy is a
party, or by which ThermoEnergy or any of ThermoEnergy’s assets may be bound, or
(b) except as contemplated by the Pledge Agreement, result in the creation of
any lien, security interest, charge or encumbrance on any of ThermoEnergy’s
assets or (c) violate any law, rule, or governmental regulation or order, writ,
injunction, decree, judgment or ruling of any court or governmental authority
applicable to ThermoEnergy or any of ThermoEnergy’s assets.
5.4 Series B Shares and Common
Stock. The
Series B Shares are duly authorized and, when issued at Closing in accordance
with the terms of this Agreement, will be validly issued shares of
ThermoEnergy’s Series B Convertible Preferred Stock, par value $0.01 per share
(the “Series B Preferred Stock”), fully paid, non-assessable and free of
preemptive and similar rights and entitled to all of the rights and preferences
of the Series B Preferred Stock as set forth in Article IV of ThermoEnergy’s
Certificate of Incorporation. A sufficient number of shares of Common
Stock to permit exercise in full of the Warrants and full conversion of the
Amended Note and the Series B Shares have been reserved and set aside
and such shares of Common Stock will, when issued and paid for upon exercise of
the Warrants, conversion of the Amended Note or conversion of the Series B
Shares in accordance with their respective terms, be duly authorized
and validly issued shares of Common Stock, fully paid, non-assessable and free
of preemptive and similar rights.
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5.5 SEC
Documents. ThermoEnergy
has, since January 1, 2010, filed all of the reports, proxy statements and other
documents (collectively, the “SEC Documents”) that ThermoEnergy has been
required to file with the Securities and Exchange Commission (the
“Commission”). As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and
regulations of the Commission thereunder, and none of the SEC Documents, when
filed, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, at the time and in the light of the circumstances under which they were
made, not misleading. The financial statements of ThermoEnergy
included in the SEC Documents complied as to form in all material respects with
applicable accounting requirements and with published rules and regulations of
the Commission with respect thereto, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated therein or in the notes thereto
or, in the case of the unaudited statements, as permitted by Form
10-Q of the Commission) and fairly present (subject, in the case of
the unaudited statements, to normal recurring audit adjustments) the
consolidated financial position of ThermoEnergy and its consolidated
subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended.
6. _________________’s
Representations and Warranties. _________________
hereby represents and warrants to ThermoEnergy as follows:
6.1 Organization and
Authority. _________________
is a _________ duly organized, validly existing and in good standing under the
laws of _________________________ and has the requisite power and authority to
enter into, and to consummate the transactions contemplated by, this Agreement
and otherwise to carry out its obligations hereunder.
6.2 Authorization and
Enforceability. The
execution and delivery of this Agreement and the New Forbearance Letter by
_________________, the performance by _________________ of the transactions
contemplated by this Agreement, and the performance of the Agreements and the
making of the waivers contained in the New Forbearance Letter have been duly
authorized by all necessary corporate or partnership or other applicable like
action, on the part of _________________. This Agreement and the New
Forbearance Letter have been duly executed by _________________ and constitute
the valid and legally binding obligations of _________________, enforceable
against _________________ in accordance with their respective
terms.
6.3 Other
Agreements. Neither
the execution and delivery of this Agreement or the new Forbearance Letter nor
the performance of this Agreement or the New Forbearance letter by
_________________ will (a) result in a violation or breach of any term or
provision of or constitute a default (or an event which, with notice or lapse of
time or both, would result in a default) under, or result in the termination or
in a right of termination, or cancellation of, or accelerate the performance
required by, or result in being declared void or voidable, any of the terms,
conditions or provisions of _________________’s Certificate of Organization,
operating agreement, or other governing document or any instrument,
commitment or obligation (including, without limitation, the 2007 Agreement and
the Pledge Agreement) to which _________________ is a party, or by which
_________________ or any of _________________’s assets may be bound, or (b)
violate any law, rule, or governmental regulation or order, writ, injunction,
decree, judgment or ruling of any court or governmental authority applicable to
_________________.
6.4 Access to Information
Regarding ThermoEnergy. _________________
acknowledges that it has been afforded (i) access to information about
ThermoEnergy and its financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
decision to enter into this Agreement and (ii) the opportunity to obtain such
additional information that ThermoEnergy possesses or can acquire without
unreasonable effort or expense that _________________ deems necessary to make an
informed investment decision with respect to this Agreement.
