Exhibit
      10.1

     

    AGREEMENT
      FOR THE PURCHASE AND SALE OF SECURITIES


    


    This
      Agreement for the Purchase and Sale of Securities (hereinafter called the
“Agreement”)
      is
      made and entered into as of the 2nd
      day of
      July 2007 (the “Effective
      Date”)
      by and
      among CASTion Corporation, a
      Massachusetts corporation (“CASTion”),
      the
      holders of shares of the capital stock of CASTion identified on Exhibit
      A
      attached
      hereto and made a part hereof (each a “Seller”),
      and
      ThermoEnergy Corporation,
      a
      Delaware corporation (the “Buyer”).
      CASTion, the Sellers and the Buyer are hereinafter collectively called the
      “Parties.”

    


    WHEREAS,
      the
      authorized capital stock of CASTion consists of 2,000,000 shares of common
      stock, no par value (the “Common
      Stock”),
      of
      which 4,724 shares are issued and outstanding, and 1,340,000 shares of preferred
      stock, no par value (the “Preferred
      Stock”),
      of
      which (i) no shares designated as Series A (the “Series
      A Stock”)
      are
      issued and outstanding, (ii) no shares designated as Series A-1 (the
“Series
      A-1 Stock”)
      are
      issued and outstanding, (iii) no shares designated as Series B-1 (the
“Series
      B-1 Stock”)
      are
      issued and outstanding, (iv) no shares designated as Series B-2 (the
“Series
      B-2 Stock”)
      are
      issued and outstanding, (v) 124,968 shares designated as Series C-1 (the
“Series
      C-1 Stock”)
      are
      issued and outstanding, (vi) 189,278.1 shares designated as Series C-2 (the
      “Series
      C-2 Stock”)
      are
      issued and outstanding, (vii) 125,000 shares designated as Series C-3 (the
      “Series
      C-3 Stock”)
      are
      issued and outstanding and (viii) 128,756.09 shares designated as Series C-4
      (the “Series
      C-4 Stock”)
      are
      issued and outstanding;
      and

    


    WHEREAS,
      the shares of Common Stock and Preferred Stock owned beneficially and of record
      by the Sellers (the “Shares”)
      are as
      set forth on Exhibit
      A
      hereto,
      and such Shares constitute, in the aggregate, (i) 0.00% of the total issued
      and
      outstanding shares of the Common Stock, (ii) 71.81% of the total issued and
      outstanding shares of the Series C-1 Stock, (iii) 98.97% of the total issued
      and
      outstanding shares of the Series C-2 Stock, (iv) 100.00% of the total issued
      and
      outstanding shares of the Series C-3 Stock, (iv) 90.72% of the total issued
      and
      outstanding shares of the Series C-4 Stock; and (v) 90.31% of the total issued
      and outstanding shares of Common Stock on an as-converted basis;
      and

    


    WHEREAS,
      no shares of Series A Stock, Series A-1 Stock, Series B-1 Stock or Series B-2
      Stock are issued and outstanding; and 

    


    WHEREAS,
      the Sellers are the holders of certain promissory notes or other obligations
      of
      CASTion (collectively, the “Notes”),
      as
      set forth on Exhibit
      A
      hereto;
      and

    


    WHEREAS,
      each of the Sellers has agreed to sell, assign, transfer, and convey all of
      the
      Shares and Notes owned by it to the Buyer and the Buyer has agreed to purchase
      from the Sellers all of such Shares and Notes on the terms hereinafter set
      forth; 

    


    NOW
      THEREFORE, in consideration of the mutual promises of the Parties hereinafter
      set forth and in reliance on the representations, warranties, covenants, and
      conditions contained in this Agreement; and for other good and valuable
      consideration, the Parties hereby agree as follows: 

    


    Recitals

    


    CASTion
      operates a waste water technology business in Worcester, Massachusetts
      (collectively, the "Business").

     

    
      
        
        

      

      
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    CASTion
      is the lessee under the leases which are more particularly described on
Exhibit
      B,
      attached hereto and made a part hereof (the "Leases").

    


    CASTion
      is a party to those other contracts and more particularly described on
Exhibit
      C,
      attached hereto and made a part hereof (the "Contracts").

    


    CASTion
      is the owner of certain intellectual property including patent-pending R-CASTTM
brand technology, more particularly described on Exhibit
      D,
      attached hereto and made a part here of, together with certain proprietary
      engineering know-how and trade secrets (the "CASTion
      Technology").

    


    CASTion
      is the owner of certain other assets used in the operation of, or otherwise
      related to the Business (the “Other
      Assets”
and,
      together with the Leases, the Contracts and the CASTion Technology, the
“Assets”),
      including, without limitation, those accounts receivable more particularly
      described on Exhibit
      E,
      attached hereto and made a part here of (the "Accounts
      Receivable")
      and
      those bank accounts more particularly described on Exhibit
      F,
      attached hereto and made a part hereof. 


     

    Agreement

    


    1. Purchase
      of Shares and Notes.
      

    


    1.1 Purchase
      of Shares.
      Subject
      to the terms and conditions set forth herein, at the Closing (as defined below),
      each of the Sellers agrees to sell, assign, transfer, and convey to the Buyer
      all of the Shares and Notes owned by such Seller and the Buyer agrees to
      purchase from each Seller all of the Shares and Notes owned by such
      Seller.

