UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
SCHEDULE
14A
(RULE
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by
the registrant
x
Filed by
a Party other than the registrant
¨
Check the
appropriate box:
x
Preliminary proxy statement.
¨
Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2)).
¨
Definitive proxy statement.
¨
Definitive additional materials.
¨
Soliciting material pursuant to § 240.14a-11(c) of
§ 240.14a-12.
THERMOENERGY
CORPORATION
(Name of Registrant as
Specified in its Charter)
_______________________________________________________________
(Name of
Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment
of filing fee (check the appropriate box):
x
No fee
required.
¨
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title
of each class of securities to which transaction
applies:______________________
(2)
Aggregate number of securities to which transaction
applies:______________________
(3) Per
unit price of other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined): ____________
(4)
Proposed maximum aggregate value of
transaction:______________________
(5) Total
fee paid:__________________________________________________
¨
Fee
paid previously with preliminary materials.
¨
Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its
filing.
(1) Amount
Previously Paid: __________
(2) Form,
Schedule or Registration Statement No.: __________
(3) Filing
Party: __________
(4) Date
Filed: __________
NOTICE
OF SPECIAL MEETING
IN
LIEU OF THE 2009 ANNUAL MEETING OF SHAREHOLDERS
Notice is
hereby given that the Annual Meeting of Shareholders of ThermoEnergy Corporation
(“ThermoEnergy”), will be held Tuesday, December 15, 2009 at 10:00 a.m., local
time, at the Millenium Broadway Hotel, 145 West 44
th
Street,
New York, New York, for these purposes:
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1.
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To
consider and act upon a proposal to amend ThermoEnergy’s Certificate of
Incorporation to increase to 300,000,000 the number of shares of Common
Stock, par value $0.001 per share, which we are authorized to
issue;
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2.
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To
elect three directors to serve on ThermoEnergy’s Board of Directors, to
serve until the 2010 Annual Meeting of Shareholders and until their
respective successors are duly elected and
qualified;
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3.
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To
ratify the appointment of Kemp & Company ThermoEnergy’s independent
registered public accounting firm for the fiscal year ending
December 31, 2009; and
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4.
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To
consider and act upon such other business as may be properly presented to
the meeting or any postponement or adjournment
thereof.
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The
foregoing items of business are more fully described in the Proxy Statement
accompanying this notice. The Board of Directors has fixed the close
of business on November 6, 2009, as the record date for the determination of the
shareholders entitled to notice of, and to vote at, the meeting or any
postponement or adjournment.
A Proxy
Card, ThermoEnergy’s Proxy Statement and its Annual Report on Form 10-K for
the fiscal year ended December 31, 2008, are enclosed with this Notice of
Special Meeting in lieu of the 2009 Annual Meeting of
Shareholders. ThermoEnergy’s Board of Directors recommends that you
vote
FOR
approval of the
amendment to our Certificate of Incorporation,
FOR
election of the nominees
for director named in the Proxy Statement and
FOR
ratification of the
appointment of Kemp & Company as independent public accountants for the
fiscal year ending December 31, 2009.
All
shareholders are cordially invited to attend the meeting in
person. However, to assure your representation at the meeting, you
are urged to mark, sign, date and return the enclosed Proxy Card as promptly as
possible in the postage prepaid envelope provided for that
purpose. Any shareholder attending the meeting may vote in person
even if he or she returned a proxy.
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By
order of the Board of Directors,
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/s/ Dennis C.
Cossey
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Dennis
C. Cossey, Chairman and Chief Executive
Officer
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November
23, 2009
Little
Rock, Arkansas
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING IN
LIEU OF THE 2009 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 15,
2009:
This
Proxy Statement and the accompanying Annual Report are available via the
Internet at:
http://thermoenergy.ir.stockpr.com/
Table of
Contents
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Questions and Answers about Voting and the Special
Meeting
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1
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Proposal
I – Amendment of the Certificate of Incorporation to Increase the Number
of Authorized shares of Common Stock to 300,000,00 Shares
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4
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Proposal
II – Election of Directors
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6
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Nominees
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7
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Directors
who are not Nominees for Election at the Special Meeting
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7
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Committees
of the Board of Directors
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7
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Shareholder
Communications
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9
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Code
of Ethics
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9
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Board
Determination of Independence
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9
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Attendance
at Annual Meeting and at Board and Committee Meetings
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9
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Compensation
of the Board
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9
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Security
Ownership by Certain Beneficial Owners, Directors and Executive
Officers
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10
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Section
16(a) Beneficial Ownership Reporting Compliance
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13
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Executive
Officers
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13
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Executive
Compensation
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14
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Summary
Compensation Table
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14
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Outstanding
Equity Awards at December 31, 2008
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15
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Equity
Compensation Plan Information
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16
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Employment
Contracts and Agreements
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16
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Certain
Relationships and Related Transactions
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18
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Audit
Committee Report
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18
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Proposal
III – Ratification of Appointment of Independent Registered Public
Accounting Firm
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20
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Other
Matters
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21
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Information Incorporated by Reference to Annual Report of Form
10-K
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21
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Proposed
Certificate of Amendment to the Certificate of
Incorporation
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Annex
A
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THERMOENERGY
CORPORATION
124 W.
Capitol Avenue, Suite 880
Little
Rock, Arkansas 72201
Telephone
501.376.6477
Facsimile
501.375.5249
November
23, 2009
PROXY
STATEMENT
QUESTIONS
AND ANSWERS ABOUT VOTING AND THE SPECIAL MEETING IN LIEU OF THE 2009 ANNUAL
MEETING
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Q:
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Why
did I receive this proxy
statement?
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A:
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The
Board of Directors of ThermoEnergy Corporation is soliciting
your proxy to vote at the Special Meeting of Shareholders because you were
a shareholder of ThermoEnergy as of the close of business on November 6,
2009, the record date, and are therefore entitled to vote at the
meeting. On the record date, there were no shares of Series B
Convertible Preferred Stock outstanding, and, consequently, the holders of
Series B Convertible Preferred Stock are not entitled to vote at the
Special Meeting of Shareholders.
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This
Proxy Statement and Proxy Card, along with the Annual Report on Form 10-K
for the fiscal year ended December 31, 2008, are being mailed to shareholders as
of the record date beginning on or about November 23, 2008. The Proxy
Statement summarizes the information you need to know to vote at the
meeting. You do not need to attend the meeting to vote your
shares.
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A:
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● Approval
of an amendment to the Certificate of Incorporation, which was adopted by
the Board of Directors on November 13,
2009.
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● Election
of three directors: Dennis C. Cossey, J. Winder Hughes III and Arthur
S. Reynolds, each of whom is an incumbent director, have been nominated to serve
until the 2010 Annual Meeting of Shareholders, or until their respective
successors are elected or appointed.
● Ratification
of the appointment of Kemp & Company ThermoEnergy’s independent registered
public accounting firm for the fiscal year ending December 31,
2009.
The Board
of Directors recommends a vote
FOR
approval of the amendment
to our Certificate of Incorporation,
FOR
election of the nominees
to the Board of Directors, and
FOR
ratification of the
appointment of Kemp & Company as ThermoEnergy’s independent registered
public accounting firm for the fiscal year ending December 31,
2009.
Q: What
is the voting requirement to approve the Amendment of the Certificate of
Incorporation? What is the voting requirement to elect the
directors. What is the voting requirement to ratify the appointment
of Kemp & Company as independent public accountants?
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A:
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The
proposal to amend the Certificate of Incorporation requires (i) the
affirmative vote of a majority of the outstanding shares of Common Stock
and Series A Convertible Preferred Stock (considered together as a single
class)
plus
(ii)
the affirmative vote of a majority of the outstanding shares of Common
Stock (considered separately). For the election of directors,
the nominees must receive the affirmative vote of a plurality of the votes
cast. The proposal to ratify the appointment of Kemp &
Company as independent public accountants requires the affirmative vote of
a majority of the votes cast. The voting requirements given in
this answer assume that a quorum is
present.
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Q: How
many votes do I have?
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A:
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You
are entitled to one vote for each share of ThermoEnergy’s Common Stock or
Series A Convertible Preferred Stock that you
hold. Shareholders do not have cumulative voting
rights.
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A:
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You
may vote using any of the following
methods:
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(1)
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Complete,
sign and date the Proxy Card you receive and return it in the prepaid
envelope; or
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(2)
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Attend
the Special Meeting of Shareholders to vote in
person.
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If you
return your signed Proxy Card but do not indicate your voting preferences, the
persons named in the Proxy Card will vote
FOR
approval of the amendment
to our Certificate of Incorporation,
FOR
the
election of the nominees
for director, and
FOR
ratification of Kemp & Company as independent public accountants for
2009.
Q: What
can I do if I change my mind after I vote my shares?
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A:
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You
may revoke your proxy at any time before it is voted at the Special
Meeting of Shareholders by:
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(1)
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Sending
written notice of revocation to the Secretary of
ThermoEnergy;
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(2)
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Submitting
a new paper ballot, after the date of the revoked proxy;
or
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(3)
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Attending
the Special Meeting of Shareholders and voting in
person.
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You may
also be represented by another person at the meeting by executing a proper proxy
designating that person.
Q: What
constitutes a quorum?
