8% SECURED CONVERTIBLE PROMISSORY NOTE
Exhibit
4.1
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Principal
Amount: $_________________
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Issue
Date: September 28,
2009
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FOR VALUE RECEIVED, ThermoEnergy
Corporation, a Delaware corporation (the “Borrower”), hereby promise to pay to
the order of _________________
(the “Holder”), the sum of _________________
Dollars ($_________________)
on the earlier to occur of (i) the closing of the Second Tranche of the Series B
Convertible Preferred Stock financing contemplated by that certain Term Sheet
dated September 16, 2009 and executed by the Holder and certain other investors
(the “Financing”) or (ii) December 31, 2010 (in either case, the “Maturity
Date”). Upon the closing of the Second Tranche of the Financing, the
entire outstanding principal amount of this Note, plus any accrued and unpaid
interest thereon, shall convert automatically into the securities to be issued
in the Financing (the “Financing Securities”) at the price per share at which
such Financing Securities will be issued in the Financing.
Interest
on the outstanding principal balance shall accrue at the rate of eight percent
(8.0%) per annum, and shall be due and payable on the Maturity
Date. Interest shall be computed on the basis of a 365-day year,
using the number of days actually elapsed.
This Note
is one of six substantially identical promissory notes in the aggregate
principal amount of $1,680,000 issued by the Borrower on or about the date
hereof and identified on Exhibit A hereto under the heading “New Notes” (which
promissory notes, together with those certain amended and restated promissory
notes in the original aggregate principal amount of $4,000,000 issued by the
Borrower on or about the date hereof and identified on Exhibit A hereto under
the heading “Restated Notes”, are referred to herein as the “Series
Notes”).
The
Holder shall have the right at any time and from time to time until the
principal and interest on this Note shall have been paid in full, to convert the
outstanding principal amount of this Note, and any accrued and unpaid interest
thereon, into shares of the Common Stock, par value $0.001 per share, of the
Borrower at a price of $0.24 per share. If the Holder desires to
exercise its right of conversion, the Holder shall give the Borrower a written
notice, setting forth the amount of principal and interest which the Holder
desires to convert. Should the Holder elect to convert less than the
entire amount of the principal balance and accrued and unpaid interest under
this Note, the amount being converted shall be credited first against accrued
and unpaid interest and the balance, if any, shall be credited against
principal. Except to the extent that the entire unpaid principal
balance of this Note is being presented for conversion, the Holder shall not be
required to present this Note in order to effect conversion, and the Holder
shall maintain a ledger setting forth each conversion of principal and interest
on this Note and such ledger shall, absent manifest error, be deemed to be
binding and conclusive on the Borrower.
The
Borrower and the holders of the Series Notes (including the Holder) have,
contemporaneously herewith, entered into a Security Agreement (the “Security
Agreement”) securing the obligations of the Borrower to the Holder and the other
holders of the Series Notes under such Series Notes, and so long as this Note is
outstanding the Holder shall be entitled to the benefit of, and subject to the
provisions of, the Security Agreement.
This Note
may not be prepaid, in whole or in part, without the prior written consent of
the Holder. Partial prepayments, if any, shall be applied first to
accrued and unpaid interest, and the balance to principal.
Subject
to the provisions of the Security Agreement, the entire unpaid principal amount
of this Note, together with interest thereon shall, on written notice from the
Holder, forthwith become and be due and payable if any one or more Events of
Default shall have occurred (for any reason whatsoever and whether such
happening shall be voluntary or involuntary or be affected or come about by
operation of law pursuant to or in compliance with any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body) and be continuing.
The
occurrence of any one or more of the following events or conditions shall
constitute an “Event of Default” under this Note:
(i) The
Borrower’s failure to make any payment of principal or interest or any other
sums within fifteen (15) days of the date when due under this Note;
or
(ii) Any
representation or warranty or other statement made by the Borrower in the
Security Agreement proves to have been false or misleading in any material
respect when made or furnished; or
(iii) Breach
of or failure in the due observance or performance in any material respect of
any covenant, condition or agreement on the part of the Borrower to be observed
or performed pursuant to this Note and the failure to cure (if curable) any such
breach or failure within fifteen (15) days after receipt of written notice
thereof from the Holder; or
(iv) If
the Borrower shall (a) apply for or consent to the appointment of a receiver,
trustee or liquidator of all or a substantial part of any of its assets; (b) be
unable, or admit in writing its inability, to pay its debts as they mature; (c)
file or permit the filing of any petition, case arrangement, reorganization, or
the like under any insolvency or bankruptcy law, or the adjudication of it as a
bankrupt, or the making of an assignment for the benefit of creditors or the
consenting to any form or arrangement for the satisfaction, settlement or delay
of debt or the appointment of a receiver for all or any part of its properties;
or (d) any action shall be taken by the Borrower for the purpose of effecting
any of the foregoing; or
(v) If
an order, judgment or decree shall be entered, or a case shall be commenced,
against the Borrower, without its application, approval or consent by any court
of competent jurisdiction, approving a petition or permitting the commencement
of a case seeking reorganization or liquidation of the Borrower or appointing a
receiver, trustee or liquidator of the Borrower, or of all or a substantial part
of the assets of the Borrower, and the Borrower, by any act, indicate its
approval thereof, consent thereto, or acquiescence therein, or such order,
judgment, decree or case shall continue unstayed and in effect for any period of
ninety (90) consecutive days or an order for relief in connection therewith
shall be entered; or
(vi) If
the Borrower shall dissolve or liquidate, or be dissolved or liquidated, or
cease to legally exist, or merge or consolidate, or be merged or consolidated,
with or into any other corporation.