    


    1.2. Purchase
      Price.
       The
      total
      purchase price payable by the Buyer to the Sellers for the Shares (the “Purchase
      Price”) shall consist, in the aggregate, of:

     

    
      	 	
              a.

            	
              Cash,
                in the aggregate amount of $1,850,000.00;
                and

            


    

     

    
      	 	
              b.

            	
              4,394,338
                shares of the common stock, par value $0.001 per share, of the Buyer
                (“ThermoEnergy
                Common Stock”) (the
                “Thermo
                Shares”);
                and 

            


    

    


    
      	 	
              c.

            	
              Convertible
                Promissory Notes of the Buyer, in substantially the form of Exhibit
                G
                attached hereto (the “Convertible
                Notes”)
                in the aggregate principal amount of $3,353,126.62, convertible into
                shares of ThermoEnergy Common Stock (the “Conversion
                Shares”)
                as set forth in the Convertible Notes; and


            


    

    


    
      	
            	d.	
              Warrants,
                in substantially the form of Exhibit
                H
                attached hereto (the “Warrants”)
                for the purchase an aggregate of 4,232,425 shares
                of ThermoEnergy Common Stock (the “Warrant
                Shares”).

            


    

    


    The
      Purchase Price shall be allocated to and among the Sellers as set forth on
      Exhibit
      A.

     

    2. Closing.
      The
      closing of the purchase and sale of the Shares hereunder (the “Closing”)
      shall
      be held at the offices of the Buyer in Little Rock, Arkansas or at such other
      place as CASTion and the Buyer may designate at 10:00 a.m. Central Time on
      the
      Effective Date or on such other date and at such other time as CASTion and
      the
      Buyer may designate; provided, however, that if all of the Conditions have
      not
      been satisfied or waived within twenty (20) days after the Effective Date,
      then
      either (i) CASTion, (ii) the Buyer or (iii) Sellers who, in the aggregate,
      hold
      a majority of the Shares may, upon notice to the other Parties, terminate this
      Agreement with no further obligation to any Party, so long as the failure to
      satisfy the Conditions is not the result of any action or inaction on the part
      of the terminating Party.  

     

    
      
        
        

      

      
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    4.
       Sellers’
      Representations and Warranties.
      Each
      Seller, severally and not jointly, hereby represents and warrants to the Buyer
      as follows:

    


    4.1. Organization
      and Authority.
      If such
      Seller is an entity, it is duly organized, validly existing and in good standing
      under the laws of the jurisdiction of its organization and has the requisite
      corporate or partnership power and authority to enter into and to consummate
      the
      transactions contemplated by this Agreement and otherwise to carry out its
      obligations hereunder. 

    


    4.2. Authorization
      and Enforceability.
      The
      execution and delivery of this Agreement by such Seller, and the performance
      by
      such Seller of the transactions contemplated by this Agreement, have been duly
      authorized by all necessary corporate or partnership or other applicable like
      action, on the part of such Seller. This Agreement has been duly executed by
      such Seller and constitutes the valid and legally binding obligation of such
      Seller, enforceable against such Seller in accordance with its terms.

    


    4.3. Title.
      Such
      Seller has good, valid and merchantable title to the Shares and Notes identified
      as owned by such Seller on Exhibit
      A,
      free
      and clear of all liens, encumbrances, or restrictive covenants or other
      restrictions, and upon the sale of such Shares and Notes to the Buyer in
      accordance with the terms of this Agreement, the Buyer will become the record
      and beneficial owner of such Shares and Notes free and clear of all liens,
      encumbrances, or restrictive covenants or other restrictions.

    


    4.4. Other
      Agreements.
      Neither
      the execution and delivery of this Agreement nor the performance of this
      Agreement by such Seller will (a) result in a violation or breach of any term
      or
      provision of or constitute a default (or an event which, with notice or lapse
      of
      time or both, would result in a default) under, or result in the termination
      or
      in a right of termination, or cancellation of, or accelerate the performance
      required by, or result in being declared void or voidable, any of the terms,
      conditions or provisions of such Seller’s certificate of incorporation,
      operating agreement, partnership agreement or other governing document (if
      such
      Seller is an entity) or any instrument, commitment or obligation to which such
      Seller is a party, or by which such Seller or any of such Seller’s assets
      (including, without limitation the Shares and Notes identified as owned by
      such
      Seller on Exhibit
      A)
      may be
      bound, or (b) result in the creation of any lien, security interest, charge
      or
      encumbrance on any of the Shares or Notes identified as owned by such Seller
      on
Exhibit
      A,
      or (c)
      violate any law, rule, or governmental regulation or order, writ, injunction,
      decree, judgment or ruling of any court or governmental authority applicable
      to
      such Seller or any of the Shares or Notes identified as owned by such Seller
      on
Exhibit
      A.
      None of
      the Shares owned by such Seller is subject to any voting agreement, right of
      first refusal, “drag along” or “carry along” agreement or any similar agreement
      or covenant.

    


    4.5. Access
      to Information Regarding CASTion.
      Such
      Seller acknowledges
      that it has been afforded (i) access to information about CASTion and its
      financial condition, results of operations, business, properties, management
      and
      prospects sufficient to enable it to evaluate its investment in the Shares
      and
      Notes and (ii) the opportunity to obtain such additional information that
      CASTion possesses or can acquire without unreasonable effort or expense that
      such Seller deems necessary to make an informed investment decision with respect
      to its sale of the Shares and Notes pursuant to this Agreement. 