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A:
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As
of the record date, 53,358,090 shares of Common Stock and 208,334 shares
of Series A Convertible Preferred Stock were
outstanding. Except as otherwise required by law or the
Certificate of Incorporation, the holders of the Common Stock and the
holders of the Series A Convertible Preferred Stock vote together as a
single class, with each share of Common Stock and each share of Series A
Convertible Preferred Stock entitling the holder thereof to one
vote. The holders of a majority of the outstanding shares of
Common Stock and Series A Convertible Preferred Stock (or 26,873,212
shares), present in person or represented by proxy, constitute
a quorum for the purpose of the meeting. If you submit a
properly executed proxy, then you will be considered part of the
quorum. If you are present or represented by proxy at the
meeting, you will count toward a
quorum.
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Q: Who
can attend the Annual Meeting of Shareholders?
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A:
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All
shareholders as of the record date may attend the Special Meeting of
Shareholders.
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Q: Are
there any shareholders that own more than 5% of ThermoEnergy’s outstanding
Common Stock?
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A:
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As
of November 6, 2009, David Gelbaum, Dennis C. Cossey, J. Winder Hughes
III, Elise C. Roenigk, the Estate of P.L. Montesi, Security Management
LLC, The Quercus Trust, Robert S. Trump, The Focus Fund,
Empire Capital Management
and Kevin B. Kimberlin each beneficially owned more than 5% of
ThermoEnergy’s outstanding Common
Stock.
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Q: When
are the shareholder proposals due for the 2010 Annual Meeting of
Shareholders?
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A:
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In
order to be considered for inclusion in next year’s proxy statement,
shareholder proposals must be submitted in writing by December 31,
2009, to Dennis Cossey, Chairman and Chief Executive Officer, ThermoEnergy
Corporation, 124 W. Capitol Avenue, Suite 880, Little Rock, Arkansas
72201.
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If you
notify us after March 1, 2010 of an intent to present a proposal at
ThermoEnergy’s 2010 Annual Meeting of Shareholders, we will have the right to
exercise discretionary voting authority with respect to your proposal, if
presented at the meeting, without including information regarding it in our
proxy materials.
Q: What
happens if the nominees for director are unable to serve as
directors?
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A:
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If
a nominee becomes unavailable for election, which we do not expect, votes
will be cast for the substitute nominee or nominees who may be designated
by the Board of Directors.
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Q: Who
will be responsible for soliciting proxies?
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A:
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ThermoEnergy
has neither hired nor paid for assistance in the distribution of proxy
materials and solicitation of votes. Employees, officers and
directors of ThermoEnergy may solicit proxies, but will not be separately
compensated for such solicitation. We will reimburse brokerage
houses and other custodians, nominees and fiduciaries for their reasonable
out-of-pocket expenses for forwarding proxy and solicitation materials to
the owners of Common Stock.
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PROPOSAL
I
AMENDMENT
OF THE CERTIFICATE OF INCORPORATION TO INCREASE
THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
TO
300,000,000 SHARES
Our
Certificate of Incorporation currently authorizes the Company to issue
150,000,000 shares of Common Stock, par value $0.001 per
share. The Board of Directors proposes to amend the Certificate
of Incorporation to authorize 300,000,000 shares of Common Stock. The additional
authorized shares of Common Stock would be a part of the existing class of
Common Stock and, if and when issued, would have the same rights and privileges
as the shares of Common Stock now issued and outstanding.
We
propose to amend the Certificate of Incorporation for the sole purpose of
increasing the number of authorized shares of Common Stock, as set forth in
Annex A. If amended, the first paragraph of Article Fourth of the Company’s
Certificate of Incorporation shall read as follows (the underlined portion
represents the proposed change):
“Fourth
:
The total number
of shares of stock that this Corporation is authorized to issue is
three hundred twenty
million (320,000,000)
shares, of which
three hundred million
(300,000,000)
shares shall be Common Stock, par value $0.001 per share,
and twenty million (20,000,000) shares shall be Preferred Stock, par value $0.01
per share. Of the authorized Preferred Stock, ten million (10,000,000) shares
shall be designated “Series A Convertible Preferred Stock” and shall have the
rights, preferences, powers, qualifications, restrictions and limitations set
forth in Exhibit A hereto, and the remaining ten million (10,000,000) shares
shall be undesignated. Subject to the limitations prescribed by law
and the provisions of this Certificate of Incorporation, the Board of Directors
of this Corporation is authorized to issue the undesignated Preferred Stock from
time to time in one or more series, each of such series to have such voting
powers, full or limited, or no voting powers, and such designations, preferences
and relative, participating, optional or other special rights, and such
qualifications, limitations or restrictions thereof, as shall be determined by
the Board of Directors in a resolution or resolutions providing for the issuance
of such Preferred Stock. Subject to the powers, preferences and
rights of any Preferred Stock, including any series thereof, having any
preference or priority over, or rights superior to, the Common Stock and except
as otherwise provided by law, the holders of the Common Stock shall have and
possess all powers and voting and other rights pertaining to the stock of this
Corporation and each share of Common Stock shall be entitled to one
vote.”
The
proposed amendment to the Company’s Certificate of Incorporation is attached
hereto as Annex A. The Company has no present commitments, agreements, or intent
to issue additional shares of Common Stock, other than with respect to currently
reserved shares issuable upon conversion of outstanding shares of our Preferred
Stock, upon exercise of outstanding stock options or stock options
and other stock purchase rights under our 2008 Incentive Stock Plan, or upon
exercise of outstanding warrants or conversion of outstanding convertible
debt.
The Board
of Directors believes it is desirable to increase the number of shares of Common
Stock to provide the Company with adequate flexibility in the future to be able
to raise capital to fund operations and corporate expansion . Having
additional shares of authorized Common Stock available will enable the Board of
Directors to consider corporate opportunities, such as acquisitions of other
companies or of rights in technologies or the establishment of strategic
relationships, that may arise and would require that we have
sufficient available shares. Except as set forth below, the Company
does not have any specific plans engage in any such transactions or to issue any
shares of Common Stock in connection with any acquisition or strategic
partnership.
We are
proposing this amendment in part to assure that we will have sufficient shares
of Common Stock to meet our obligations upon conversion of all of the shares of
Series B Convertible Preferred Stock and upon exercise of all of the Common
Stock Purchase Warrants that we may issue in the future pursuant to a Securities
Purchase Agreement dated November 16, 2009 (the “Securities Purchase
Agreement”), pursuant to which we issued _________ shares of Series B
Convertible Preferred Stock and (ii) five-year warrants to purchase an aggregate
of ______ shares of our Common Stock at an exercise price of $0.50 per share.
Subject to the satisfaction of certain conditions set forth in the Securities
Purchase Agreement, we have agreed to issue an additional _____ shares of Series
B Convertible Preferred Stock and warrants to purchase an aggregate of _____
additional shares of our Common Stock. If all of the shares of Series
B Convertible Preferred Stock issuable pursuant to the Securities Purchase
Agreement were converted by their terms into shares of Common Stock, and all of
the Common Stock Purchase Warrants issuable pursuant to the Securities Purchase
Agreement were exercised in full, we would be obligated to issue an total of
_____________ shares of Common Stock. The Company does not currently
have enough shares of Common Stock authorized to permit the full exercise of all
issued and outstanding warrants or the full conversion of convertible
instruments currently outstanding and the full exercise of all Common Stock
Purchase Warrants and conversion of all shares of Series B Convertible Preferred
Stock which we may be required to issue in the future.
The
proposed amendment to our Certificate of Incorporation would permit the issuance
of additional shares of Common Stock up to the new 300,000,000 maximum
authorization without further action or authorization by shareholders (except as
may be required in a specific case by law or by the rules of any
exchange or quotation service that may in the future be applicable to the
Company). The Board of Directors believes it is prudent for the Company to have
this flexibility. However, the issuance of additional shares of Common Stock
would dilute the ownership and voting rights of existing shareholders. The
availability for issuance of additional shares of Common Stock could discourage,
or make more difficult, efforts to obtain control of the Company. For example,
the issuance of shares of Common Stock in a public or private sale, merger, or
similar transaction would increase the number of outstanding shares, thereby
possibly diluting the interest of a party attempting to obtain control of the
Company. The Company is not aware of any pending or threatened efforts to
acquire control of the Company.
Vote Required
Approval
of the proposal to amend our Certificate of Incorporation will require the
affirmative vote of the holders of at least a majority of the shares of Common
Stock and Series A Convertible Preferred Stock outstanding on the Record Date
(considered as a single class), or 26,873,212 shares. Such approval will also
require the affirmative vote of the holders of at least a majority of the shares
of Common Stock outstanding on the Record Date (voting separately), or
26,679,045 shares.
Recommendation
of Board of Directors
On
November 13, 2009, our Board of Directors recommended the amendment to Article
Fourth of our Certificate of Incorporation to bring the total number of
authorized shares of Common Stock to 300,000,000, as set forth in Annex A, and
directed that the amendment be submitted for approval by the Company’s
shareholders as required by the Delaware General Corporation
Law
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR
APPROVAL
OF
THE
AMENDMENT
OF
THE CERTIFICATE OF INCORPORATION.
PROPOSAL
II
ELECTION
OF DIRECTORS
Unless
otherwise directed in the proxy, the person named in the enclosed proxy card, or
his substitute, will vote the proxy FOR the election of Dennis C. Cossey, J.
