<PAGE>
                                                                   EXHIBIT 10.40

                            THERMOENERGY CORPORATION

                            15% CONVERTIBLE DEBENTURE

         Thermo Energy Corporation, a corporation duly organized and existing
under the laws of the State of Arkansas (the "Company"), for value received,
hereby absolutely and unconditionally promises to pay to Robert S. Trump (the
"Holder"), on 15th day of December, 2007, (the "Maturity Date") upon
presentation and surrender of this Debenture at the office of the Company in
Little Rock, Arkansas, the principal sum of Three Hundred thousand and 00/100
($300,000.00) Dollars, together with interest thereon from the date hereof at
the rate of fifteen (15%) percent per annum, and until payment of such principal
sum and accrued interest has been made.

         1.       AUTHORIZATION. This Debenture dated December 16, 2002, has
been duly authorized by the Board of Directors of the Company and is not part of
the issuance of any series of debentures.

         2.       CONVERSION. The Holder of this Debenture has the right, at his
option, exercisable at any time prior to the Maturity Date and on or after the
Maturity Date until the entire principal amount of this Debenture plus all
accrued interest thereon shall have been paid to Holder, to convert the entire
principal amount hereof and accrued interest hereon into shares (the "Conversion
Shares") of common shares of the Company, (the "Common Stock") at the conversion
price of One and 05/100 ($1.05) Dollars per share of Common Stock (the
"Conversion Price"), upon surrender of this Debenture, at the office of the
Company, accompanied by written notice of conversion duly executed by the
Holder.

         3.       PRINCIPAL OBLIGATION. The obligation for the Company is
absolute and unconditional to pay the principal of and interest on this
Debenture at the place, at the time, and at the rate herein prescribed.

         4.       REDEMPTION. The Debentures may not be redeemed by the Company
prior to maturity.

         5.       TRANSFERABILITY. Transfer of this Debenture is restricted, and
the Debentures may not be transferred by the Holder except in compliance with
all applicable federal and stat securities laws. This Debenture will be
registered in the Holder's name on the books of the Company. No transfer hereof
shall be valid unless made at such office by the Holder or the Holder's attorney
or other duly authorized representative.

         6.       CORPORATE OBLIGATION. No recourse hereunder, or for any claim
based hereon or otherwise in respect thereof, shall be had against any promoter,
subscriber to shares, incorporator, either through any trustee, receiver, of any
other person, whether by virtue of any constitution, statute, or rule of law, or
by the enforcement of any assessment or penalty or otherwise; it being expressly
understood that this Debenture is solely a corporate obligation of the Company,
and that any and all such personal liability, either at common law or in equity
or

<PAGE>

by constitution or statute, of, and any and all such rights and claims against,
every such promoter, subscriber, incorporator, shareholder, officer, or
director, as such, are hereby expressly waived and released by every holder
hereof by the acceptance of this Debenture and as a part of the consideration
for the issuance hereof.

         7.       EVENTS OF DEFAULT. Any of the following events shall
constitute an event of default hereunder:

                  (a)      The Company shall fail to pay any principal or
interest of this Debenture when due; or

                  (b)      The Company shall (i) generally not pay (or admit in
writing its inability to pay) its debts as they become due, (ii) file, or
consent by answer or otherwise to the filing against it of, a petition for
relief, reorganization, or arrangement or any other petition in bankruptcy, or
for liquidation, or to take advantage of any bankruptcy, debt relief, or
insolvency law of any jurisdiction, as now constituted or hereafter in effect,
(iii) make an assignment for the benefit of creditors, (iv) consent to the
appointment of a custodian, receiver, trustee, or similar officer for it or for
any substantial part of its assets, (v) liquidate or otherwise transfer
substantially all of its assets, (vi) dissolve, or (vii) taken any action for
the purpose of effectuating any of the foregoing; or