     

    
      
        
        

      

      
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    4.6 Independent
      Investment Decision.
      Such
      Seller has independently evaluated the merits of its decision to sell Shares
      and
      Notes pursuant to this Agreement and to acquire Thermo Shares, Convertible
      Notes
      and Warrants pursuant to this Agreement and such Seller confirms that it has
      not
      relied on the advice of CASTion, the Buyer, any other Seller or any of their
      respective officers, directors, general partners or managers in making such
      decision. Such Seller acknowledges and agrees that the Buyer has not made any
      representations or warranties with respect to the transactions contemplated
      hereby other than those specifically set forth in Section 6 hereof.

    


    5. CASTion’s
      Representations and Warranties.
      CASTion
      hereby represents and warrants to the Buyer, except
      as
      set forth on the disclosure statement separately provided to the
      Buyer,
      as
      follows:

    


    5.1 Organization
      and Qualification. CASTion
      is a corporation duly organized, validly existing and in good standing under
      the
      laws of the Commonwealth of Massachusetts, with the requisite power and
      authority to own and use its properties and assets and to carry on the Business
      as
      now
      being conducted.
      CASTion
      is not in violation of any of the provisions of its Articles of Organization
      or
      bylaws. CASTion is duly qualified to conduct business and is in good standing
      as
      a foreign corporation in each jurisdiction listed on Exhibit
      I
      attached
      hereto and made a part hereof, which are the only jurisdictions in which the
      failure to be so qualified and in good standing could have or reasonably be
      expected to result in a material adverse effect on CASTion or the Business
      as a
      whole (a “Material
      Adverse Effect”),
      and
      no proceedings have been instituted in any such jurisdiction revoking, limiting
      or curtailing, or seeking to revoke, such power and authority or
      qualification.

    


    5.2. Authorization
      and Enforceability.
      The
      execution and delivery by CASTion of this Agreement, and performance by CASTion
      of the transactions contemplated by this Agreement, have been duly authorized
      by
      all necessary corporate action on the part of such CASTion, its Board of
      Directors and its shareholders. This Agreement has been duly executed by CASTion
      and constitutes the valid and legally binding obligation of CASTion, enforceable
      against CASTion in accordance with its terms.

     

    5.3. Default
      Under Other Agreements.
      Neither
      the execution and delivery of this Agreement nor the performance of this
      Agreement by CASTion will (a) result in a violation or breach of any term or
      provision of or constitute a default (or an event which, with notice or lapse
      of
      time or both, would result in a default) under, or result in the termination
      or
      in a right of termination, or cancellation of, or accelerate the performance
      required by, or result in being declared void or voidable, any of the terms,
      conditions or provisions of (i) CASTion’s Articles of Organization or bylaws or
      (ii) except as would not be reasonably expected to have a Material Adverse
      Effect, any instrument, commitment or obligation to which CASTion is a party,
      or
      by which CASTion or, the Business may be bound, or (b) result in the creation
      of
      any lien, security interest, charge or encumbrance on any of CASTion’s assets or
      (c) violate any law, rule, or governmental regulation or order, writ,
      injunction, decree, judgment or ruling of any court or governmental authority
      applicable to CASTion, the Business or any of CASTion’s assets. 

    


    5.4. Subsidiaries.
      CASTion
      has no direct or indirect subsidiaries. 

    


    5.5 The
      Shares.
      All of
      the issued and outstanding shares of capital stock of CASTion, including without
      limitation the Shares, are validly issued and are fully paid, non-assessable
      and
      free of preemptive and similar rights, each having the rights of its particular
      class or series as set forth in CASTion’s Articles of Organization.

    


    5.6 The
      Notes.
      Each of
      the Notes is the legal, valid and binding obligation of CASTion, enforceable
      against CASTion in accordance with its terms. CASTion has asserted no defense
      against the rights of the holders of the Notes to collect the amounts due,
      or to
      become due, thereunder, and no basis for any such assertion exists.

     

    
      
        
        

      

      
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    5.7 Filings,
      Consents and Approvals.
      CASTion
      is not required to obtain any consent, waiver, authorization or order of, give
      any notice to, or make any filing or registration with, any court or other
      federal, state, local or other governmental authority (a “Governmental
      Authority”)
      or
      other person or entity in connection with the execution, delivery and
      performance by CASTion of this Agreement and the consummation of the
      transactions contemplated hereby. 

    