Winder Hughes III and Arthur S. Reynolds to the Board of Directors.
The Board
of Directors has set the number of directors constituting the Board of Directors
at seven. Four members of the Board of Directors are elected by the
holders of our Series B convertible preferred stock and three members of the
Board of Directors are elected by the holders of our Common Stock and our Series
A Convertible Preferred Stock (voting together as a single
class). All directors serve one-year terms. At the Special
Meeting of Shareholders, three directors are to be elected by the holders of our
Common Stock and our Series A Convertible Preferred Stock. Dennis C.
Cossey, J. Winder Hughes III and Arthur S. Reynolds currently serve on the Board
of Directors and are being nominated for another term, expiring at the 2010
Annual Meeting of Shareholders.
Nominees
Dennis C. Cossey,
age 63, has
served as Chairman of the Board of Directors since 1990. Mr. Cossey
has been the Chief Executive Officer and a director of the Company since
1988. Prior to joining the Company, Cossey served in executive and
marketing positions at a number of companies, including IBM and Peter Kiewit and
Sons Engineering. Mr. Cossey is a member of several industry
professional groups including the American Society of Naval Engineers, the US
Naval Institute, the National Safety Council, the American Chemical Society, the
Asia Pacific Water Council, and the Association of Energy
Engineers. Mr. Cossey has testified before Congress on various
environmental issues.
J. Winder Hughes III
, age 51,
has been a director of the Company since July 2009. Since 1995, Mr.
Hughes has served as the managing partner of Hughes Capital Investors, LLC,
which manages private assets and raises money for small public companies.
He formed the Focus Fund, LP in 2000 (with Hughes Capital as the fund manager),
which is a highly-concentrated equity partnership that focuses on
publicly-traded emerging growth companies. From 1983 to 1995, Mr. Hughes
was an investment executive, first with Kidder Peabody & Co. and
subsequently with Prudential Securities.
Arthur S. Reynolds
, age 65,
has been a director of the Company since 2008. From August 3, 2009
through November 16, 2009, Mr. Reynolds served as our interim Chief Financial
Officer, and except during that period, has been Chairman of the Audit Committee
of the Board of Directors. He is the founder of Rexon Limited of
London and New York where, since 1999, he has served as managing director.
Mr. Reynolds was founder and, from 1997 to 1999, managing partner of
London-based Value Management & Research (UK)
Limited. Mr. Reynolds was the founder and, from 1982 to 1997,
served as managing director of Ferghana Financial Services
Limited. Prior thereto, Mr. Reynolds held executive positions at
Merrill Lynch International Bank Limited, Banque de la Société Financière
Européene, J.P. Morgan & Company and Mobil Corporation. Mr.
Reynolds is a director of Apogee Technology, Inc.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR
ELECTION
OF
THE NOMINEES.
Directors
who are not Nominees for Election at the Special Meeting
The
following members of the Board of Directors have been elected by the holders of
our Series B Convertible Preferred Stock, are not candidates for election at the
Special Meeting of Shareholders, and will continue to serve as directors
following the Special Meeting:
David Anthony
, age 48, has
been a director of the Company since October 2009. He is an
experienced entrepreneur, venture capitalist, and educator. He is Managing
Director of 21 Ventures, a position he has held since 2003, and sits on the
boards of Agent Video Intelligence, Axion Power International, Inc., 3GSolar,
BioPetroClean, Juice Wireless, Open Energy and VOIP Logic. Prior to 21 Ventures,
Mr. Anthony launched Notorious Entertainment, a developer of multimedia
brands.
Joseph P. Bartlett
, age
51, has been a director of the Company since October 2009. He is
counsel to The Quercus Trust and has practiced corporate and securities law
since 1985. From September 2004 until August 2008 he was a
partner at Greenberg Glusker LLP in Los Angeles, California, and from
September 2000 until September 2004 he was a partner at Spolin
Silverman Cohen and Bartlett LLP. Mr. Bartlett is a director of Axion
Power International, Inc.
David Gelbaum
, age 60, has
been a director of the Company since October 2009. He previously
served as a member of the Board of Directors from September 2008 until January
2009. Since 2002, Mr. Gelbaum has been a private investor. From
1989 until 2002, he performed quantitative modeling for stock price returns and
derivative securities for TGS Management, and from 1972 until 1989 he worked at
Oakley & Sutton in a similar capacity. Mr. Gelbaum is a trustee of The
Quercus Trust and sits on the board of Axion Power International,
Inc.
Shawn R. Hughes
, age 49, has
been a director of the Company since October 2009. He previously
served as a member of the Board of Directors from September 2008 until January
2009. He has served as President and Chief Operating Officer of the
Company since January 1, 2008. From June 15, 2007 through December 31, 2007, he
was employed by us to assist the Chief Executive Officer in administering
corporate affairs and overseeing all of our business operating functions.
Previously, Mr. Hughes served as President and Chief Operating Officer of
Mortgage Contract Services (from November 2006 to May 2007) and as Chief
Executive Officer of Fortress Technologies (from 2001 to October
2006).
Committees
of the Board of Directors
Compensation and Benefits
Committee
. The Compensation and Benefits Committee consists of
Mr. Anthony, as Chairman, Mr. Bartlett and Mr. Gelbaum. This
committee makes recommendations to the Board of Directors on compensation
generally, executive officer salaries, bonus awards, stock option grants,
special awards and supplemental compensation. The Compensation and
Benefits Committee consults generally with management on matters concerning
executive compensation and other compensation issues where Board of Directors or
shareholder action is contemplated. The Board has determined that all
of the members of the Compensation and Benefits Committee are
independent.
Audit
Committee
. The Audit Committee consists of Mr. Reynolds, as
Chairman, Mr. Winder Hughes, and Mr. Anthony. This committee oversees
the Company’s financial reporting process and internal controls. The
Audit Committee is governed by a written charter approved by the Board of
Directors. The charter sets out the Audit Committee’s membership
requirements and responsibilities. A copy of the Audit Committee
charter was provided to shareholders as Annex A to the Company’s 2007 proxy
statement. As part of its duties, the Audit Committee consults with
management and the Company’s independent registered public accounting firm
during the year on matters related to the annual audit, internal controls, the
published financial statements and the accounting principles and auditing
procedures being applied. The Audit Committee selects the Company’s
registered public accounting firm, reviews the independent registered public
accounting firm’s audit fees, discusses relationships with the auditor, and
reviews and approves in advance non-audit services to ensure no compromise of
independence. The Board has determined that all of the members of the
Audit Committee except Mr. Reynolds are independent and that all of the members
are audit committee financial experts (as defined in Item 407(d)(5)(ii) of
Regulation S-K). Mr. Reynolds is not considered independent due to
his service as interim Chief Financial Officer during the period August 3
through November 16, 2009 but, because of Mr. Reynolds’s prior service as an
independent member of the Audit Committee, the extraordinary circumstances under
which he agreed to serve as interim Chief Financial Officer, and the brief
period of such service, the Board of Directors has determined that Mr. Reynolds
will be able to exercise independent judgment as a member of the Audit Committee
and that his service as Chairman of the Audit Committee is in the best interests
of the Company and its shareholders.
Nominating
Committee
. The directors elected by the holders of our Common
Stock and our Series A Convertible Preferred Stock (Messrs. Cossey, Winder
Hughes, and Reynolds) serve as the Nominating Committee, with Mr. Cossey serving
as Chairman. The Nominating Committee identifies the individuals to
be nominated for election to the Board of Directors by the holders of our Common
Stock and our Series A Convertible Preferred Stock. In considering
candidates, the Nominating Committee seeks to assure that the Board of Directors
will include persons with a variety of skills and experience, including at least
one director with expertise in the areas of science and technology in which the
Company operates and at least one director who qualifies as an audit committee
financial expert. The Nominating Committee does not have a
charter.
The
Nominating Committee will consider director candidates recommended by the
shareholders if a nominating shareholder complies with the following
requirements. If a shareholder wishes to recommend a candidate to the
Nominating Committee for consideration as a candidate for election to the Board
of Directors, the shareholder must submit in writing to the Nominating Committee
the nominee’s name and a brief resume setting forth the nominee’s business and
educational background and qualifications for service, and a notarized consent
signed by the recommended candidate stating the recommended candidate’s
willingness to be nominated and to serve. This information must be
delivered to the Chairman of the Nominating Committee at the following address:
ThermoEnergy Corporation, 124 W. Capitol Avenue, Suite 880, Little Rock,
Arkansas 72201, and must be received no later than December 31 in any year
to be considered as a potential director nominee at the Annual Meeting of
Shareholders for the following year. The Nominating Committee may
request additional information if it determines a potential candidate may be an
appropriate nominee.
Shareholder
Communications
The Board
of Directors does not have a formal policy for shareholder communications to the
Board of Directors. The small size of the Board of Directors and the
simple administrative structure of ThermoEnergy permits shareholders to have
easy access to ThermoEnergy’s management and its directors for any
communications, including those pertaining to director nominations as set forth
above. Shareholder inquiries, suggestions and other communications
may be directed to ThermoEnergy’s Chairman and Chief Executive Officer at
ThermoEnergy Corporation, 124 W. Capitol Avenue, Suite 880, Little Rock,
Arkansas 72201.