                  (c)      A court, governmental authority, or tribunal of
competent jurisdiction shall enter an order (i) appointing a custodian,
receiver, trustee or similar officer for the Company or for a substantial part
if its assets, or (ii) directing the dissolution, winding-up or liquidation of
the undersigned, or (iii) constituting an order for relief with respect to the
Company, or (iv) approving any petition with respect to the undersigned for
relief, reorganization, or arrangement or to take advantage of any bankruptcy,
debt relief or insolvency law of any jurisdiction, as now constituted or
hereafter in effect; or if any such petition (or any petition seeking any of the
foregoing orders) is filed against the Company and not dismissed within thirty
(30) days; or

                  (d)      Failure by the Company promptly to lift any
execution, distraint, garnishment, attachment, or similar process, of such
consequence as will impair its ability to pay its obligations under this
Debenture when due; or

                  (e)      The Company shall breach or default under any other
note, warrant, instrument or agreement of which the Company and Holder are
parties.

         Upon the occurrence of an event of default, then (i) if the event is
one listed in paragraphs (b)(ii), (c)(iii), or (c)(iv) above, the entire
outstanding indebtedness evidenced by this Debenture shall automatically become
immediately due and payable, without notice or demand, and (ii) upon any other
event of default, the Holder, at his option, may declare the entire outstanding
indebtedness evidenced by this Debenture immediately due and payable. If the
Company is in default under the terms of this Debenture and this Debenture is
placed in the hands of an attorney for collection, by suit or otherwise, the
Company will pay all costs of collection, including reasonable attorneys' fees.
From and after maturity of this Debenture,


                                      -2-

<PAGE>

whether by acceleration, extension or otherwise, and from and after the
occurrence of an event of default and for so long as such event shall be
continuing, the principal amount of this Debenture (and any unpaid interest
hereon which shall then be due and payable) shall bear interest at the lesser of
(a) 24% per annum or (b) the maximum rate allowable under applicable law. The
Company hereby waives presentment, demand, notice of dishonor and protest, and
agrees that the Holder may, without releasing liability of the Company, grant
extensions or renewals hereof from time to time, successively or otherwise and
for any term or terms without prejudice to his rights hereunder.

         8.       ISSUANCE OF SHARES. For purposes of this Agreement and
notwithstanding anything to the contrary contained herein, "Common Stock" of the
Corporation shall mean and include any and all shares of common stock of the
Company, whether now or hereafter authorized or issued, shares issued by way of
dividend or upon an increase, reduction, substitution or reclassification of
comment stock, and upon any merger, consolidation or reorganization of the
Company.

         9.       ADDITIONAL PROVISIONS CONCERNING CONVERSION OF THIS DEBENTURE.

                  (a)      Upon the conversion of this Debenture, the Company
shall issue and deliver to the Holder a certificate or certificates for the
number of full shares of Conversion Shares to which the Holder is entitled,
registered in the name or names specified by the Holder, and cash with respect
to any remaining fractional interest in a share.

                  (b)      All of the Conversion Shares issued upon the
conversion of this Debenture shall be duly and validly issued, fully paid and
nonassessable and the Company shall pay all documentary, stamp or other taxes
and governmental charges in connection with the issuance or delivery of any
Conversion Shares upon conversion of this Debenture. In addition, upon issuance,
the Conversion Shares shall be free and clear of any and all liens,
encumbrances, adverse interests, claims, charges, levies, restrictions,
agreements and taxes of any nature whatsoever except only for applicable
restrictions under state and federal securities laws with regard to the transfer
of the Conversion Shares.

                  (c)      Each person in whose name any certificate or
certificates for shares of Conversion Shares is issued shall for all purposes be
deemed to have become the holder of record of such shares on the date on which
the Debenture was converted, irrespective of the date of delivery of the
certificate or certificates, except that if the date of conversion is a date
when the stock transfer books of the Company are closed, a personal shall be
deemed to have become the holder of the Conversion Shares at the close of
business on the immediately preceding date on which the stock transfer books are
open.