    5.8 Capitalization.
      The
      authorized capital stock of CASTion consists of 2,000,000 shares of common
      stock, no par value (the “Common
      Stock”),
      of
      which 4,724 shares are issued and outstanding, and 1,340,000 shares of preferred
      stock, no par value (the “Preferred
      Stock”),
      of
      which (i) no shares designated as Series A (the “Series
      A Stock”)
      are
      issued and outstanding, (ii) no shares designated as Series A-1 (the
“Series
      A-1 Stock”)
      are
      issued and outstanding, (iii) no shares designated as Series B-1 (the
“Series
      B-1 Stock”)
      are
      issued and outstanding, (iv) no shares designated as Series B-2 (the
“Series
      B-2 Stock”)
      are
      issued and outstanding, (v) 124,968 shares designated as Series C-1 (the
“Series
      C-1 Stock”)
      are
      issued and outstanding, (vi) 189,278.1 shares designated as Series C-2 (the
      “Series
      C-2 Stock”)
      are
      issued and outstanding, (vii) 125,000 shares designated as Series C-3 (the
      “Series
      C-3 Stock”)
      are
      issued and outstanding and (viii) 128,756.09 shares designated as Series C-4
      (the “Series
      C-4 Stock”)
      are
      issued and outstanding. No person has any right of first refusal, preemptive
      right, right of participation, or any similar right to participate in the
      transactions contemplated by this Agreement.  Except as set forth on
Exhibit
      I
      attached
      hereto and made a part hereof, there are no outstanding options, warrants,
      rights to subscribe to, calls or commitments of any character whatsoever
      relating to, or securities, rights or obligations convertible into or
      exchangeable for, or giving any person any right to subscribe for or acquire,
      any shares of Common Stock or Preferred Stock, or contracts, commitments,
      understandings or arrangements by which CASTion or any Subsidiary is or may
      become bound to issue additional shares of Common Stock, Preferred Stock or
      any
      other equity securities (collectively, the “Options”).
      On or
      prior to the time of Closing, CASTion shall have taken all action necessary
      to
      terminate all then-outstanding Options other than Options granted to employees
      under CASTion’s stock option plan. 

    


    5.9 Financial
      Statements and Subsequent Events.
      CASTion
      has furnished to the Buyer the financial statements of CASTion as of December
      31, 2006. Such financial statements have been prepared in accordance with GAAP
      applied on a consistent basis during the periods involved, except as may be
      otherwise specified in such financial statements or the notes thereto, and
      fairly present in all material respects the financial position of CASTion and
      as
      of and for the dates thereof and the results of operations and cash flows for
      the periods then ended, subject, in the case of unaudited statements, to normal,
      immaterial, year-end audit adjustments and to the absence of footnotes. Since
      December 31, 2006, (i) CASTion has not incurred any liabilities (contingent
      or
      otherwise) other than (A) trade payables, accrued expenses and other liabilities
      incurred in the ordinary course of business, (B) indebtedness represented by
      the
      Notes, (C) indebtedness to the Buyer, and (D) liabilities not required to be
      reflected in CASTion’s financial statements pursuant to GAAP, (iii) CASTion has
      not altered its method of accounting or the identity of its auditors, and (iv)
      CASTion has not declared or made any dividend or distribution of cash or other
      property to its stockholders or purchased, redeemed or made any agreements
      to
      purchase or redeem any shares of its capital stock,.

    


    5.10 Litigation. There
      is
      no pending litigation, investigation or other proceeding against CASTion which
      (i) adversely affects or challenges the legality, validity or enforceability
      of
      this Agreement or (ii) could, if there were an unfavorable decision,
      individually or in the aggregate, have or reasonably be expected to result
      in a
      Material Adverse Effect; and no such litigation, investigation or other
      proceeding has been threatened in writing. Neither CASTion, nor any officer
      thereof (in his or her capacity as such), is the subject of any pending
      litigation, investigation or other proceeding involving a claim of violation
      of
      or liability under federal or state law; and no such litigation, investigation
      or other proceedings has been threatened in writing.

     

    
      
        
        

      

      
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    5.11 Compliance.
      CASTion
      (i) is in default under or in violation of (and no event has occurred that
      has
      not been waived that, with notice or lapse of time or both, would result in
      a
      default by CASTion under), nor has CASTion received notice of a claim that
      it is
      in default under or that it is in violation of, any indenture, loan or credit
      agreement or any other agreement or instrument to which it is a party or by
      which it or any of its properties is bound (whether or not such default or
      violation has been waived), (ii) is in violation of any order of any court,
      arbitrator or governmental body, or (iii) is or has been in violation of any
      statute, rule or regulation of any governmental authority, including without
      limitation all foreign, federal, state and local laws relating to taxes,
      environmental protection, occupational health and safety, product quality and
      safety and employment and labor matters, except in each case as could not,
      individually or in the aggregate, reasonably be expected to result in a Material
      Adverse Effect.

    


    5.12 Regulatory
      Permits.
      CASTion
      possesses all certificates, authorizations and permits issued by the appropriate
      federal, state, local or foreign regulatory authorities necessary to conduct
      the
      Business, except where the failure to possess such permits could not,
      individually or in the aggregate, reasonably be expected to result in a Material
      Adverse Effect, and CASTion has not received any notice of proceedings relating
      to the revocation or modification of any such permits.

    


    5.13 Assets. 
      CASTion
      owns no real property and has good and marketable title in all personal property
      owned by it that is material to the Businesses, including without limitation
      the
      Other Assets, in each case free and clear of all liens, except for liens as
      do
      not materially affect the value of such property and do not materially interfere
      with the use made and proposed to be made of such property by CASTion. The
      Other
      Assets are in good working order, reasonable wear and tear excepted. The Leases
      are valid, subsisting and enforceable leases with which CASTion and, to
      CASTion’s knowledge, all of the other parties thereto are in compliance, and
      such Leases will remain in full force and effect following consummation of
      the
      transactions contemplated by this Agreement. The Contracts are valid, subsisting
      and enforceable agreements with which CASTion and, to CASTion’s knowledge, all
      of the other parties thereto are in compliance, and such Contracts will remain
      in full force and effect following consummation of the transactions contemplated
      by this Agreement. The Accounts Receivable were generated by valid sales of
      goods or services, have not been disputed and are believed by CASTion to be
      fully collectible (subject to reasonable reserves for bad accounts).


