EXHIBIT 00.0
XXXXXXXX XXXXXX VENTURES
June 26, 2003
Xx. Xxxxxx X. Xxxxxx
Chief Executive Officer
ThermoEnergy Corporation
1300 Tower building
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Dear Xxxxxx:
As we discussed, we are pleased to provide you with a proposed Engagement
Agreement (the "Agreement') between ThermoEnergy Corporation (the "Company")
and Prospect Street Ventures ("PSV").
In consideration of the mutual promises set forth herein and for other
good and valuable consideration, the sufficiency of which is hereby
acknowledged by the parties, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. This Agreement confirms that the Company and its affiliates,
successors and assigns has engaged PSV as the Company's financial
advisor on an exclusive basis in connection with a possible
Transaction (as hereinafter defined) involving the Company and one or
more investors or partners. "Transaction" means (a) a financing is
consummated and either equity or debt or a combination thereof are
issued by the Company, (b) a merger, consolidation, sale or purchase
of stock or assets, business combination or other transaction
involving the Company is consummated, or (c) a corporate partnering,
distribution, licensing or similar arrangement (a "Partnering
Arrangement") is consummated in which equity contributions or other
financial considerations are received by the Company, such as services
or products, or deposits or contracts for future services or product
shipments, excluding those projects designated as "pilot" or
"demonstration" where 100% of all third party money is used
exclusively for equipment and operations, and none of the
participating parties, including the company, receive any
compensation. PSV understands that the Company's immediate goal is to
obtain at least $250,000 of financing as soon as practicable, and PSV
agrees to use reasonable efforts to obtain such financing on terms
acceptable to the Company or on any other terms.
2. The Company agrees to make available to PSV copies of legal documents,
reports, studies and information relating to the Company as may
reasonably be required by PSV (the "Documents"). Except as permitted
by the Company, PSV will keep the Documents confidential and will not
use the Documents for any purpose other than fulfilling its
obligations hereunder. PSV may provide prospective qualified investors
("Prospective Investors") with those Documents that PSV deems
appropriate. In performing services
-------------------------------------------------------------------------------
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000 -
Tel. 000-000-0000 - Fax 000-000-0000 - xxx.xxxxxxxxxxxxxx.xxx
for the Company, PSV shall be relying upon the completeness of
financial statements and other information furnished by the Company.
PSV will rely solely upon such information supplied by the Company and
its representatives without assuming any responsibility for
independent investigation or verification thereof, or for any
misstatements or omissions therein.
3. PSV shall use reasonable efforts, acting as an advisor and consultant
to the Company but not in the capacity of a broker or dealer in
securities, to identify and introduce sources of capital to provide
financing. The Company will refer all prospective investors, partners
and inquiries related thereto to PSV. It is understood and agreed by
PSV that the Company shall have the sole right to approve or reject
the terms of a Transaction proposed by any investors or partners. The
Company agrees to inform PSV in a timely manner of any other
significant financial transactions that are being contemplated by the
Company during the term of this Agreement.
4. The Company agrees to pay PSV as compensation for its services and
reimbursement for its expense the following:
(a) A consulting fee (the "Consulting Fee") payable as follows:
(i) 125,000 shares of ThermoEnergy common stock upon
execution of this Agreement; and
(ii) 37,500 shares of Thermo Energy common stock per
month beginning 60 days after execution hereof, and
remaining in effect for the term of this Agreement.
At the option of PSV, future fees for services rendered under
this Agreement may be paid in Company common stock at a
negotiated discount from the prior days' closing price as of
June 27, 2003 (the "Designated Price"), but under no
circumstances would the discounted price be more than 33-1/3%
of the Designated price; provided that the Company agrees, at
the option of the holder of such Company stock, to redeem
such stock for cash at the Designated Price as soon as the
Company has working capital exceeding $200,000 as defined by
GAAP. PSV shall have the option to receive all payments under
this agreement in Company common stock, Convertible Preferred
Stock or Convertible Debentures, as selected by PSV, at the
Designated Price (or convertible thereat) with the
aforementioned redemption option, all as described in this
paragraph.
(b) In addition, a fee equal to 10% of the Gross Proceeds of a
Transaction, including amounts raised from investors not
introduced by PSV (a "Transaction Fee"), will be due and
payable, by wire transfer in immediately available funds, at
each closing of any Transaction occurring during the term
hereof.
