Exhibit 4.1
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Principal
Amount: $_________________
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Issue Date: September
28, 2009
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8% SECURED CONVERTIBLE
PROMISSORY NOTE
FOR VALUE
RECEIVED, ThermoEnergy Corporation, a Delaware corporation (the
“Borrower”), hereby promise to pay to the order of
_________________ (the “Holder”), the sum of
_________________ Dollars ($_________________) 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.
2
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