    


    5.14 Intellectual
      Property.
      CASTion
      owns, or has rights to use, the CASTion Technology and all other patents, patent
      applications, trademarks, trademark applications, service marks, trade names,
      copyrights, licenses and other similar rights that are necessary or material
      for
      use in connection with the Business as it is currently conducted and which
      the
      failure to so have could, individually or in the aggregate, reasonably be
      expected to result in a Material Adverse Effect. There are no claims filed
      or,
      to CASTion’s knowledge, made by others against CASTion to the effect that the
      CASTion Technology or any other intellectual property used by CASTion violates
      or infringes upon the rights of such claimant, and CASTion knows of no basis
      for
      any such claim. All of CASTion’s rights in the CASTion Technology are
      enforceable and, to CASTion’s knowledge, there is no existing infringement by
      another person or entity of any of such rights. To the knowledge of CASTion,
      no
      present or former officer or employee of, or consultant to, CASTion who
      participated in the development of any of the CASTion Technology was, at the
      time of such development, subject to any agreement with any former employer
      or
      other person or entity that in any way restricted his or her right to be
      employed by, or to consult with, CASTion or to participate in the development
      of
      the CASTion Technology.

     

    
      
        
        

      

      
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    5.15 Transactions
      with Affiliates.
      None of
      the Sellers and none of the officers or directors of CASTion and, to the
      knowledge of CASTion, none of the employees of CASTion is a party to any
      transaction with CASTion (other than for services as employees, officers and
      directors), including any contract, agreement or other arrangement providing
      for
      the furnishing of services to or by, providing for rental of real or personal
      property to or from, or otherwise requiring payments to or from any Seller,
      officer, director or such employee or, to the knowledge of CASTion, any entity
      in which any Seller, officer, director, or any such employee has a substantial
      interest or is an officer, director, trustee or partner.

    


    5.16 Application
      of Anti-Takeover Provisions.
      CASTion
      has taken all necessary action, if any, in order to render inapplicable any
      control share acquisition, business combination, poison pill (including any
      distribution under a rights agreement) or other similar anti-takeover provision
      under CASTion’s Articles of Organization or the laws of the Commonwealth of
      Massachusetts that is or could become applicable to the Buyer as a result of
      the
      Buyer, the Sellers and CASTion fulfilling their obligations or exercising their
      rights under this Agreement, including without limitation the Sellers’ sale of
      the Shares and the Notes and the Buyer’s ownership of the Shares and the
      Notes.

    


    5.17 Environmental
      Matters. 
      To the
      knowledge of CASTion, (i) CASTion has complied
      with all
      applicable Environmental Laws; (ii) the properties currently owned or operated
      by CASTion (including soils, groundwater, surface water, buildings or other
      structures) are not contaminated by CASTion with any Hazardous Substances (and
      any representation to any contamination of any of such properties by any third
      party is expressly excluded); (iii) the properties formerly owned or operated
      by
      CASTion were not contaminated by CASTion with Hazardous Substances during the
      period of ownership or operation by CASTion (and any representation to any
      contamination of any of such properties by any third party is expressly
      excluded); (iv) CASTion is not subject to liability for any Hazardous Substance
      disposal or contamination on any third party property; (v) CASTion has not
      been
      associated with any release or threat of release of any Hazardous Substance;
      (vi) CASTion has not received any notice, demand, letter, claim or request
      for
      information alleging that CASTion may be in violation of or liable under any
      Environmental Law; and (vii) CASTion is not subject to any orders, decrees,
      injunctions or other arrangements with any Governmental Authority or subject
      to
      any indemnity or other agreement with any third party relating to liability
      under any Environmental Law or relating to Hazardous Substances. As used in
      this
      Agreement, the term “Environmental Law” means any federal, state, local or
      foreign law, regulation, order, decree, permit, authorization, opinion, common
      law or agency requirement relating to: (A) the protection, investigation or
      restoration of the environment, health and safety, or natural resources; (B)
      the
      handling, use, presence, disposal, release or threatened release of any
      Hazardous Substance or (C) noise, odor, wetlands, pollution, contamination
      or
      any injury or threat of injury to persons or property and the term “Hazardous
      Substance” means any substance that is: (i) listed, classified or regulated
      pursuant to any Environmental Law; (ii) any petroleum product or by-product,
      asbestos-containing material, lead-containing paint or plumbing, polychlorinated
      biphenyls, radioactive materials or radon; or (iii) any other substance which
      is
      the subject of regulatory action by any Governmental Authority pursuant to
      any
      Environmental Law. 

    


    5.18 Taxes.
      CASTion
has,
      or shall
      have as of Closing, filed or validly extended all federal, state, local and
      foreign tax returns required by law, including, but not limited to all income,
      use, unemployment, federal withholding, payroll, ad valorem and property (real
      and personal) and all unemployment compensation taxes and assessments, and
      paid
      all taxes, assessments and penalties due and payable. There are no present
      disputes involving CASTion as to any taxes
      and
      CASTion has no knowledge of a tax deficiency which has been or might be asserted
      or threatened against CASTion which, if adversely determined, would reasonably
      be expected to have a Material Adverse Effect.