All
payment obligations arising under this Note are subject to the express condition
that at no time shall the Borrower be obligated or required to pay interest at a
rate which could subject the Holder to either civil or criminal liability as a
result of being in excess of the maximum rate which the Borrower is permitted by
law to contract or agree to pay. If, by the terms of this Note, the
Borrower is at any time required or obligated to pay interest at a rate in
excess of such maximum rate, the applicable rate of interest shall be deemed to
be immediately reduced to such maximum rate, and interest thus payable shall be
computed at such maximum rate, and the portion of all prior interest payments in
excess of such maximum rate shall be applied and shall be deemed to have been
payments in reduction of principal.
No
failure or delay on the part of the Holder in the exercise of any power, right
or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other right, power or
privilege. All rights and remedies existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise
available.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of Delaware, without regard to the
principles of conflicts of law thereof. Each party agrees that any action,
claim, suit, investigation or proceeding (including, without limitation, an
investigation or partial proceeding, such as a deposition), whether commenced or
threatened. (a “Proceeding”) concerning the interpretation, enforcement and of
the transactions contemplated by this Note or the Security Agreement shall be
commenced exclusively in the state or federal courts sitting in, or having
jurisdiction over, Wilmington, Delaware (the “Delaware Courts” ). Each party
hereto hereby irrevocably submits to the exclusive jurisdiction of the Delaware
Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any Proceeding, any claim that
it is not personally subject to the jurisdiction of any such Delaware Court, or
that such Proceeding has been commenced in an improper or inconvenient forum.
Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such Proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby. If either party shall commence a Proceeding to enforce any
provisions of this Note or the Security Agreement, then the prevailing party in
such Proceeding shall be reimbursed by the other party for its reasonable
attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such Proceeding.
THE
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO A
TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS NOTE. THIS WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR THE HOLDER TO ACCEPT THIS NOTE.
All
notices, requests or other communications required or permitted to be given
under this Agreement to any party shall be in writing and shall be deemed to
have been sufficiently given when delivered by personal service or sent by
registered mail, by overnight courier service with evidence of delivery or
attempted delivery, or by facsimile, e-mail or other means of electronic
transmission (provided such transmission generates evidence of delivery), to the
Borrower or to the Holder at their respective principal places of
business. Either party may, by like notice, change the address to
whom notice is to be given.
This Note
may be amended or supplemented, or any provision hereof waived, only by the
written agreement of the Holder and the Borrower.
This Note
shall be binding upon the Borrower and its successors and assigns, and shall
inure to the benefit of the Holder and its successors and
assigns. The Borrower may not assign any of its obligations under
this Note without the consent of the Holder.
If
default is made in the payment of this Note, the Borrower shall pay the Holder
hereof reasonable costs of collection, including reasonable attorneys’ fees,
regardless of whether the Holder commenced litigation in order to enforce its
rights under this Note.
IN WITNESS WHEREOF, the
Borrower has caused this Note to be executed and delivered by its duly
authorized Chairman and Chief Executive Officer as of the date and year first
above written.
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ThermoEnergy
Corporation
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By:
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Xxxxxx
X. Xxxxxx
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Chairman
and Chief Executive
Officer
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Exhibit
A
New
Notes
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Note
Holder
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Principal
Amount
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|||
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Empire
Capital Partners, LP
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$ | 133,333 | ||
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Empire
Capital Partners, Ltd
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$ | 133,333 | ||
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Empire
Capital Partners Enhanced Master Fund, Ltd
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$ | 133,333 | ||
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Xxxxxx
X. Xxxxx
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$ | 1,000,000 | ||
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The
Quercus Trust
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$ | 250,000 | ||
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The
Quercus Trust
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$ | 30,000 | ||
Restated
Notes
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Note
Holder
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Date
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Principal
Amount
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||||
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Empire
Capital Partners, LP
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April
24, 2009
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$ | 100,000 | |||
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Empire
Capital Partners, Ltd
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April
24, 2009
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$ | 100,000 | |||
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Empire
Capital Partners Enhanced Master Fund, Ltd
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April
24, 2009
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$ | 100,000 | |||
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Xxxxx
X. Xxxx
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April
24, 2009
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$ | 100,000 | |||
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Xxxxx
X. Xxxxxxxx
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April
24, 2009
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$ | 100,000 | |||
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Xxxxxx
X. Xxxxx
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December
19, 2008
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$ | 500,000 | |||
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Focus
Fund, L.P.
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July
31, 2009
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$ | 600,000 | |||
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The
Quercus Trust
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June
25, 2009
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$ | 150,000 | |||
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The
Quercus Trust
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February
11, 2009
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$ | 250,000 | |||
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The
Quercus Trust
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September
15, 2008
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$ | 2,000,000 | |||