Code
of Ethics
A copy of
the Company’s Code of Business Conduct and Ethics, including additional
provisions which apply to the chief executive officer and senior financial
officers, may be obtained free of charge by making a written request to Investor
Relations, ThermoEnergy Corporation, 124 W. Capitol Avenue, Suite 880, Little
Rock, Arkansas 72201.
Board
Determination of Independence
The
Company’s securities are not listed on a national securities exchange or on an
inter-dealer quotation system which has requirements that a majority of the
board of directors be independent. In determining which directors and
which members of committees are “independent,” the Board of Directors has
adopted independence standards that mirror exactly the criteria specified by
applicable laws and regulations of the SEC and the Marketplace Rules of the
Nasdaq Stock Market. The Board of Directors has determined that each
of Mr. Anthony, Mr. Bartlett, Mr. Gelbaum, and Mr. Winder Hughes does not have a
relationship that would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director and that, consequently, each of
these directors is an “independent director.” In determining the independence of
our directors, the Board of Directors considered all transactions in which
ThermoEnergy and any director had any interest, including those discussed under
“Certain Relationships and Related Transactions” below.
Attendance
at the Annual Meeting and at Board and Committee Meetings
Although
the Company does not have a requirement that all members of the Board of
Directors attend the Annual Meeting of Shareholders, such attendance is strongly
encouraged. All of the directors then in office attended the 2008
Annual Meeting of Shareholders and the Company anticipates that all of the
current directors will be present at the Special Meeting in lieu of the 2009
Annual Meeting of Shareholders. During the fiscal year ended December 31, 2008,
the Board of Directors held five meetings and every director attended at least
75% of those meetings. During 2008, the Audit Committee held four meetings and
Compensation and Benefits Committee held two meetings, and all members of those
committees attended at least 75% of the meetings of their respective committees.
The Nominating Committee did not hold any meetings during the fiscal year ended
December 31, 2008.
Compensation
of the Board
Directors
do not receive cash compensation for serving on the Board or its
committees. Non-employee directors are awarded annual grants of
non-qualified stock options. All directors are reimbursed for their
reasonable expenses incurred in attending all board meetings. We
maintain directors and officers liability insurance.
The
following table shows compensation for the fiscal year ended December 31, 2008
to our directors who were not also named executive officers:
Director
Compensation (1)
|
|
|
Fees Earned or
|
|
Option Awards
|
|
|
|
|
|
Name
|
|
Paid in Cash
|
|
($) (2)
|
|
|
Total ($)
|
|
|
Arthur
Reynolds (3)
|
|
none
|
|
$
|
10,920
|
(3)
|
|
$
|
10,920
|
|
|
Paul
A. Loeffler PhD(4)
|
|
none
|
|
$
|
31,459
|
(4)
|
|
$
|
31,459
|
|
|
Louis
J. Ortmann DDS (5)
|
|
none
|
|
$
|
31,459
|
(5)
|
|
$
|
31,459
|
|
|
Martin
A. Roenigk (6)
|
|
none
|
|
$
|
21,051
|
(6)
|
|
$
|
21,051
|
|
|
(1)
|
Certain
columnar information required by Item 402(f)(2) of Regulation S-K has been
omitted for categories where there was no compensation awarded to, or paid
to, the named directors during the fiscal year ended December 31,
2008.
|
|
(2)
|
The
reported amounts reflect the dollar amounts recognized for financial
statement reporting purposes for the fiscal year ended December 31, 2008,
in accordance with FAS 123R, and may include amounts from awards granted
both in and prior to the fiscal year ended December 31,
2008. As required, the amounts shown exclude the impact of any
forfeitures related to service-based vesting conditions. The
actual amount realized by the director will likely vary based on a number
of factors, including the Company’s performance, stock price fluctuations
and applicable vesting.
|
|
(3)
|
An
option to purchase 30,000 shares at an exercise price of $1.24 per share
was granted to Mr. Reynolds on October 2, 2008. This option has
a termination date of October 3,
2018.
|
|
(4)
|
An
option to purchase 30,000 shares at an exercise price of $1.24 per share
was granted to Dr. Loeffler on June 26, 2008. This option has a
termination date of June 30, 2018. An option to purchase 11,900
shares at an exercise price of $1.75 was also granted to Dr. Loeffler on
June 26, 2008. This option has a termination date of June 30,
2018. At December 31, 2008, Dr. Loeffler held options for the
purchase of an aggregate of 141,900 shares, all of which were
exercisable.
|
|
(5)
|
An
option to purchase 30,000 shares at an exercise price of $1.24 per share
was granted to Dr. Ortmann on June 26, 2008. This option has a
termination date of June 30, 2018. An option to purchase 11,900
shares at an exercise price of $1.75 was also granted to Dr. Ortmann on
June 26, 2008. This option has a termination date of June 30,
2018. At December 31, 2008, Dr. Ortmann held options for the
purchase of an aggregate of 141,900 shares, all of which are
exercisable.
|
|
(6)
|
An
option to purchase 30,000 shares at an exercise price of $1.24 per share
was granted to Mr. Roenigk on June 26, 2008. This option has a
termination date of June 30, 2018. At December 31, 2008, Mr.
Roenigk held options for the purchase of an aggregate of 80,000 shares,
all of which are exercisable.
|
Security
Ownership by Certain Beneficial Owners, Directors and Executive
Officers
The
following table sets forth certain information as of November 6, 2009 with
respect to beneficial ownership of our Common Stock by each shareholder known by
the Company to be the beneficial owner of more than 5% of our Common Stock and
by each of our directors and executive officers and by all of the directors,
nominees for election as director, and executive officers as a
group.
|
Beneficial
Owners
(1)
|
|
Amount and Nature
of Beneficial
Ownership
(2)
|
|
|
Percent of
Class
(3)
|
|
|
|
|
|
|
|
|
|
|
Directors,
Nominees and Officers
|
|
|
|
|
|
|
|
David
Anthony
|
|
|
0
|
|
|
|
*
|
|
|
Joseph
P. Bartlett
|
|
|
0
|
|
|
|
*
|
|
|
Dennis
C. Cossey
|
|
|
3,751,049
|
(4)
|
|
|
6.7
|
%
|
|
David
W. Delasanta
|
|
|
100,000
|
(5)
|
|
|
*
|
|
|
Alexander
G. Fassbender
|
|
|
2,197,856
|
(6)
|
|
|
4.0
|
%
|
|
David
Gelbaum
|
|
|
32,953,334
|
(7)
|
|
|
41.3
|
%
|
|
J.
Winder Hughes III
|
|
|
11,600,000
|
(8)
|
|
|
18.8
|
%
|
|
Shawn
R. Hughes
|
|
|
952,500
|
(9)
|
|
|
1.8
|
%
|
|
Teodor
Klowan, Jr.
|
|
|
0
|
|
|
|
*
|
|
|
Arthur
S. Reynolds
|
|
|
251,103
|
(10)
|
|
|
*
|
|
|
All
executive officers, directors and nominees as a group
(9
persons)
|
|
|
50,853,342
|
(11)
|
|
|
54.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
5% Beneficial
Owners
|
|
|
|
|
|
|
|
|
|
Quercus
Trust
|
|
|
|
|
|
|
|
|
|
1835
Newport Blvd.
|
|
|
|
|
|
|
|
|
|
A109-PMC
467
|
|
|
|
|
|
|
|
|
|
Costa
Mesa, CA 92627
|
|
|
32,953,334
|
(12)
|
|
|
41.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Security
Investors, LLC
|
|
|
|
|
|
|
|
|
|
Security
Benefit Place
|
|
|
|
|
|
|
|
|
|
Topeka,
Kansas 66636
|
|
|
5,064,663
|
(13)
|
|
|
9.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Robert
S. Trump
|
|
|
|
|
|
|
|
|
|
167
E. 61
st
Street
|
|
|
|
|
|
|
|
|
|
New
York, NY 10021
|
|
|
22,637,766
|
(14)
|
|
|
32.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Estate
of P.L. Montesi
3504 North Hills Blvd
North Little Rock, AR 72116
|
|
|
2,976,150
|
(15)
|
|
|
5.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Elise
C. Roenigk
PO
Box 230
Eureka
Springs, AR 72632
|
|
|
5,405,708
|
(16)
|
|
|
9.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
The
Focus Fund
|
|
|
|
|
|
|
|
|
|
PO
Box 389
|
|
|
|
|
|
|
|
|
|
Ponte
Vedra, FL 32004
|
|
|
11,600,000
|
(17)
|
|
|
18.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Empire
Capital Management and Affiliates
|
|
|
|
|
|
|
|
|
|
One
Gorham Island, Suite 201
|
|
|
|
|
|
|
|
|
|
Westport,
CT 06880
|
|
|
10,651,182
|
(18)
|
|
|
17.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Kevin
B. Kimberlin
c/o
Spencer Trask
|
|
|
|
|
|
|
|
|
|
535
Madison Avenue
|
|
|
|
|
|
|
|
|
|
New
York, NY 10022
|
|
|
7,955,816
|
(19)
|
|
|
13.2
|
%
|
* Less
than 1%
(1)
Except as otherwise indicated in the beneficial ownership table, the address for
each person listed is: c/o ThermoEnergy Corporation, 124 West Capitol Avenue,
Suite 880, Little Rock, Arkansas 72201.