     

    
      
        
        

      

      
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    5.19 Employees.
      CASTion
      has no written or oral contracts, understandings or commitments involving the
      employment by or compensation of any person by CASTion which are not terminable
      at will. Seller has complete and full power to discharge and dismiss any or
      all
      of its current employees, without obligation to any person or
      entity.

     

    6. Buyer’s
      Representations and Warranties.
      The
      Buyer hereby represents and warrants to the Sellers and to CASTion as
      follows:

    


    6.1 Organization
      and Qualification. The
      Buyer
      is a corporation duly organized, validly existing and in good standing under
      the
      laws of the State of Delaware, with the requisite power and authority to own
      and
      use its properties and assets and to carry on its business as currently
      conducted. The Buyer is not in violation of any of the provisions of its
      Certificate of Incorporation or bylaws. The Buyer is duly qualified to conduct
      business and is in good standing as a foreign corporation in each jurisdiction
      in which the failure to be so qualified and in good standing could have or
      reasonably be expected to result in a material adverse effect on the Buyer
      or
      its business, and no proceedings have been instituted in any such jurisdiction
      revoking, limiting or curtailing, or seeking to revoke, such power and authority
      or qualification.

    


    6.2 Authorization
      and Enforceability.
      The
      execution and delivery by the Buyer of this Agreement, and performance by the
      Buyer of the transactions contemplated by this Agreement, have been duly
      authorized by all necessary corporate action on the part of such the Buyer,
      its
      Board of Directors and its shareholders. This Agreement has been duly executed
      by the Buyer and constitutes the valid and legally binding obligation of the
      Buyer, enforceable against the Buyer in accordance with its terms.
      The
      Convertible Notes and the Warrants have been duly authorized and, when issued
      as
      contemplated by this Agreement, will be the legal, valid and binding obligations
      of the Buyer, enforceable against the Buyer in accordance with their respective
      terms.

    


    6.3 Other
      Agreements.
      Neither
      the execution and delivery of this Agreement nor the performance of this
      Agreement by the Buyer will (a) result in a violation or breach of any term
      or
      provision of or constitute a default (or an event which, with notice or lapse
      of
      time or both, would result in a default) under, or result in the termination
      or
      in a right of termination, or cancellation of, or accelerate the performance
      required by, or result in being declared void or voidable, any of the terms,
      conditions or provisions of the Buyer’s Articles of Incorporation or bylaws or
      any instrument, commitment or obligation to which the Buyer is a party, or
      by
      which the Buyer or any of the Buyer’s assets may be bound, or (b) result in the
      creation of any lien, security interest, charge or encumbrance on any of the
      Buyer’s assets or (c) violate any law, rule, or governmental regulation or
      order, writ, injunction, decree, judgment or ruling of any court or governmental
      authority applicable to the Buyer or any of the Buyer’s assets. 

    


    6.4 ThermoEnergy
      Common Stock.
      The
      Thermo Shares are duly authorized and, when issued at Closing in accordance
      with
      the terms of this Agreement, will be validly issued shares of ThermoEnergy
      Common Stock, fully paid, non-assessable and free of preemptive and similar
      rights.
      A
      sufficient number of shares of
      ThermoEnergy Common Stock to permit exercise in full of the Warrants and full
      conversion of the Convertible Notes have been reserved and set aside and the
      Warrant Shares and the Conversion Shares will, when issued and paid for upon
      exercise of the Warrants or conversion of the Convertible Notes in accordance
      with their respective terms, be duly authorized and validly issued shares of
      ThermoEnergy Common Stock, fully paid, non-assessable and free of preemptive
      and
      similar rights.

    


    6.5 SEC
      Documents.
      The
      Buyer has filed all of the reports, proxy statements and other documents
      (collectively, SEC
      Documents”)
      that
      the Buyer has been required to file with the Securities and Exchange Commission
      (the “Commission”).
      As of
      their respective dates, the SEC Documents complied in all material respects
      with
      the requirements of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) and the rules and regulations of the Commission thereunder, and
      none of the SEC Documents, when filed, contained any untrue statement of a
      material fact or omitted to state a material fact required to be stated therein
      or necessary to make the statements therein, at the time and in the light of
      the
      circumstances under which they were made, not misleading. The financial
      statements of the Buyer included in the SEC Documents complied as to form in
      all
      material respects with applicable accounting requirements and with published
      rules and regulations of the Commission with respect thereto, have been prepared
      in accordance with generally accepted accounting principles applied on a
      consistent basis during the periods involved (except as may be indicated therein
      or in the notes thereto or, in the case of the unaudited statements, as
      permitted by Form 10-Q (or Form 10-QSB, as the case may be) of the Commission)
      and fairly present (subject, in the case of the unaudited statements, to normal
      recurring audit adjustments) the consolidated financial position of the Buyer
      and its consolidated subsidiaries as at the dates thereof and the consolidated
      results of their operations and cash flows for the periods then ended.


     

    
      
        
        

      

      
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    6.6 Independent
      Investment Decision.
      The
      Buyer acknowledges and agrees that neither the Sellers nor CASTion has made
      any
      representations or warranties with respect to CASTion, the Assets, the Business
      or the transactions contemplated hereby other than those specifically set forth
      in Sections 4, 5 and 8 hereof.

     

    7. Investment
      Representations of the Buyer

    


    7.1.
       Investment
      Intent.
      The
      Buyer is acquiring the Shares and the Notes for its own account for purposes
      of
      investment and without expectation, desire, or need for resale and not with
      the
      view toward distribution or resale of the Shares or the Notes. The Buyer
      understands that no public market now exists for the Shares or the Notes and
      that a public market may never exist for the Shares or the Notes.