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6.5 Investment
Representations. _________________
is an “accredited investor” (as such term is defined in Rule 501 of Regulation D
promulgated by the Securities and Exchange Commission pursuant to the Securities
Act of 1933 (the “Securities Act”)), it understands that the Series B Shares and
the Warrant to be issued to it pursuant to this Agreement have not been
registered under the Securities Act of 1933 or under any applicable state
securities laws and may not be resold with such registration unless an
applicable exemption from the registration requirements of the Securities Act of
1933 and the applicable state securities laws is available, and it is
acquiring the Series B Shares and the Warrants for investment for its own
account and not with a plan or present intention to distribute or resell such
securities.
6.6 Independent Investment
Decision. _________________
has independently evaluated the merits of its decision to enter into this
Agreement and to acquire the Series B Shares, the Amended Note and the Warrants
pursuant to this Agreement and _________________ confirms that it has not relied
on the advice of ThermoEnergy or any of its officers or directors in making such
decision. _________________ acknowledges and agrees that ThermoEnergy
has not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 2
hereof.
7. Consents and
Waivers. Prior
to, and as a condition of, the Closing, ThermoEnergy shall have
obtained any and all consents or waivers required for the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby,
including without limitation any consents or waivers necessary under the 2007
Agreement or the Pledge Agreement. _________________ shall use its
commercially reasonable efforts to assist ThermoEnergy in obtaining such
consents and waivers.
8. Registration
Rights.
8.1 Piggy-Back
Registration. If
(but without any obligation to do so) ThermoEnergy proposes
to register (including for this purpose, a registration effected by ThermoEnergy
for stockholders other than _________________) any shares of the Common Stock
under the Securities Act in connection with the public offering of such shares
of Common Stock solely for cash other than (i) a registration statement on Form
S-8 (or any successor form relating to the sale of securities to employees of
ThermoEnergy pursuant to a stock option, stock purchase or similar plan or
arrangement), (ii) a registration statement on Form S-4 (or any
successor form relating to a merger, consolidation or similar transaction
involving ThermoEnergy), (iii) a registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale by _________________ of the shares of
Common Stock issued or issuable upon conversion of the Amended Note or the
Series B Shares or the exercise of the Warrants (collectively, the “Registrable
Securities”) or (iv) a registration statement being filed by ThermoEnergy
pursuant to a contractual obligation existing prior to the date of this
Agreement which prohibits the inclusion of additional shares, ThermoEnergy
shall, at such time, promptly give _________________ written notice of such
registration. Upon the written request of _________________ given
within twenty (20) days after mailing of such notice by ThermoEnergy,
ThermoEnergy shall, subject to the provisions of this Section 8, cause to
be registered under the Securities Act all of the Registrable Securities that
_________________ has requested to be registered. Notwithstanding the
foregoing, ThermoEnergy shall not be obligated to register more Registrable
Securities than permitted under the Securities Act or any rule or regulation of
the Commission promulgated thereunder or any interpretation thereof by the Staff
of the Commission. In the event that any such registration shall be,
in whole or in part, an underwritten public offering of Common Stock, the number
of Registrable Securities to be included in such an underwriting may be reduced
or excluded partially or completely if and to the extent that the
managing underwriter shall be of the opinion that the inclusion of some or all
of the Registrable Securities would adversely affect the marketing of the
securities to be sold by ThermoEnergy therein. ThermoEnergy shall
have the right, without penalty, to terminate or withdraw any registration
initiated by it under this Section 8.1 prior to the effectiveness of such
registration whether or not _________________ has elected to include securities
in such registration.
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8.2 Registration Obligations of
ThermoEnergy. In
connection with the registration of the Registrable Securities for the account
of _________________ pursuant to Section 8.1, ThermoEnergy
shall:
(a) Take
all lawful action such that the registration statement and any amendment thereto
does not, when it becomes effective, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, not misleading and that the prospectus forming
part of such registration statement, and any amendment or supplement thereto,
does not at any time include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) Comply
with the provisions of the Securities Act with respect to the Registrable
Securities covered by the registration statement until the earlier of (i) such
time as all of such Registrable Securities have been disposed of in accordance
with the intended methods of disposition by the Sellers as set forth in the
prospectus forming part of the registration statement or (ii) the date after
which all of such Registrable Securities may be sold without restriction
pursuant to Rule 144 under the Securities Act (the “Registration
Period”).