(2)
Includes shares as to which such person directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise, has or shares
voting power and/or investment power, as these terms are defined in
Rule 13d-3(a) of the Exchange Act. Shares of Common Stock underlying
options to purchase shares of Common Stock and securities convertible into
shares of Common Stock, which are exercisable or convertible on, or become
exercisable or convertible within 60 days after, June 30, 2009 are deemed to be
outstanding with respect to a person or entity for the purpose of computing the
outstanding shares of Common Stock owned by the particular person and by the
group, but are not deemed outstanding for any other purpose.
(3)
Based on 53,538,090 shares of Common Stock issued and outstanding on November 6,
2009 plus, with respect to each individual or entity (but not with respect to
other individuals or entities), the number of shares of Common Stock underlying
options to purchase shares of Common Stock and securities convertible into
shares of Common Stock, held by such individual or entity which are exercisable
or convertible on, or which become exercisable or convertible within 60 days
after, November 6, 2009.
(4)
Includes 1,391,049 shares owned directly by Mr. Cossey or jointly with the
estate of P.L. Montesi. Also includes 2,357,500 shares issuable upon the
exercise of options.
(5)
Includes 100,000 shares issuable upon the exercise of options.
(6)
Includes 340,356 shares owned directly by Mr. Fassbender. Also includes
1,852,500 shares issuable upon the exercise of options.
(7) This
beneficial ownership information is based on information contained in Amendment
No. 3 to the Statement on Schedule 13D filed by The Quercus Trust and its
trustees (including Mr. Gelbaum) on October 22,
2009. Includes 6,666,667 shares owned directly by The Quercus Trust,
15,120,000 shares issuable upon the exercise of warrants and 11,166,667 shares
issuable upon conversion of convertible debt.
(8)
Includes 3,300,000 shares owned by The Focus Fund and 8,300,000 shares issuable
to The Focus Fund upon exercise of warrants or conversion of convertible
debt. Mr. Hughes is the Managing Director of The Focus Fund and may
be deemed the beneficial owners or the securities held by such fund; he
disclaims beneficial ownership of such securities except to the extent of his
pecuniary interest therein.
(9)
Includes 102,500 shares owned directly by Mr. Hughes. Also includes 850,000
shares issuable upon the exercise of options.
(10) Includes
70,000 shares issuable upon the exercise of options. Also includes
181,103 shares issuable upon exercise of warrants held by Christine Reynolds,
Mr. Reynolds’s wife. Mr. Reynolds disclaims beneficial ownership of
the shares issuable to Mrs. Reynolds.
(11) Includes
shares issuable upon exercise of options and warrants and conversion of
convertible debt, as detailed in notes 4 through 10, above.
(12) This
beneficial ownership information is based on information contained in Amendment
No. 3 to the Statement on Schedule 13D filed by The Quercus Trust and its
trustees on October 22, 2009. Includes 6,666,667 shares owned by The
Quercus Trust, 15,120,000 shares issuable upon the exercise of warrants and
11,166,667 shares issuable upon conversion of convertible debt.
(13) This
beneficial ownership information is based on information contained in Amendment
No. 1 to the Statement on Schedule 13G filed by Security
Investors, LLC on February 13, 2009.
(14)
Includes 5,823,456 shares of Common Stock owned by Mr. Trump, 10,564,310
shares issuable upon the exercise of warrants and 6,250,000 shares issuable upon
conversion of convertible debt.
(15)
Includes 1,251,150 shares of stock owned directly by the estate of
Mr. Montesi, by various members of Mr. Montesi’s family or jointly with
ThermoEnergy’s Chief Executive Officer, Dennis Cossey. Also includes 1,725,000
shares of Common Stock issuable upon the exercise of options.
(16)
Includes 669,589 shares owned directly by Mrs. Roenigk, and 6,893,982 shares
issuable upon the exercise of warrants and conversion of convertible debt held
by Mrs. Roenigk.
(17)
Includes 3,300,000 shares owned by The Focus Fund and 8,300,000 shares issuable
to The Focus Fund upon exercise of warrants or conversion of convertible
debt.
(18) This
beneficial ownership information is based on information contained in Amendment
No. 1 to the Statement on Schedule 13G filed by the group consisting of Empire
Capital Management LLC and its affiliates on October 16,
2009. Includes 2,916,663 shares issuable upon conversion of
outstanding convertible debt and 3,814,282 shares issuable upon exercise of
warrants owned by Empire Capital Management LLC and its affiliates.
(19) This
beneficial ownership information is based on information contained in Amendment
No. 1 to the Statement on Schedule 13D filed by Mr. Kimberlin on July
22, 2008. Includes 4,302,015 shares issuable upon conversion of
convertible debt owned by Spencer Trask and its affiliates.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
requires our executive officers and directors and persons who own more than 10%
of our Common Stock to file reports of ownership and changes in ownership with
the SEC. Such executive officers, directors and shareholders are also required
by SEC rules to furnish us with copies of all Section 16(a) forms they file.
Based on information supplied to the Company and filings made with the SEC,
during the fiscal year ended December 31, 2008 none of our executive officers
and directors and no person who owns more than 10% of our Common Stock failed to
make a Section 16(a) filing on a timely basis.
EXECUTIVE
OFFICERS
Set forth
below is information regarding our Executive Officers who are not also members
of our Board of Directors:
Alexander G. Fassbender
,
age 56, has been our Executive Vice President and Chief Technology Officer since
November 1998. He served as a member of our Board of Directors from
June 2005 through October 2009. Prior to joining the Company,
Mr. Fassbender was Manager of Technology Commercialization at Battelle
Memorial Institute (BMI) Pacific Northwest Laboratories, where he had held
various positions since 1976. Mr. Fassbender received his BS
(Chemical Engineering) in 1976 from the University of California, Berkeley and
his MBA in 1980 and his MS (Chemical Engineering) in 1988, both from the
University of Washington, Seattle. Mr. Fassbender is a member of the National
Coal Council, a federal advisory committee to the U.S. Secretary of
Energy.
Teodor Klowan, Jr.
, age 41,
was appointed as our Executive Vice President and Treasurer on November 2, 2009
and became our Chief Financial Officer on November 16, 2009. Mr.
Klowan has been a certified public accountant since 1991. From
November 2007 through February 2009 he was Chief Financial Officer and from May
2006 to November 2007 he was Vice President, Corporate Controller and Chief
Accounting Officer of Nestor, Inc., a publicly held automated speed and red
light technology company. On June 3, 2009, a receiver was appointed
by the Rhode Island Superior Court for the business and assets of Nestor,
Inc. Mr. Klowan was Corporate Controller of MatrixOne, Inc. in
2005 and Corporate Controller and Chief Accounting Officer at Helix Technology
Corporation from 1999 to 2004. He was Assistant Corporate Controller of Waters
Corporation from 1996 to 1999. Prior to 1996, Mr. Klowan worked in management
and staff positions at Banyan Systems, Inc. and Ernst & Young.
David W. Delasanta
, age 59,
has been President of our subsidiary, CASTion Corporation, since December 15,
2008; prior to assuming that position he was our Senior
Vice-President for Marketing. Before joining ThermoEnergy in 2008, Mr. Delasanta
had 30 years of experience in the environmental and energy fields. From
1997 to 2007, he was Regional Vice-President, Business Development for Shaw
Group, a major environmental and energy engineering firm. From 1994 to
1997, he was Regional Director of Government Business Development for ICF
Kaiser Engineers. Prior to 1994, he served in various management,
sales and marketing positions at RESNA Industries, Air & Water Technologies,
ACUREX, and SynGas Systems, and as a consultant with DHR, a
Washington DC consulting company where, among other things, he managed the
technical support contract for the Department of Energy’s National Energy Plan
for coal gasification.
Executive
Compensation
Summary
Compensation Table
The table
set forth below summarizes the compensation earned by our named executive
officers in 2008 and 2007.