(c) In addition, reimbursement for all expenses (other than
travel, meals and entertainment), including copying,
telephone, fax and word processing charges incurred on the
Company's behalf at the flat rate of $200 per month, payable
within 30 days of receipt of invoice (whether or not a
Transaction occurs). Preapproved legal, accounting,
consulting, travel, meals, accommodations, and entertainment,
if any, will be separately invoiced.
(d) In addition, the Company will cause to be issued to PSV, at
no cost to PSV, at the first closing of the initial
Transaction, Company convertible debentures in the Company's
standard form convertible in to a minimum of 10% of the fully
diluted equity of the Company, immediately after such closing
(increasing to 25% if PSV arranges a Transaction that values
the Company (value determined by price per shares x fully
diluted shares) at $40 million or more, increasing pro rata
from 10% to 25% for valuations between $20 million and $40
million).
(e) In addition, in the event of a Transaction involving a
Partnering Arrangement (excluding Partnering Arrangements
notified in writing by the Company to PSV at or prior to
execution hereof where PSV has not facilitated or assisted
same) either at the time of closing of a Transaction or over
a period of time, compensation equal to (i) 10% of the stock
of any joint venture or partnership and (ii) 10% of any lump
sum or advance payment and 10% of payments received or the
value of services or products provided (a "Partnering Fee").
PSV shall receive Company convertible debentures in the form
and amount described in Paragraph 4(d) above if PSV
introduces or assists in aggregate Partnering Arrangement
value equal to or exceeding $10 million (but the aggregate
amount of Company convertible debentures received pursuant to
this sentence and paragraph 4(d) above cannot exceed the
maximum set forth in Paragraph 4(d)).
(f) In addition, PSV shall receive a sales commission of 10% of
the gross sales of any direct or indirect sales of Company
products or services introduced, facilitated or assisted by
PSV (a "Sales Fee"). Changes in the commission rate can be
effected with the agreement of the Company and PSV. PSV shall
receive Company convertible debentures in the form and amount
described in Paragraph 4(d) above if PSV introduces or
assists in cumulative sales equal to or exceeding $10 million
(but the aggregate amount of Company convertible debentures
received pursuant to this sentence and paragraph 4(d) above
cannot exceed the maximum set forth in Paragraph 4(d).)
(g) "Gross Proceeds" means, without duplication, the value of
cash and securities and any other forms of payment or
consideration received directly or indirectly, by the
Company, its affiliates or shareholders pursuant to a
Transaction, including without limitation the assumption of
debt and other obligations. Xxxx Proceeds expressly include
(i) the value of all options or warrants purchased or assumed
in connection with a Transaction, (ii) in the event of a
change of control, the total enterprise value of the Company,
including the face amount of Company debt and other
obligations, and (iii) all consideration received by
officers, directors, interest holders, employees and
affiliates in connection with a Transaction.
(h) PSV shall have the right, anytime during the two year period
following each Transaction, on behalf of PSV or any PSV fund,
to invest up to $2 million on the same terms as the investors
in such Transaction.
(i) The Company will provide PSV an annual certificate confirming
compliance with this Agreement.
5. In the event that the fees and reimbursements set forth in Paragraph 4
are not paid within 30 days of the date due, the Company shall pay, in
addition to such amounts, interest at the rate of 1.5% per month (or
such lesser maximum amount then permitted by law) and the costs and
disbursements of any action taken to collect such amounts, including
reasonable attorneys' fees.
6. This Agreement shall constitute an exclusive contract between the
Company and PSV for a period ending one year after the date hereof,
after which the Agreement may be terminated by either PSV or the
Company upon ten (10) days' prior written notice (the "Termination
Date"), provided that the provisions of paragraphs 4 through 15 shall
survive any such termination.
7. If the Company (or any direct or indirect subsidiary of the Company)
enters into an agreement with any investor or partner introduced or
assisted by PSV, directly or indirectly, or any other party introduced
or assisted by such investor or partner, within a period of two (2)
years from the Termination Date of this Agreement, then the Company
shall pay to PSV the compensation set forth in Paragraph 4.
8. If the Company (or its assets) is merged or sold during the term
hereof, or the Company purchases stock or assets, PSV shall advise the
Company in connection therewith and the compensation set forth in
Paragraph 4 shall apply to the Gross Proceeds of the sale price or
merger consideration, including the amount of any obligations assumed.