(c) Prior
to the filing with the Commission of the registration
statement (including any amendments thereto) and the distribution or delivery of
any prospectus (including any supplements thereto), provide draft copies thereof
to _________________ and reflect in such documents all such comments as
_________________ (and its counsel) reasonably may propose.
(d) (i) register
or qualify the Registrable Securities covered by the registration statement
under such securities or “blue sky” laws of such jurisdictions as
_________________ reasonably request, (ii) prepare and file in such
jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof at all times during the Registration Period,
and (iii) take all such other lawful actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period; provided, however, that ThermoEnergy shall not be required
in connection therewith or as a condition thereto to (A) qualify to do
business in any jurisdiction where it would not otherwise be required to
qualify, (B) subject itself to general taxation in any such jurisdiction or
(C) file a general consent to service of process in any such
jurisdiction.
(e) As
promptly as practicable after becoming aware of such event, notify
_________________ of the occurrence of any event, as a result of which the
prospectus included in the registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and
promptly prepare an amendment to the registration statement and supplement to
the prospectus to correct such untrue statement or omission, and deliver a
number of copies of such supplement and amendment to _________________ as
_________________ may reasonably request.
(f) As
promptly as practicable after becoming aware of such event, notify
_________________ of the issuance by the Commission of any stop order or other
suspension of the effectiveness of the registration statement and take all
lawful action to effect the withdrawal, rescission or removal of such stop order
or other suspension.
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(g) Make
generally available to its security holders as soon as practicable, but in any
event not later than eighteen (18) months after (i) the effective date of
the registration statement, and (ii) the effective date of each
post-effective amendment to the registration statement, as the case may be, an
earnings statement of ThermoEnergy and its subsidiaries complying with
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(h) Make
reasonably available for inspection by _________________ and any underwriter
participating in any disposition pursuant to the registration statement, and any
attorney, accountant or other agent retained by _________________ or any such
underwriter all relevant financial and other records, pertinent corporate
documents and properties of ThermoEnergy and its subsidiaries, and
(ii) cause ThermoEnergy’s officers, directors and employees to supply all
information reasonably requested by _________________ or any such underwriter,
attorney, accountant or agent in connection with the registration statement, in
each case, as is customary for similar due diligence examinations; provided,
however, that all records, information and documents that are designated in
writing by ThermoEnergy, in good faith, as confidential, proprietary or
containing any nonpublic information shall be kept confidential by
_________________ and any such underwriter, attorney, accountant or agent
(pursuant to an appropriate confidentiality agreement in the case of
_________________ or any such agent), unless such disclosure is made
pursuant to judicial process in a court proceeding (after first giving
ThermoEnergy an opportunity promptly to seek a protective order or otherwise
limit the scope of the information sought to be disclosed) or is required by
law, or such records, information or documents become available to the public
generally or through a third party not in violation of an accompanying
obligation of confidentiality; and provided, further, that, if the foregoing
inspection and information gathering would otherwise disrupt ThermoEnergy’s
conduct of its business, such inspection and information gathering shall, to the
maximum extent possible, be coordinated on behalf of the Sellers and the other
parties entitled thereto by one firm of counsel designated by and on behalf of
the majority in interest of all parties selling shares of Common Stock pursuant
to the registration statement; and
(i) Use
its commercially reasonable efforts to cause all Registrable Securities covered
by the registration statement to be listed or qualified for trading on the
principal trading market, if any, on which the Common Stock is traded or listed
on the effective date of the registration statement.
8.3 Obligations and
Acknowledgements of _________________. In
connection with the registration of the Registrable Securities for the account
of _________________ pursuant to Section 8.1, _________________ shall have
the following obligations and hereby make the following
acknowledgements:
(a) It
shall be a condition precedent to the obligations of ThermoEnergy to include the
Registrable Securities in the registration statement that _________________
(i) shall furnish to ThermoEnergy such information regarding itself, the
shares of Common Stock held by it and the intended method of
disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable Securities and
(ii) shall execute such documents in connection with such registration as
ThermoEnergy may reasonably request. At least ten (10) business days
prior to the first anticipated filing date of a registration statement,
ThermoEnergy shall notify _________________ of the information ThermoEnergy
requires from _________________ (the “Requested Information”) if
_________________ elects to have any of the Registrable Securities included in
the registration statement. If at least two business days prior to
the anticipated filing date ThermoEnergy has not received the Requested
Information from _________________, then ThermoEnergy may file the registration
statement without including any Registrable Securities for the
account of _________________ and ThermoEnergy shall have no further
obligations under this Section 8 to _________________.