|
Name
and Principal Position
|
|
Year
|
|
Salary
|
|
|
Bonus
|
|
|
Option
Awards
(a)
|
|
|
All
Other Compensation
(b)
|
|
|
Securities Underlying
Options
(#)
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis
C. Cossey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chairman
of the Board and Chief
|
|
2008
|
|
$
|
295,000
|
|
|
|
0
|
|
|
$
|
774,093
|
|
|
$
|
24,653
|
|
|
|
1,047,500
|
|
|
$
|
1,093,746
|
|
|
Executive
Officer
|
|
2007
|
|
$
|
250,000
|
|
|
$
|
194,375
|
(c)
|
|
$
|
176,667
|
|
|
$
|
28,000
|
|
|
|
350,000
|
|
|
$
|
649,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew
T. Melton
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Vice President, Treasurer and Chief Financial Officer
|
|
2008
|
|
$
|
250,000
|
|
|
|
0
|
|
|
$
|
83,159
|
|
|
$
|
24,466
|
|
|
|
257,500
|
|
|
$
|
357,625
|
|
|
|
|
2007
|
|
$
|
200,000
|
|
|
$
|
194,375
|
(c)
|
|
$
|
176,667
|
|
|
$
|
35,500
|
|
|
|
350,000
|
|
|
$
|
571,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alexander
G. Fassbender
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Vice President and Chief Technology Office
|
|
2008
|
|
$
|
295,000
|
|
|
|
0
|
|
|
$
|
437,372
|
|
|
$
|
109,000
|
|
|
|
662,500
|
|
|
$
|
771,372
|
|
|
|
|
2007
|
|
$
|
281,400
|
|
|
$
|
194,375
|
(c)
|
|
$
|
176,667
|
|
|
$
|
33,000
|
|
|
|
350,000
|
|
|
$
|
652,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shawn
R. Hughes (d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President
and Chief Operating Officer
|
|
2008
|
|
$
|
275,000
|
|
|
|
0
|
|
|
$
|
76,600
|
|
|
$
|
12,000
|
|
|
|
250,000
|
|
|
$
|
363,600
|
|
|
|
|
2007
|
|
$
|
137,500
|
|
|
$
|
131,875
|
(e)
|
|
$
|
245,760
|
|
|
$
|
6,000
|
|
|
|
600,000
|
|
|
$
|
521,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
W. Delasanta (d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President
of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASTion
Corporation
|
|
2008
|
|
$
|
150,000
|
|
|
|
0
|
|
|
$
|
70,170
|
|
|
|
0
|
|
|
|
100,000
|
|
|
$
|
220,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
R. Powell (d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President
and CEO of
|
|
2008
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
CASTion
Corporation
|
|
2007
|
|
$
|
186,250
|
|
|
$
|
320,000
|
|
|
$
|
108,833
|
|
|
|
0
|
|
|
|
300,000
|
|
|
$
|
615,083
|
|
|
(a)
|
The amounts in the column
“Options Award” reflect the dollar amount recognized for financial
statement reporting purposes in accordance with FAS 123R, for option
awards granted pursuant to grants made by the Board of Directors.
Assumptions used in the calculation of these amounts are included in Note
9 and Note 10 to the Company’s consolidated financial statements for the
fiscal year ended December 31,
2008.
|
|
(b)
|
The amounts in the column “All
Other Compensation” reflect the following items: automobile expenses,
medical and insurance reimbursement, temporary living expenses, moving
relocation expense reimbursement and salary to executive officers’
spouses.
|
|
(c)
|
Includes a cash bonus of
$125,000. Also includes a grant of 62,500 shares of common
stock valued at $69,375.
|
|
(d)
|
Messrs. Hughes and Powell were
appointed in 2007and the information with respect to their compensation
during the year ended December 31, 2007 reflects partial-year
information. Mr. Powell resigned, effective January 1,
2008. Mr. Delasanta was not an executive officer during the
year ended December 31, 2007 and, consequently, no information is set
forth with respect to his compensation during the year ended December 31,
2007.
|
|
(e)
|
Includes a cash bonus of
$62,500. Also includes a grant of 62,500 shares of common stock
valued at $69,375.
|
Certain
columnar information required by Item 402(a) (2) of Regulation S-K has been
omitted for categories where there has been no compensation awarded to, or paid
to, the named executive officers required to be reported in the table during
2008.
Outstanding
Equity Awards at December 31, 2008
The
following table summarizes information concerning outstanding equity awards held
by the named executive officers at December 31, 2008. No named
executive officer exercised options in the fiscal year ended December 31,
2008.
|
|
|
Stock
Option Awards
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
|
|
Options
(#)
|
|
Options
(#)
|
|
Exercise
|
|
Expiration
|
|
Name
|
|
Exercisable
|
|
Unexerciable
|
|
Price
($)
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
Dennis
C. Cossey
|
|
|
250,000
|
|
none
|
|
$
|
1.22
|
|
6/10/2010
|
|
|
|
|
560,000
|
|
none
|
|
$
|
1.29
|
|
9/15/2010
|
|
|
|
|
150,000
|
|
none
|
|
$
|
0.94
|
|
1/20/2011
|
|
|
|
|
350,000
|
|
none
|
|
$
|
1.11
|
|
1/02/2011
|
|
|
|
|
797,500
|
|
none
|
|
$
|
1.75
|
|
6/30/2018
|
|
|
|
|
250,000
|
|
none
|
|
$
|
1.50
|
|
2/27/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew
T. Melton
|
|
|
150,000
|
|
none
|
|
$
|
1.22
|
|
6/10/2010
|
|
|
|
|
40,000
|
|
none
|
|
$
|
0.90
|
|
9/15/2010
|
|
|
|
|
150,000
|
|
none
|
|
$
|
0.94
|
|
1/20/2011
|
|
|
|
|
350,000
|
|
none
|
|
$
|
1.11
|
|
1/02/2011
|
|
|
|
|
7,500
|
|
none
|
|
$
|
1.75
|
|
6/30/2018
|
|
|
|
|
250,000
|
|
none
|
|
$
|
1.50
|
|
2/27/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alexander
G. Fassbender
|
|
|
250,000
|
|
none
|
|
$
|
1.22
|
|
6/10/2010
|
|
|
|
|
440,000
|
|
none
|
|
$
|
1.29
|
|
9/15/2010
|
|
|
|
|
150,000
|
|
none
|
|
$
|
0.94
|
|
1/20/2011
|
|
|
|
|
350,000
|
|
none
|
|
$
|
1.11
|
|
1/02/2011
|
|
|
|
|
412,500
|
|
none
|
|
$
|
1.75
|
|
6/30/2018
|
|
|
|
|
250,000
|
|
none
|
|
$
|
1.50
|
|
2/27/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shawn
R. Hughes
|
|
|
600,000
|
|
none
|
|
$
|
0.90
|
|
12/15/2010
|
|
|
|
|
250,000
|
|
none
|
|
$
|
1.50
|
|
2/27/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
W. Delasanta
|
|
|
100,000
|
|
none
|
|
$
|
1.24
|
|
6/30/2018
|
Equity
Compensation Plan Information
The
following table sets forth the securities that are authorized for issuance under
the equity compensation plans of ThermoEnergy as of December 31,
2008:
|
Plan Category
|
|
(A)
Number of securities to be
issued upon exercise of
outstanding options, warrants
and rights
|
|
|
(B)
Weighted-average exercise
price of outstanding options,
warrants and rights
|
|
|
(C)
Number of securities
remaining available for future
issuance under equity
compensation plans
(excluding securities
reflected
in column A)
|
|
|
Equity
Compensation plans approved by security holders
|
|
|
|
|
|
|
|
|
|
|
2008
Incentive Stock Plan
|
|
|
120,000
|
|
|
$
|
1.24
|
|
|
|
9,880,000
|
|
|
Equity
Compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
options
|
|
|
8,093,800
|
|
|
$
|
1.23
|
|
|
|
0
|
|
|
Total
|
|
|
8,213,800
|
|
|
$
|
1.23
|
|
|
|
0
|
|
E
mployment Contracts and
Agreements
The
Company has written employment agreements with each of its senior executives. In
connection with the Series B Convertible Preferred Stock financing in November
2009, the Board of Directors has requested that the employment agreements with
its senior executives be amended to provided for limited terms of employment, a
reduction in base salary, and an adjustment in the severance
arrangements. The agreement with Shawn R. Hughes, the President and
Chief Operating Officer, was amended on September 28, 2009 to reflect these
changes and is described below, The Company anticipates that the
agreements with Messrs. Cossey and Fassbender will be revised prior to December
31, 2009 in accordance with the Board of Directors’
request.
The
employment agreement with Dennis C. Cossey currently provides for a contract
term of five years (extended, each month for an additional month), with a
beginning base compensation of $200,000 (in 2005) for Mr. Cossey and minimum
annual 15% increases in compensation capped at $1,500,000, after which annual
increases will be determined on the basis of changes in the consumer price
index. At the request of the Compensation and Benefits Committee, Mr.
Cossey waived the right to receive the annual increase in compensation scheduled
for 2007 and 2008. The employment agreement also provides that Mr. Cossey will
be eligible for discretionary incentive compensation of up to 100% of his base
salary, as determined by the Compensation and Benefits Committee. The
employment agreement also entitle Mr. Cossey to periodic performance-based
compensation if certain unusual, but significant, events occur, including but
not limited to the acquisition of new technology, the execution of new contracts
in excess of 20% of existing revenues and other events as determined by the
Compensation and Benefits Committee. In addition, the employment
agreements provide that, upon the occurrence of a change in control of the
Company, each officer will be entitled to receive a lump sum payment of five
years’ base compensation from the date of such change of control, as well as an
immediate vesting of all unvested stock options and/or restricted stock
grants. The employment agreement also contains certain restrictive
covenants protecting trade secrets and prohibiting Mr. Cossey from competing
with the Company or soliciting Company customers or employees for a period of
one year after the termination of his employment.
The
employment agreement with Alexander G. Fassbender, the Executive Vice President
and Chief Technology Officer, currently provides for a continuous three-year
term (subject to the Company’s right to terminate the annual extensions upon 60
days’ written notice), with a beginning base compensation of $135,000 (in 1998)
with 15% annual increases, capped at $250,000, after which annual increases will
be determined on the basis of changes in the consumer price index.