IF the Company shall renegotiate or restructure its obligations, PSV
shall advise in connection therewith and the compensation set forth in
Paragraph 4 shall apply to the face amount of the obligations
renegotiated or restructured (except that PSV agrees to advise in the
restructuring of currently outstanding Company debentures not to
exceed $7 million for a flat fee of 125,000 shares of ThermoEnergy
common stock, payable at execution hereof.
9. The Company agrees that PSV has the right at its own expense to
purchase advertisements describing its services to the Company
hereunder.
10. The Company expressly acknowledges that all opinions and advice
(written or oral) given by PSV to the Company in connection with PSV's
engagement are intended solely for the benefit and use of the Company
in considering the Transaction to which they relate and the Company
agrees that no such opinion or advise shall be used for any other
purpose or reproduced, disseminated, quoted or referred to at any
time, in any manner or for any purpose, nor shall any public
references to PSV be made by the Company (or such persons), without
the prior written consent of PSV, which consent shall not be
unreasonably withhold, excluding disclosure requirements under the
1934 Securities Act, as amended, and/or by SEC disclosure regulations.
The Company and PSV agree to keep the terms of this Agreement
confidential. The Company expressly acknowledges that PSV has been
retained solely as an advisor to the Company, and not as an advisor to
or agent of any other person, and that the Company's engagement of PSV
is not intended to confer rights or obligations upon any persons not a
party hereto (including shareholders, employees, officers or creditors
of the Company or PSV) as against PSV, PSV's affiliates or their
respective directors, officers, agents and employees). The Company is
a sophisticated business enterprise that has retained PSV for the
limited purposes set forth in this Agreement, and the parties
acknowledge and agree that their respective rights and obligations are
contractual in nature. Each party disclaims in intention to impose
fiduciary obligations on the other by virtue of the engagement
contemplated by this Agreement.
11. This Agreement does not constitute an express or implied commitment or
undertaking on the part of PSV to provide financing and does not
ensure the successful arrangement or completion of any Transaction or
any portion thereof. This Agreement does not create, and shall not be
construed as creating rights or obligations enforceable by or against
any person or entity not a party hereto. The Company acknowledges and
agrees that PSV: (a) is being retained to assist the Company in its
efforts to consummate a Transaction; (b) is not being retained to
advise the Company as to the underlying business decision to effect a
Transaction; and (c) is acting as an independent contractor and is not
and shall not be construed as a fiduciary of the Company.
13. The Company shall indemnify and hold harmless PSV, and each of its
officers, directors, agents, independent contractors, employees and
affiliates from and against any and all liabilities, losses, claims
and demands, including legal fees incurred in connection with
defending, investigating or appearing as a witness (in addition to
witness fees at PSV's standard rate), arising from or relating to this
engagement or any Transaction, except to the extent any such
liability, loss, claim or demand was caused by the bad faith and
willful misconduct of PSV. The company also agrees that PSV shall not
have any liability(including without limitation, liability for any
losses, claims, damages, obligations, penalties, judgments, awards,
liabilities, costs, expenses or disbursements) in contract, tort or
otherwise to the Company, or to any person claiming through the
Company, in connection with the engagement of PSV pursuant to this
Agreement and the matters contemplated hereby, except to the extent
any such liability is found in a final judgment by a court of
competent jurisdiction (not subject to further appeal) to have
resulted primarily and directly from the bad faith and willful
misconduct of PSV.
14. This Agreement shall be governed and construed in accordance with the
laws of the State of New York, without regard to the conflict of laws
principles thereof. The parties hereto consent to the jurisdiction of
the courts of the State of New York with regard to any dispute arising
from this Agreement. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of
which, together, shall constitute one and the same original
instrument. Facsimile execution and delivery of this Agreement is
legal, valid and binding for all purposes.
15. In the event that any part of this Agreement shall be determined to be
void or unenforceable, the remaining parts shall continue to be
construed separately and apart from such void or unenforceable parts.
16. This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof, and supersedes all prior
agreements and understandings. This Agreement may only be modified and
amended in writing, signed on behalf of each party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
PROSPECT STREET VENTURES THERMOENERGY CORPORATION
By: \s\ Xxxx Xxxxx By: \s\ Xxxxxx X. Xxxxxx
------------------------------- ------------------------------------
Xxxx Xxxxx, Managing Partner Xxxxxx X. Xxxxxx, CEO