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(b) _________________
agrees to cooperate with ThermoEnergy in connection with the preparation and
filing of a registration statement under this Section 8, unless such Seller
_________________ has notified ThermoEnergy in writing of its election to
exclude all of the Registrable Securities from such registration
statement.
(c) _________________
agrees that, upon receipt of any notice from ThermoEnergy of the occurrence of
any event of the kind described in Section 8.2(e) or 5.2(f), it shall
immediately discontinue its disposition of Registrable Securities pursuant to
the registration statement until _________________’s receipt of the copies of
the supplemented or amended prospectus contemplated by Section 8.2(e) and,
if so directed by ThermoEnergy, _________________ shall deliver to ThermoEnergy
(at the expense of ThermoEnergy) or destroy (and deliver to ThermoEnergy a
certificate of destruction) all copies in _________________’s possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice.
8.4 Expenses of
Registration. All
expenses incurred in connection with registrations, filings or qualifications
pursuant to this Section 8, including, without limitation, all
registration, listing, and qualifications fees, legal fees, printing and
engraving costs, accounting fees, and the reasonable fees and expenses of one
counsel to all selling shareholders (other than underwriting discounts and
commissions) shall be borne by ThermoEnergy.
8.5 Indemnification and
Contribution
(a) Indemnification by
ThermoEnergy. ThermoEnergy shall indemnify and hold harmless
_________________ and each underwriter, if any, which facilitates the
disposition of Registrable Securities for the account of _________________, and
each of their respective officers and directors and each person who controls
_________________ or such underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act
(each such person being sometimes hereinafter referred to as an “Indemnified
Person”) from and against any losses, claims, damages or liabilities, joint or
several, to which such Indemnified Person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
registration statement or an omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, not misleading, or arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any prospectus or an
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and ThermoEnergy
hereby agrees to reimburse such Indemnified Person for all reasonable legal and
other expenses incurred by them in connection with investigating or defending
any such action or claim as and when such expenses are incurred; provided,
however, that ThermoEnergy shall not be liable to any such Indemnified Person in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon (i) an untrue statement or alleged untrue
statement made in, or an omission or alleged omission from, such registration
statement or prospectus in reliance upon and in conformity with written
information furnished to ThermoEnergy by such Indemnified Person expressly for
use therein or (ii) in the case of the occurrence of an event of the type
specified in Section 8.2(e), the use by the Indemnified Person of an
outdated or defective prospectus after ThermoEnergy has provided to such
Indemnified Person an updated prospectus correcting the untrue statement or
alleged untrue statement or omission or alleged omission giving rise to such
loss, claim, damage or liability.
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(b) Indemnification by
_________________. _________________ agrees as a consequence
of the inclusion of any of its Registrable Securities in a registration
statement pursuant to this Section 8, and each underwriter, if any, which
facilitates the disposition of Registrable Securities for _________________
shall agree, as a consequence of facilitating such disposition of Registrable
Securities to (i) indemnify and hold harmless ThermoEnergy, its directors,
its officers who sign any registration statement and each person, if any, who
controls ThermoEnergy within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any losses,
claims, damages or liabilities to which ThermoEnergy or such other persons may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in any registration statement or an omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, not misleading, or arise out of or are based upon
an untrue statement or alleged untrue statement of a material fact contained in
any prospectus or an omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to ThermoEnergy by
_________________ or such underwriter expressly for use therein, and
(ii) reimburse ThermoEnergy for any legal or other expenses incurred by
ThermoEnergy in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that neither
_________________ nor any underwriter shall be liable under this
Section 8.5(b) for any amount in excess of the net proceeds paid to
_________________ or such underwriter in respect of Registrable
Securities sold by it.