Mr. Fassbender is also eligible for discretionary incentive compensation of
up to 50% of his base salary, as determined by the Compensation and Benefits
Committee. Upon the occurrence of a change in control of the Company,
Mr. Fassbender shall be entitled to a lump sum payment equal to 2.99 years’
base compensation in effect on the date of such change of
control. The employment agreement also contains certain restrictive
covenants protecting trade secrets and prohibiting Mr. Fassbender from competing
with the Company or soliciting Company customers or employees for a period of
one year after the termination of his employment.
On
September 16, 2009 we entered into an Executive Employment Agreement with Shawn
R. Hughes, the President and Chief Operating Officer. The term of Mr.
Hughes’s employment will expire on the earlier of (i) the date on which the
Company has appointed both a new Chief Executive Officer as successor to Dennis
C. Cossey and a new Chief Financial Officer as successor to Arthur S. Reynolds
or (ii) March 31, 2010 (in either case, the “Termination Date”); provided,
however, that the Termination Date may be extended on terms to be agreed, in
good faith, by Mr. Hughes and the Board of Directors. Mr. Hughes’s
Executive Employment Agreement provides for a base salary of $150,000 per annum,
with an entitlement to a bonus, upon completion of the current contract between
the Company’s subsidiary, CASTion Corporation and URS Corporation in
an amount equal to 10% of CASTion’s gross profits on such
contract. The agreement also contains certain restrictive covenants
protecting trade secrets and prohibiting Mr. Hughes from competing with the
Company or soliciting Company customers or employees for a period of one year
after the termination of his employment.
On
November 2, 2009 we entered into an Executive Employment Agreement with Teodor
Klowan, Jr., the Executive Vice President, Treasurer and Chief Financial
Officer, pursuant to which we have agreed to pay him an annual base salary of
$175,000, with eligibility for performance bonuses, from time to time, in
accordance with incentive compensation arrangements to be established by the
Compensation Committee of our Board of Directors. Mr. Klowan’s
employment is terminable by either party upon 30 days’ written notice; provided
that we may terminate Mr. Klowan’s employment immediately for “Cause” (as such
term is defined in the Executive Employment Agreement) and Mr. Klowan may
terminate his employment immediately for “Good Reason” (as such term is defined
in the Executive Employment Agreement). If Mr. Klowan’s employment is
terminated for any reason other than (i) by us during a 90-day probationary
period ending January 31, 2010, (ii) by us for Cause or (iii) voluntarily by Mr.
Klowan without Good Reason, Mr. Klowan will be entitled to receive severance
payments of $14,583 per month for six months following the termination of his
employment, and we will keep in force for such six-month period all health
insurance benefits afforded to Mr. Klowan and his family at the time of
termination. Mr. Klowan’s Executive Employment Agreement contains
other conventional terms, including covenants relating to the confidentiality
and non-use of our proprietary information and a provision prohibiting Mr.
Klowan, for a period of one year following the termination of his employment,
from competing against us or soliciting our customers or
employees.
Certain
Relationships and Related Transactions
The
Company is a party to a license agreement with Alexander G. Fassbender, the
Executive Vice President for Technology, under which Mr. Fassbender has
granted to us an exclusive license in the patents and patent applications for
ThermoFuel and Enhanced Biogas Production in the United States and certain
foreign countries. We are required to pay to Mr. Fassbender a royalty
of 1% of net sales after the cumulative sales of all licensed products exceed
$20,000,000. In December 2007 Mr. Fassbender waived certain
termination rights under the license agreement, agreed that we can assign or
transfer the license without his consent in connection with a merger or a sale
of all or a portion of our business and assets, and agreed that he would not
transfer his interest in the license agreement without our consent.
The
Company, Mr. Fassbender and Mr. Fassbender’s ex-wife are members of a limited
liability company, ThermoEnergy Power Systems, LLC (“TEPS”), which
owns the TIPS technology and which is a 50% member of Babcock-Thermo
Carbon Capture, LLC, our joint venture with Babcock
Power. ThermoEnergy holds an 85% ownership interest in TEPS and Mr.
Fassbender and his ex-wife each own a 7.5% membership interest in
TEPS. The Operating Agreement of TEPS provides, among other things,
that the interests of Mr. Fassbender and his ex-wife cannot be diluted and that
Mr. Fassbender will not be obligated to make capital contributions to TEPS other
than his initial contribution of intellectual property.
The
Company and Rexon Limited, a company controlled by Arthur S. Reynolds a member
of the Board of Directors, entered into a consulting agreement on August 21,
2009, pursuant to which Mr. Reynolds has provided services as the Company’s
interim Chief Financial Officer. Under the Consulting Agreement, the
Company has paid Rexon a retainer of $15,000 per month, has agreed to reimburse
Rexon for all reasonable and customary expenses incurred by it in connection
with Mr. Reynolds’s services, and issues to Rexon warrants, on the first
business day of each month, commencing on August 1, 2009, for the purchase of
that number of shares of Common Stock determined by dividing (i) $15,000 by (ii)
the market price per share of the Common Stock on such date. Upon the
successful consummation of a recapitalization, the Company has agreed to pay
Rexon a success fee in an amount to be agreed by Rexon and the Compensation
Committee of the Board of Directors; such success fee may be paid in cash,
through the issuance of securities, or by a combination thereof. The
Company may terminate the services of Mr. Reynolds under the Consulting
Agreement at any time upon 180 days’ written notice.
The Board
of Directors has adopted a policy whereby all transactions between us and any of
our affiliates, officers, directors, principal shareholders and any affiliates
of the foregoing must be approved in advance by the disinterested members of the
Board of Directors based on a determination that the terms of such transactions
are no less favorable to us than would prevail in arm’s-length transactions with
independent third parties.
Audit
Committee Report
The
Audit Committee reviews the financial reporting process of ThermoEnergy
Corporation (the “Company”) on behalf of the Board of
Directors. Management has the primary responsibility for the
financial statements and the reporting process, including the system of internal
controls. The Company’s independent public accountants are
responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with generally accepted auditing standards
and to issue a report thereon. The Audit Committee monitors these
processes.
The
composition of the Audit Committee has changed significantly during the period
commencing January 1, 2008, due to the resignation of Lowell E. Faulkenberry as
a director on September 30, 2008, the appointment of Arthur S. Reynolds to the
Audit Committee on October 2, 2008, Mr. Reynolds’s temporary departure from the
Audit Committee during his service as interim Chief Financial Officer from
August 3, 2009 through December 16, 2009, the resignation of Paul A. Loeffler as
a director on October 15, 2009, the appointment of J. Winder Hughes
III to the Audit Committee on July 28, 2009, and the appointment of David
Anthony to the Audit Committee on October 15, 2009.
The
Audit Committee has met and held discussions with management and the independent
public accountants. Management represented to us that the Company’s
consolidated financial statements were prepared in accordance with generally
accepted accounting principles, and the Audit Committee has reviewed and
discussed the audited financial statements and related disclosures with
management and the independent public accountants, including a review of the
significant management judgments underlying the financial statements and
disclosures. The Audit Committee also discussed with the independent
public accountants the matters required to be discussed by Statement on Auditing
Standards No. 61 (Codification of Statements on Auditing Standards, AU 380), as
amended.
In
addition, the Audit Committee discussed with the independent public accountants,
the auditors' independence from the Company and its management, and also
considered whether the non-audit services performed during fiscal year 2008 by
the independent public accountants is compatible with maintaining the
accountants’ independence. The independent public accountants have
provided to the Committee the written disclosures and letter required by the
Independence Standards Board Standard No. 1 (Independence Discussions With Audit
Committees).
The
Committee discussed with the Company's independent public accountants the
overall scope and plans for its audit. The Committee met with the independent
public accountant, with and without management present, to discuss the results
of its examinations, the evaluations of the Company’s internal controls, and the
overall quality of the Company’s financial reporting.
The
independent public accountants report to us and to the Board. The
Audit Committee has sole authority to appoint (subject to shareholder
ratification) and to terminate the engagement of the independent public
accountants. Following a review of the independent public
accountants’ performance and qualifications, including management’s
recommendation, the Audit Committee approved the reappointment of Kemp and
Company as the Company’s independent auditing firm for the 2008 fiscal
year.
Based
on the reviews and discussions referred to above, the Committee recommended to
the Board of Directors, and the Board approved, that the audited financial
statements be included in the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2008, for filing with the Securities and Exchange
Commission.
In
consultation with the Company’s management and the independent public
accountants, the Audit Committee determined that the Company’s internal controls
as of December 31, 2008 were deficient in that (i) the Company had not allocated
adequate resources to ensure that necessary internal controls were implemented
and followed throughout the Company, (ii) the Company’s period-end reporting
process did not provide sufficiently timely and accurate financial statements
and required disclosures, (iii) there was a lack of segregation of duties in the
Company’s significant accounting functions, (iv) the Company’s contract
administration and accounting procedures were deficient, and (v) the Company’s
former Chief Financial Officer (who resigned on August 3, 2009 following a
report to the Board of Directors by the Audit Committee and a vote by the Board
of Directors to terminate his employment for cause) engaged in acts that
resulted in significant adjustments to the 2008 consolidated financial
statements and subjected the Company to potential criminal and/or civil action
with respect to the impact of the Company’s unpaid payroll tax
matters.
Audit
Committee
Arthur
S. Reynolds, Chairman
David
Anthony
J.