    


    7.2 Access
      to Information.
      The
      Buyer acknowledges
      that it has been afforded (i) access to information about CASTion and its
      financial condition, results of operations, business, properties, management
      and
      prospects sufficient to enable it to evaluate its investment in the Shares
      and
      the Notes and (ii) the opportunity to obtain such additional information that
      CASTion or the Sellers possess or can acquire without unreasonable effort or
      expense that the Buyer deems necessary to make an informed investment decision
      with respect to its purchase of the Shares and the Notes.

    


    7.3.
       Securities
      Act.
      The
      Buyer acknowledges that it understands that the Shares and the Notes to be
      purchased have not been registered under the Securities Act of 1933
      (“Securities
      Act”)
      or
      under any state securities law and understands that the Shares and the Notes
      cannot be resold in a transaction to which the Securities Act and state
      securities laws apply unless (i) subsequently registered under the Securities
      Act and applicable state securities laws or (ii) exemptions from such
      registration requirements are available. 

    


    8. Investment
      Representations of the Sellers.
      Each
      Seller, severally and not jointly, hereby represents and warrants to the Buyer
      as follows:

    


    8.1.
       Investment
      Intent.
      Such
      Seller is acquiring the Thermo Shares being issued to it pursuant to Section
      1.2(b) and will, upon conversion of the Convertible Note being issued to it
      pursuant to Section 1.2(c) or exercise of the Warrant being issued to it
      pursuant to Section 1.2(d), be acquiring the Conversion Shares or the Warrant
      Shares issued upon such conversion or exercise, for its own account for purposes
      of investment and without expectation, desire, or need for resale and not with
      the view toward distribution or resale of such shares of ThermoEnergy Common
      Stock. 

     

    
      
        
        

      

      
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    8.2 Access
      to Information.
      Such
      Seller acknowledges
      that it has been afforded (i) access to information about the Buyer and its
      financial condition, results of operations, business, properties, management
      and
      prospects sufficient to enable it to evaluate its investment in ThermoEnergy
      Common Stock and (ii) the opportunity to obtain such additional information
      that
      the Buyer possesses or can acquire without unreasonable effort or expense that
      such Seller deems necessary to make an informed investment decision with respect
      to its investment in shares of ThermoEnergy Common Stock.

    


    8.3.
       Securities
      Act.
      Such
      Seller acknowledges that it understands that the Thermo Shares to be issued
      to
      it pursuant to Section 1.2(b), the Convertible Note to be issued to it pursuant
      to Section 1.2(c) and the Warrant to be issued to it pursuant to Section 1.2(d)
      have not been, and that, except as set forth in Section 12 of this Agreement,
      the Thermo Shares, the Conversion Shares issuable upon conversion of such
      Convertible Note and the Warrant Shares issuable upon exercise of such Warrant
      will not be, registered under the Securities Act or under any state securities
      law and understands that such ThermoEnergy Shares cannot be resold in a
      transaction to which the Securities Act and state securities laws apply unless
      (i) subsequently registered under the Securities Act and applicable state
      securities laws or (ii) exemptions from such registrations are available.


    


    8.4 Accredited
      Investor Status.
      Such
      Seller is an “accredited investor” (as such term is defined in Rule 501 of
      Regulation D promulgated by the Commission pursuant to the Securities
      Act.

     

    9.  Covenants
      Pending Closing.
      CASTion
      agrees that between the date hereof and the Closing:

    


    9.1. Conduct
      of Business.
      CASTion
      shall maintain its books and records, and carry on the Business in the usual,
      regular and ordinary course and in substantially the same manner as heretofore
      conducted and shall use its commercially reasonable efforts to preserve intact
      its present business organization, keep available the services of its present
      employees and preserve its goodwill and its relationships with customers,
      suppliers and others having business dealings with it. 

    


    9.2. Maintenance
      of Assets.
      CASTion
      shall maintain all of the Assets in good operating condition, ordinary wear
      and
      tear excepted, and will not sell,
      transfer, pledge or voluntarily subject to any lien, charge or other encumbrance
      any of the Assets except in the ordinary course of business. 

    


    9.3.
       Employee
      Compensation.
      CASTion
      shall not pay any bonuses, increase any employee’s salary or other compensation,
      or hire any employees except in the ordinary course of business consistent
      with
      past practices, and shall not enter into any agreements or arrangements to
      pay
      any such bonuses, to make any such increase in any employee’s salary or other
      compensation, or to hire any such employee.

    


    9.4. Insurance.
      CASTion
      will maintain and keep in full force and effect all insurance existing on the
      date hereof relating to the Business or the Assets.

    


    9.5. Corporate
      Existence.
      CASTion
      will continue to maintain its existence as a Massachusetts corporation in good
      standing.

    


    9.6 Access.
      CASTion
      shall allow the Buyer and its representatives and advisers access, during normal
      business hours, to visit and inspect all of CASTion’s facilities and shall
      permit the Buyer and its representatives and advisers to have reasonable access
      to all of the Assets (including the right to review and make extracts of
      CASTion’s books and records).

     

    
      
        
        

      

      
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    9.7. Other
      Actions.
      CASTion
      will not take any action which would or could reasonably be expected to result
      in any of the representations and warranties of CASTion set forth in this
      Agreement becoming untrue in any material respect at any time on or prior to
      the
      Closing.