(c) Notice of Claims,
etc. Promptly after receipt by a person seeking
indemnification pursuant to this Section 8.5 (an “Indemnified Party”) of
written notice of any investigation, claim, proceeding or other action in
respect of which indemnification is being sought (each, a “Claim”), the
Indemnified Party promptly shall notify the person against whom indemnification
pursuant to this Section 8.5 is being sought (the “Indemnifying Party”) of
the commencement thereof; but the omission to so notify the Indemnifying Party
shall not relieve the Indemnifying Party from any liability that it otherwise
may have to the Indemnified Party, except to the extent that the Indemnifying
Party is materially prejudiced and forfeits substantive rights and defenses by
reason of such failure. In connection with any Claim as to which both
the Indemnifying Party and the Indemnified Party are parties, the Indemnifying
Party shall be entitled to assume the defense
thereof. Notwithstanding the assumption of the defense of any Claim
by the Indemnifying Party, the Indemnified Party shall have the right to employ
separate legal counsel and to participate in the defense of such Claim, and the
Indemnifying Party shall bear the reasonable fees, out-of-pocket costs and
expenses of such separate legal counsel to the Indemnified Party if (and only
if): (i) the Indemnifying Party shall have agreed to pay such fees, costs
and expenses, (ii) the Indemnified Party shall reasonably have concluded
that representation of the Indemnified Party by the Indemnifying Party by the
same legal counsel would not be appropriate due to actual or, as reasonably
determined by legal counsel to the Indemnified Party, potentially differing
interests between such parties in the conduct of the defense of such Claim, or
if there may be legal defenses available to the Indemnified Party that are in
addition to or disparate from those available to the Indemnifying Party, or
(iii) the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the Indemnified Party within a reasonable period of
time after notice of the commencement of such Claim. If the
Indemnified Party employs separate legal counsel in circumstances other than as
described in the preceding sentence, the fees, costs and expenses of such legal
counsel shall be borne exclusively by the Indemnified Party. Except
as provided above, the Indemnifying Party shall not, in connection with any
Claim in the same jurisdiction, be liable for the fees and expenses of more than
one firm of counsel for the Indemnified Party (together with appropriate local
counsel). The Indemnified Party shall not, without the prior written
consent of the Indemnifying Party (which consent shall not unreasonably be
withheld), settle or compromise any Claim or consent to the entry of any
judgment that does not include an unconditional release of the Indemnifying
Party from all liabilities with respect to such Claim or judgment or contain any
admission of wrongdoing.
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(d) Contribution. If
the indemnification provided for in this Section 8.5 is unavailable to, or
insufficient to hold harmless, an Indemnified Party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to
herein, then each Indemnifying Party shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Indemnifying Party and the Indemnified
Party in connection with the statements or omissions or alleged statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such Indemnifying Party or by such Indemnified Party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would
not be just and equitable if contribution pursuant to this Section 8.5(d)
were determined by pro rata allocation (even if the Sellers or any underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in this Section 8.5(d). The amount paid or payable by an
Indemnified Party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or
claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) Limitation on
_________________’s and Underwriters’
Obligations. Notwithstanding any other provision of this
Section 8.5, in no event shall (i) _________________ have any
liability under this Section 8.5 for any amounts in excess of the dollar
amount of the proceeds actually received by _________________ from the sale of
Registrable Securities (after deducting any fees, discounts and commissions
applicable thereto) and (ii) any underwriter be required to undertake
liability to any person hereunder for any amounts in excess of the aggregate
discount, commission or other compensation payable to such underwriter with
respect to the Registrable Securities underwritten by it and distributed
pursuant to the registration statement.
(f) Other
Liabilities. The obligations of ThermoEnergy under this
Section 8.5 shall be in addition to any liability which ThermoEnergy may
otherwise have to any Indemnified Person and the obligations of any Indemnified
Person under this Section 8.5 shall be in addition to any liability which
such Indemnified Person may otherwise have to ThermoEnergy. The
remedies provided in this Section 8 are not exclusive and shall not limit
any rights or remedies which may otherwise be available to an indemnified party
at law or in equity.
8.6 Floating of Shares Outside
of the United States. In
the event that ThermoEnergy proposes to issue and/or sell (including for this
purpose, a sale effected by ThermoEnergy for stockholders other than
_________________) any shares of Common Stock to the public under the laws of
any sovereign jurisdiction outside of the United States, then the provisions of
this Section 8 shall apply to such issuance and/or sale of shares so as to
give _________________ as nearly as practicable the same rights and benefits as
they would have had had ThermoEnergy proposed to register shares of Common Stock
under the Securities Act pursuant to Section 8.1(a) above; provided,
however, that ThermoEnergy shall not be required to include in any such issuance
and/or sale any Registrable Securities for the benefit of _________________ if,
and to the extent that, the laws of any jurisdiction in which such offering is
to made, or the rules of any exchange or trading system through which such
offering is to be effected, prohibit the inclusion of shares to be offered by
any person or entity other than the issuer.