         10.      ADJUSTMENTS IN CONVERSION PRICE AND CONVERSION SHARES.

                  (a)      Adjustment in Conversion Price. If at anytime from
and after the date hereof, the Company shall issue shares of common Stock at a
price per share ("Issuance Price") which is less than the Conversion Price, or
if at any time from and after the date hereof, the Company shall issue warrants,
options, convertible notes or debentures, or any other convertible


                                      -3-

<PAGE>

security, having an exercise or conversion price or rate which is less than the
Conversion Price, then, in any such event, the Conversion Price shall be reduced
to an amount equal to the lowest Issuance Price at which any Common Stock shall
hereafter be issued or to the lowest such exercise or conversion price for any
such convertible security, as the case may be. In addition, if at any time from
and after the date hereof, the Company shall issue shares of Common Stock at an
Issuance Price less than the then current market value per share at the time of
such issuance ("Market Value"), then the Conversion Price shall be reduced (but
not below $.001 per share) by an amount equal to the difference between the
Market Value and the Issuance Price.

                  (b)      Change in Class of Shares. If, at any time or from
time to time, the Company, by stock dividend, stock split, subdivision, reverse
split, consolidation, reorganization, reclassification of shares, or otherwise,
changes as a whole its outstanding Common Stock into a different class of
shares, the class of shares into which the Common Stock has been changed shall
replace the Common Stock for the purposes of the Debenture so that the Holder
shall be entitled to receive, and shall receive upon the conversion of this
Debenture, shares of the class of stock into which the Common Stock has been
changed.

                  (c)      Stock Dividends and Split-ups. If at any time or from
time to time, the number of outstanding shares of Common Stock of the Company is
increased by a stock dividend payable in shares of Common Stock or by a stock
split or subdivision of Common Stock, or otherwise, then, on the day following
the date fixed for the determination of holders of Common Stock entitled to
receive the stock dividend or split-up, the number of Conversion Shares issuable
on the conversion of each Debenture shall be increased in proportion to the
increase in outstanding shares of Common Stock and the then applicable
Conversion Price shall be correspondingly decreased.

                  (d)      Aggregation of Shares. If at any time or from time to
time, the number of outstanding shares of Common Stock of the Company is
decreased by a reverse split, consolidation or reclassification of shares of
Common Stock, or otherwise, then, after the effective date of the reverse split,
consolidation or reclassification, the number of Conversion Shares issuable on
conversion of each Debenture shall be decreased in proportion to the decrease in
outstanding shares of Common Stock and the then applicable Conversion Price
shall be correspondingly increased.

                  (e)      Special Stock Dividends. If at any time or form time
to time, shares of any class of stock of the Company (other than Common Stock)
are issued by way of a stock dividend on outstanding Common Stock, then,
commencing with the day following the date fixed for the determination of
holders of Common Stock entitled to receive the stock dividend, in addition to
any shares of Common Stock receivable upon conversion of the Debentures, the
Holder shall upon conversion of the Debentures be entitled to receive, as nearly
as practicable, the same number of shares of dividend stock, plus any shares
issued upon any subsequent change, replacement, subdivision, or combination of
the stock dividend, to which the Holder would have been entitled if the
Debenture would have been converted immediately prior o the stock dividend. No
adjustment in the Conversion Price shall be made by virtue of the happening of
any event specified in this Subsection 10(e).


