Bridge Loan Agreement
ThermoEnergy Corporation
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
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/ Xxxx X. Xxxxxxx | |
| Xxxx X. Xxxxxxx, President and CEO | ||
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ThermoEnergy Corporation
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
Schedule I
| Investor | Bridge Loan | |||
| Xxxxxx X. Xxxxx | $ | 750,000 | ||
| Empire Capital Partners, L.P. | 255,500 | |||
| Empire Capital Partners, Ltd. | 130,000 | |||
| Empire Capital Partners Enhanced Master Fund Ltd. | 114,500 | |||