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9. Optional Conversion of
Amended Note. All
or any portion of the outstanding principal and accrued interest on the Amended
Note may be converted at any time at the option of _________________ into shares
of Series B Preferred Stock at a price of $2.40 per share as provided in the
Amended Note and, as an inducement to _________________ to effect such a
conversion, ThermoEnergy will issue to _________________, at the time of such
conversion, a five-year Common Stock Purchase Warrant (in substantially the same
form as the $0.30 Warrant) for the purchase, at an exercise price of $0.30 per
share, of that number of shares of Common Stock determined by dividing (i) 200%
of the amount of principal and interest on the Amended Note so converted by (ii)
$0.30.
10. Mandatory Conversion of
Amended Note.
10.1 Conversion upon Additional
Payments. In
the event, on or before the date that is six months after the date of this
Agreement, ThermoEnergy makes any payments of principal or accrued interest on
the Amended Note, then simultaneously with the making of such payment a portion
of the principal and accrued and unpaid interest on the Amended Note in an
amount equal to the amount of such payment by ThermoEnergy shall automatically
convert into shares of Series B Preferred Stock at a price of $2.40 per
share. Upon such conversion ThermoEnergy will issue to
_________________ a five-year Common Stock Purchase Warrant (in substantially
the same form as the $0.30 Warrant) for the purchase, at an exercise price of
$0.30 per share, of that number of shares of Common Stock determined by dividing
(i) 200% of the amount of principal and interest on the Amended Note so
converted by (ii) $0.30.
10.2 Market-Triggered
Conversion. If
at any time (i) the closing price of the Common Stock on any trading day on the
principal trading market on which the Common Stock is listed or traded, or if
the Common Stock is not listed on a trading market, in the over-the-counter
market, as reported by the OTC Bulletin Board, or if the Common Stock is not
then listed on a trading market or quoted on the OTC Bulletin Board, as reported
by the National Quotation Bureau Incorporated (or any similar organization or
agency succeeding to its functions of reporting prices) equals or exceeds $0.72
per share for twenty (20) consecutive trading days and (ii) the daily
average trading volume of the Common Stock exceeds 30,000 shares for twenty (20)
consecutive trading days, then upon notice from ThermoEnergy to
_________________, the entire principal amount of the Amended Note then
remaining outstanding, plus all accrued and unpaid interest thereon, shall
automatically convert into shares of Series B Preferred Stock at a price of
$2.40 per share. Upon such conversion ThermoEnergy will issue to
_________________ a five-year Common Stock Purchase Warrant (in substantially
the same form as the $0.30 Warrant) for the purchase, at an exercise price of
$0.30 per share, of that number of shares of Common Stock determined by dividing
(i) 200% of the amount of principal and interest on the Amended Note so
converted by (ii) $0.30.
11. General
Provisions.
11.1 Governing Law and
Jurisdiction. This
Agreement and any claims or disputes arising hereunder shall be governed by,
construed and enforced in accordance with the internal laws of the Commonwealth
of Massachusetts, without application of principles of conflicts of
law. The parties agree that any dispute pursuant to this Agreement
shall be adjudicated in the federal and state courts located in Suffolk County,
Massachusetts.
11.2 Entire
Agreement. This
Agreement, the Pledge Agreement, the New Forbearance Letter, the Warrants and
the Amended Note contain the entire agreement of the parties hereto with respect
to the subject matter of this Agreement, and supersede all prior negotiations,
commitments, agreements and understandings between them with respect
hereto.
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11.3 Successors and
Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
11.4 Counterparts. This
Agreement may be executed in any number of counterparts (each of which shall be
deemed an original but all of which, taken together, shall constitute a single
agreement) and may be effected by facsimile or electronic
signature.
In
witness whereof, ThermoEnergy and _________________ have executed this Agreement
as of the date first above written.
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ThermoEnergy
Corporation
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[Noteholder’s
Signature]
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By:
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▇▇▇▇
▇. ▇▇▇▇▇▇▇, President and CEO
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