                                      -4-

<PAGE>

                  (f)      Merger, Consolidation and Sale. If, at any time, a
consolidation or merger of the Company with or into another company (other than
a consolidation or merger in which the Company is the continuing corporation and
which does not result in any reclassification or change of outstanding shares
issuable upon conversion of the Debentures), or sale or transfer of all or
substantially all of its assets to another corporation, is effective, then, as a
condition of the consolidation, merger or sale, the Holder shall have the right
to convert the Debentures for the kind and amount of shares and other securities
and property receivable upon the consolidation, merger, sale or transfer by a
holder of the number of shares of Common Stock which might have been purchased
upon conversion of the Debentures immediately prior to he consolidation, merger,
sale or transfer by a holder of the number of shares of Common Stock which might
have been purchased upon conversion of the Debentures immediately prior to the
consolidation, merger, sale or transfer and provision shall be made whereby the
Holder after the transaction shall have the right to purchase and receive, upon
the basis and upon the terms and conditions specified in this Debenture, the
same number of shares purchasable immediately prior to the transaction upon the
exercise of the rights represented by this Debenture. The Company shall not
effect any consolidation, merger, transfer or sale unless, prior to the
consummation of the transaction, the successor corporation (if other than the
Company) resulting from the consolidation or merger, or the corporation
purchasing the assets of the Company, assumes by written instrument executed and
delivered to the Holder the obligation to deliver to the Holder the shares of
stock in accordance with the preceding sentence.

                  (g)      Pre-emptive or Other Rights. If at any time prior to
the conversion of this Debenture, the Company offers any shares of its Common
Stock to the holders of its Common Stock as a class for subscription in
accordance with the preemptive or other rights of those stockholders, the Holder
shall be entitled to subscribe for the same number of shares of Common Stock as
the Holder would have been entitled to receive, upon converting this Debenture
and becoming a stockholder of the Company, immediately prior to the record or
effective date with respect to the preemptive or other rights.

                  (h)      Distribution of Assets. If at any time after the date
of this Debenture, the Company makes any distribution of its assets upon or with
respect to its shares of Common Stock as a liquidating or partial liquidating
dividend (other than upon a liquidation, dissolution or winding up of the
Corporation as provided for in Subsection 11(a) below, or other than as a cash
dividend payable out of earnings or any surplus legally available for
dividends), the Holder shall upon conversion of the Debenture after the record
date of distribution or in the absence of a record date, after the date of
distribution, receive, in addition to the shares subject to conversion, the
amount of the assets or a sum equal to the value of the assets at the time of
the distribution, which would have been distributed to the Holder if this
Debenture had been converted immediately prior to the record date for the
distribution or, in the absence of a record date, immediately prior to the date
of the distribution.

                  (i)      Other Change. If the Company takes any action with
respect to its shares of Common Stock, other than as set forth in this
Debenture, which would adversely affect the rights of the Holder, then the
Conversion Shares shall be changed in a manner which is equitable under the
circumstances. Unless the context otherwise indicates, all references to shares
of Common Stock in this Debenture shall, in the event of a change under this
Section 10, be


                                      -5-

<PAGE>

deemed to refer to any other securities or property included in the Common Stock
pursuant to the change.

                  (j)      Notice of Adjustment. Upon any adjustment of the
Conversion Price or number of Conversion Shares issuable on conversion of this
Debenture pursuant to the provisions of this Section 10, then and in each case,
the Company shall give prompt written notice of adjustment to the Holder by
certified mail, return receipt requested at the address(es) registered with the
Company. The notice shall set forth in reasonable detail the facts requiring the
change, the Conversion Price resulting from the adjustment and the increase or
decrease if any, in the number of Conversion Shares as so changed, setting forth
in reasonable detail the method of calculation and the facts upon which the
calculation is based. Without limiting the foregoing notice requirement, in case
at any time:

                           (i)      the Company pays any dividends payable in
stock upon its Common Stock or makes any distributions (other than regular cash
dividends) to the holders of its Common Stock;

                           (ii)     the Company offers for subscription pro rata
to the holders of its common Stock any additional shares of stock of any class
or any other rights; or

                           (iii)    there is a capital reorganization, a
reclassification of the capital stock of the Company, or a consolidation or
merger of the Company with, or a sale of all or substantially all of its assets
to another corporation; then, in any or more of these cases, the Company shall
give written notice to the Holder in the manner set forth above of the date on
which(i) the books of the Company close or a record is taken for the dividend,
distribution or subscription rights, or (ii) the reorganization,
reclassification, consolidation, merger or sale takes place. The notice also
shall specify the date as of which the holders of the Common Stock of record
shall participate in dividend distribution or subscription rights, or shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon the reorganization, reclassification, consolidation, merger or
sale. The notice shall be given at least 30 days prior to the transaction in
question and not less than 20 days prior to the record date or the date on which
the Company's transfer books are closed with respect to the transaction.