Winder Hughes III
PROPOSAL
III
RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING
FIRM
The Audit
Committee has, subject to ratification by the shareholders at the Special
Meeting in lieu of the 2009 Annual Meeting, appointed Kemp & Company to
serve as ThermoEnergy’s independent public accounting firm for fiscal year
ending December 31, 2009.
Kemp
& Company served in this capacity for fiscal year 2008, and has reported on
ThermoEnergy’s financial statements for the year ended December 31,
2008.
A
representative of Kemp & Company is expected to be present at the Special
Meeting in lieu of the 2009 Annual Meeting of Shareholders. The
representative will have the opportunity to make a statement at the meeting if
he desires to do so and is expected to be available to respond to appropriate
questions.
Policy on Audit Committee
Pre-Approval of Audit and Permissible Non-Audit Services of Independent Public
Accountants
The Audit
Committee reviews and approves in advance any audit and permitted non-audit
services to be provided by ThermoEnergy’s independent public accountants. The
Audit Committee has the sole authority to make these approvals.
The
following describes the current policies and procedures of the Audit Committee
with respect to pre-approval of audit and permissible non-audit
services:
Audit
Services
. All audit services must be pre-approved by the Audit
Committee. The Audit Committee approves the annual audit services
engagement and, if necessary, any changes in terms, conditions, and fees
resulting from changes in audit scope, company structure, or other
matters. Pre-approval is generally provided for up to one year and
any pre-approval is detailed as to the particular service or category of
services and is generally subject to a specific budget. The Audit Committee may
also grant pre-approval for other audit services, which are those services that
only the independent public accountant reasonably can provide.
Non-Audit
Services
. The Audit Committee's policy is to pre-approve all
permissible non-audit services provided by the independent public
accountants. These services may include audit-related services, tax
services and other services. The independent public accountants and
management are required to periodically report to the Audit Committee regarding
the extent of services provided by the independent public accountants in
accordance with this pre-approval, and the fees for the services performed to
date. The Audit Committee may also pre-approve particular services on
a case-by-case basis.
Fees
billed to the Company by Kemp & Company, our independent public accountants
for fiscal years 2007 and 2008, all of which were approved by the Audit
Committee, were comprised of the following:
Audit Fees
. Kemp &
Company’s fee for its audit of the Company’s annual financial statements, its
review of the financial statements included in the Company’s quarterly reports
on Forms 10−QSB and 10-Q, audits of statutory filings, comfort letter procedures
and review of other regulatory filings for 2008 and 2007 were $97,000 and
$80,000, respectively.
Audit Related Fees
. No fees
were billed to the Company for audit related services in 2007 or
2008.
Tax Fees.
Kemp &
Company’s fees for tax services provided to the Company, including tax
compliance, tax advice and planning, totaled $5,000 in 2008 and $1,000 in
2007.
All Other Fees.
No other fees
were billed to the Company by Kemp & Company in 2008 or 2007 for “other
services.”
In
accordance with the Audit Committee’s pre-approval policy, all audit services
performed by Kemp & Company, the Company’s independent public accountants,
during 2007 and 2008 were approved at the time such firm was engaged to serve as
the Company’s independent public accounts for such fiscal years. The
Audit Committee reviewed and approved, as consistent with the Company’s policies
and procedures, the tax services performed for the Company in 2007 and 2008 by
Kemp & Company.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR
RATIFICATION
OF THE APPOINTMENT OF KEMP & COMPANY.
INFORMATION
INCORPORATED BY REFERENCE
The
following information is incorporated into this Proxy Statement by reference to
our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, a
copy of which is delivered with this Proxy Statement:
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(a)
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Our
audited financial statements as of, and for the year ended, December 31,
2008; and
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(b)
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
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OTHER
MATTERS
The Board
of Directors is not aware of any other matters to come before the
meeting. However, if any other matters properly come before the
meeting, it is the intention of the persons named in the enclosed proxy to vote
the proxy in accordance with their judgment in such matters.
November
23, 2009
Little
Rock, Arkansas
Annex
A
Certificate
of Amendment
to
the Certificate of incorporation
of
ThermoEnergy
Corporation
ThermoEnergy
Corporation, a corporation organized and existing under and by virtue of the
Delaware General Corporation Law, does hereby certify as follows:
The Board
of Directors of the Corporation has duly adopted, pursuant to Section 242 of the
Delaware General Corporation Law, a resolution setting forth an amendment to the
Certificate of Incorporation of the Corporation and declaring said amendment to
be advisable. The stockholders of the Corporation have duly approved
said proposed amendment, in accordance with Section 242 of the Delaware General
Corporation Law, at a special meeting called and held upon notice in accordance
with Section 222 of the Delaware General Corporation Law. The
resolution setting forth the amendment is as follows:
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Resolved:
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That
this Board of Directors of the Corporation recommends and deems it
advisable that the Corporation’s Certificate of Incorporation be amended
by deleting in its entirety the first paragraph of Article Fourth and
substituting in place thereof the following new
text:
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“Fourth
:
The total number
of shares of stock that this Corporation is authorized to issue is three hundred
twenty million (320,000,000) shares, of which three hundred million
(300,000,000) shares shall be Common Stock, par value $0.001 per share, and
twenty million (20,000,000) shares shall be Preferred Stock, par value $0.01 per
share. Of the authorized Preferred Stock, ten million (10,000,000) shares shall
be designated “Series A Convertible Preferred Stock” and shall have the rights,
preferences, powers, qualifications, restrictions and limitations set forth in
Exhibit A hereto, and the remaining ten million (10,000,000) shares shall be
undesignated. Subject to the limitations prescribed by law and the
provisions of this Certificate of Incorporation, the Board of Directors of this
Corporation is authorized to issue the undesignated Preferred Stock from time to
time in one or more series, each of such series to have such voting powers, full
or limited, or no voting powers, and such designations, preferences and
relative, participating, optional or other special rights, and such
qualifications, limitations or restrictions thereof, as shall be determined by
the Board of Directors in a resolution or resolutions providing for the issuance
of such Preferred Stock. Subject to the powers, preferences and
rights of any Preferred Stock, including any series thereof, having any
preference or priority over, or rights superior to, the Common Stock and except
as otherwise provided by law, the holders of the Common Stock shall have and
possess all powers and voting and other rights pertaining to the stock of this
Corporation and each share of Common Stock shall be entitled to one
vote.”
In
witness whereof, the Corporation has caused this Certificate of Amendment to be
duly executed this ___ day of December 2009.
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ThermoEnergy
Corporation
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/s/ Shawn R. Hughes
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Shawn
R. Hughes,
President
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PROXY
THERMOENERGY
CORPORATION — SPECIAL MEETING IN LIEU OF THE 2009
ANNUAL
MEETING OF SHAREHOLDERS
DECEMBER
15, 2009
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned hereby appoints Dennis C. Cossey AND Shawn R. Hughes, and each of
them, with full power of substitution, as proxy of the undersigned, to vote all
common shares held of record by the undersigned or which the undersigned is
entitled to vote, as designated below and upon all subjects that may properly
come before the meeting, at the Special Meeting in lieu of the
2009 Annual Meeting of Shareholders of ThermoEnergy Corporation, to
be held 10:00 a.m., on December 15, 2009, and any adjournments and postponements
of said meeting.
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ý
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PLEASE
MARK VOTES
AS
IN THIS EXAMPLE
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1.
Approval
of the amendment to the Certificate of Incorporation to increase to 300,000,000
the number of shares of Common Stock.
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FOR
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AGAINST
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ABSTAIN
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¨
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¨
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¨
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2.
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To
elect each of Dennis C. Cossey, J. Winder Hughes III and Arthur S.
Reynolds to serve as Directors until the 2010 Annual Meeting of
Shareholders, or until their respective successors are elected or
appointed.
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FOR
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WITHHOLD
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FOR
ALL EXCEPT (STRIKE A LINE THROUGH NOMINEE NAME)
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¨
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¨
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¨
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DENNIS C.
COSSEY
J. WINDER
HUGHES III
ARTHUR S.
REYNOLDS
Write-In
candidate: ___________________________________________________
3. Ratification
of the appointment of Kemp & Company as the independent public accountants
of ThermoEnergy for the fiscal year ending December 31, 2009.
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FOR
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AGAINST
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ABSTAIN
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¨
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¨
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¨
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I
plan to attend in person
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¨
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Mark
box at right if comments or address change
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¨
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I
do not plan to attend in person
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¨
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HAS
YOUR ADDRESS CHANGED?
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DO
YOU HAVE COMMENTS?
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THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THE BOARD
RECOMMENDS AN AFFIRMATIVE VOTE ON ALL PROPOSALS SPECIFIED. SHARES
WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES
REPRESENTED WILL BE VOTED
FOR
THE ELECTION OF
THE DIRECTORS,
FOR
RATIFICATION OF
KEMP & COMPANY AS THE INDEPENDENT PUBLIC ACCOUNTANTS AS SET FORTH IN THE
PROXY STATEMENT AND IN THE DISCRETION OF THE PROXY HOLDER, UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
PLEASE
VOTE, DATE AND SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
Date:
__________, 2009
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Shareholder
sign here
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Co-owner
sign here
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Please
sign exactly as your name(s) appear(s) on the Proxy. Joint owners
should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that
of an authorized officer who should state his or here title.
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