         11.      PROVISIONS FOR PROTECTION OF DEBENTURE HOLDERS.

                  (a)      In the event of the liquidation, dissolution or
winding up of the Company, a notice shall be filed by the Company with the
Holder at least 60 days before the record date (which shall be specified in the
notice) for determining holders of the shares of Common Stock entitled to
receive any distribution upon the liquidation, dissolution or winding up. The
notice must contain: (i) the date on which the transaction is to take place;
(ii) the record date (which must be at least 60 days after the giving of the
notice) as of which holders of Common Stock entitled to receive distributions
upon the liquidation, dissolution or winding up shall be determined; (iii) a
brief description of the transaction; (iv) a brief description of the
distributions, if any, to be made to holders of the Common Stock as a result of
the transaction; and (v) an estimate of the fair market value of the
distributions. The notice shall also specify the date on which the right to
convert this Debenture shall expire. A copy of the notice shall be mailed to


                                      -6-

<PAGE>

Holder at the address(es) registered with the Company not more than 30 and not
less than 20 days before the record date.

                  (b)      The Company shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock the number
of shares that are from time to time sufficient to permit the conversion of all
outstanding Debentures and the issuance of the Conversion Shares. If at any time
the number of authorized by unissued shares of Common Stock is not sufficient
for these purposes, the Corporation shall take all action that maybe necessary
to increase its authorized but unissued shares to the number of shares
sufficient for these purposes. In accordance with the provisions of a separate
agreement dated even date herewith between the Company and the Holder, the
Conversion Shares issuable upon the conversion of this Debenture will be
registered with the Securities and Exchange commission under the Securities Act
of 1933, as amended, so as to permit the public offering and sale of the
Conversion Shares in compliance with that Act. The Corporation shall take all
action necessary to keep the registration current and effective to permit a
public offering and sale of the Shares by their holders until all such
securities are sold.

                  (c)      If any of the Debentures becomes lost, stolen,
mutilated or destroyed, the Company shall issue a new Debenture of like
denomination, tenor and date as the Debenture lost, stolen, mutilated or
destroyed. Any new Debenture shall constitute any original contractual
obligation of the company, regardless of whether the allegedly lost, stolen,
mutilated or destroyed Debenture is at any time enforceable by anyone.

                  (d)      All rights of action are vested in the Holder. Any
Holder may, in the Holder's own behalf and for the Holder's own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company suitable to enforce, the right to convert this Debenture for Common
Stock, and for any other purpose in connection with the Debenture.

         12.      REPRESENTATIONS OF THE COMPANY. As a material inducement to
the Holder, the Corporation represents, warrants and covenants to and with the
Holder as follows:

                  (a)      All shares of common Stock that may be issued upon
the conversion of the Debentures shall, upon issuance, be duly and validly
issued, fully paid and nonassessable, and free from all liens, encumbrances,
adverse interests, claims, charges, levies, restrictions, agreements and taxes
of any nature whatsoever with respect to the purchase and issuance of the
Conversion Shares except only for applicable restrictions under state and
federal securities laws with regard to the transferability thereof. The company
has done and performed all acts and things necessary to make the Debentures the
valid, binding and legal obligations of the Company and the Debentures are the
valid, binding and legal obligations of the Company.

                  (b)      The Company is a corporation duly organized and
validly existing under the laws of the State of Arkansas, has all requisite
corporate power and authority to own, operate and carry on its business and to
enter into the Debentures and to perform all of its obligations hereunder and is
duly qualified and in good standing in the State of Arkansas.


                                      -7-

<PAGE>

                  (c)      The Company has obtained all necessary authorizations
and approvals from its Board of Directors required for the execution and
delivery of the Debentures and all collateral documents arising out of or
relating to this transaction. This Debenture has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms
(except as may be limited by applicable bankruptcy and insolvency laws).

                  (d)      Neither the execution and delivery of this Debenture
nor any of the other instruments or documents contemplated hereby, nor the
issuance of the Conversion Shares, nor the incurrence of the obligations herein
set forth (i) will result in a violation of, or constitute a default under, the
certificate of incorporation or bylaws of the Company, or any material
obligations, agreements, covenants or conditions contained in any bond,
debenture, mortgage, loan agreement, lease, joint venture or other agreement or
instrument, mortgage, loan agreement, lease, joint venture or other agreement or
instrument to which the Company is a party or by which it or any of its
properties may be bound, or (ii) is in violation of any order, rule, regulation,
writ, injunction, or decree of any domestic government, governmental
instrumentality or court.

                  (e)      The Company has complied with and shall comply with
all applicable federal, state and local laws, ordinances, rules, regulations,
orders and standards applicable to the issuance of the Debentures. The
transactions underlying or giving rise to the Debentures and the issuance of the
conversion Shares upon the conversion thereof shall not violate any federal,
state or local law, rule or regulation.

         13.      USURY. If any payment required hereunder shall be determined
to be a payment of interest in excess of the maximum legal rate of interest
allowable under any applicable usury laws, such excess payment shall, at the
sole option of Holder, (i) be reduced by an amount necessary to reduce the same
to the permitted amount, or (ii) be credited by Holder against the outstanding
principal balance, it being the intention of the parties hereto that only a
permissible rate of interest shall be charged to and payable by the Company.

         14.      NO WAIVER. No delay or omission on the part of the Holder in
exercising any right hereunder shall operate as a waiver of such right or any
other right. A waiver or any one occasion shall not be construed as a bar to, or
waiver of, any such right on any future occasions.

         15.      GOVERNING LAW. This Debenture may not be modified orally and
shall be governed by and construed in accordance with the laws of the State of
Arkansas, without reference to principles of conflict of laws.

         16.      SUCCESSORS AND ASSIGNS. The provisions of this Debenture are
binding upon the successors, assigns and legal representatives of the Company,
and shall inure to the benefit of the Holder, his heirs, successors, assigns and
legal representatives.

         17.      UNENFORCEABLE PROVISIONS. If any one or more of the provisions
contained in this Debenture shall for any reason be held invalid, illegal or
unenforceable for any reason the same


                                      -8-

<PAGE>

shall not affect any other provision of this Debenture, which shall be construed
as if such invalid, illegal or unenforceable provision had never been contained
herein.

         18.      GENDER. The use of any gender, pronoun, adjective or word
herein shall be deemed to include all other genders, and the use of any singular
term herein shall be deemed to include the plural, and vice versa.

         IN WITNESS WHEREOF, ThermoEnergy Corporation has caused this Debenture
to be duly executed in its name by the signature of its President and attested
by the signature of its Secretary.



        DATED: December 16, 2002.



                                       THERMO ENERGY CORPORATION



                                       By: /s/ P.L. Montesi
                                          --------------------------------------
                                       Title: P.L. Montesi, President
                                             -----------------------------------



                                       ATTEST:


                                       /s/ Dennis C. Cossey
                                       -----------------------------------------
                                       Dennis C. Cossey, Secretary

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1993, AS AMENDED, OR TE ARKANSAS SECURITIES ACT, AS
AMENDED. THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED,
SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF REGISTRATION OR
THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED, THE ARKANSAS SECURITIES ACT, AS AMENDED, AND ANY OTHER
APPLICABLE STATE SECURITIES LAWS.


                                      -9-