    


    9.8.
       Advice
      of Changes.
      CASTion
      and each Seller shall promptly advise the Buyer in writing of any change or
      event known to CASTion or to such Seller would or could reasonably be expected
      to have a Material Adverse Effect.

    


    10.  Buyer’s
      Conditions to Closing.
      The
      obligation of the Buyer to purchase the Shares and the Notes under this
      Agreement is subject to the fulfillment prior to or at the Closing of each
      of
      the following conditions (each of which may be waived by the Buyer in its sole
      discretion):

    


    10.1. Representations
      and Warranties.
      The
      representations and warranties of the Sellers and CASTion contained herein
      or in
      any exhibit, schedule, certificate or other document delivered pursuant to
      the
      provisions hereof, shall be true in all material respects as of the Effective
      Date and as of the Closing.

    


    10.2. Performance
      of Agreements.
      Each of
      the Sellers and CASTion shall have performed and complied in all material
      respects with all of the agreements and conditions required by this Agreement
      to
      be performed or complied with by them at or prior to the Closing. It is
      expressly acknowledged and agreed that the Buyer shall have no obligation to
      proceed to Closing and to purchase the Shares being sold hereunder by any Seller
      unless the Sellers are, at Closing, ready, willing and able to sell to the
      Buyer
      the lesser of (x) all of the Shares identified as owned by such Sellers on
      Exhibit
      A
      and (y)
      Shares having a combined voting power of not less than 90% of CASTion’s capital
      stock on an as converted basis. 

    


    10.3. Material
      Adverse Changes.
      There
      shall have occurred no event which could be reasonably anticipated to have
      a
      Material Adverse Effect.

     

    10.4 Inspections.
      From
      the Effective Date to the Closing, CASTion shall have allowed the Buyer and
      its
      representatives and advisers access, during normal business hours, to visit
      and
      inspect all of CASTion’s facilities and shall have permitted the Buyer and its
      representatives and advisers to have reasonable access to all of the Assets
      (including the right to review and make extracts of CASTion’s books and
      records).

    


    10.5 Corporate
      Actions.
      CASTion
      shall have delivered to the Buyer (i) copies of all resolutions adopted by
      the
      Board of Directors and/or the stockholders of CASTion approving this Agreement
      and the transactions contemplated hereby, certified by the Secretary of CASTion
      as being duly adopted and in full force and effect as of the Closing Date,
      (ii)
      the resignations of all of the officers and directors of CASTion, effective
      as
      of the Closing, (iii) copies of the Articles of Organization of CASTion and
      all
      amendments thereto, certified by the Secretary of State of the Commonwealth
      of
      Massachusetts, and (iv) a copy of the by-laws of CASTion, certified by the
      Secretary of CASTion as being in full force and effect as of the Closing
      Date.

    


    10.6 Management
      Bonus Pool.
      The
      Buyer shall have authorized and set aside, for issuance to the officers and
      employees of CASTion at the Closing (in distributive amounts to be determined
      by
      the board of directors of CASTion (as constituted immediately prior to the
      Closing), the following:

    


    
      	 	
              a.

            	
              $150,000.00
                in cash; 

            


    

     

    
      
        
        

      

      
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              b.

            	
              175,000
                shares of ThermoEnergy Common Stock (the “Management
                Shares”);
                and

            


    

    


    
      	 	
              c.

            	
              Warrants,
                in substantially the form of Exhibit
                H,
                for the purchase an aggregate of 300,000 Warrant Shares (the “Management
                Warrants”).

            


    

    


    The
      Buyer
      shall also have authorized and set aside, for issuance to Farley &
Associates, Inc. (“Farley”), an affiliate of the Company, at the Closing, (i)
      18,750 ThermoEnergy Common Stock (the “Farley
      Shares”) and
      (ii)
      a Warrant to purchase 37,500 Warrant Shares.

    


    In
      addition, the Buyer shall have executed and delivered to CASTion an agreement,
      in substantially the form of Exhibit
      I
      attached
      hereto (the “Bonus
      Agreement”),
      pursuant to which the Buyer would pay an aggregate of $300,000.00 to the
      officers and employees of CASTion (in distributive amounts to be determined
      by
      the compensation committee of the board of directors of CASTion (as constituted
      immediately prior to the Closing)) upon the happening of certain events
      specified in the Bonus Agreement.

    


    For
      all
      purposes herein (including without limitation Section 12), (i) the Management
      Warrants referred to in this Section 10.6 shall be deemed to be Warrants,
      notwithstanding the fact that such Management Warrants may be in a form, and
      may
      contain rights and restrictions, different from those of the Warrants and (ii)
      the Farley Shares and the Management Shares shall be deemed to be ThermoShares.
      For purposes of Section 12, Farley, the initial holders of the Management
      Warrants, and the initial holders of the Management Shares shall be deemed
      to be
“Sellers.” 

    


    10A. Sellers’
      Conditions to Closing.
      The
      obligations of the Sellers to sell the Shares and the Notes under this Agreement
      are subject to the fulfillment prior to or at the Closing of each of the
      following conditions (each of which may be waived by the Sellers in their sole
      discretion):

     

    10A.1. Representations
      and Warranties.
      The
      representations and warranties of the Buyer contained herein or in any exhibit,
      schedule, certificate or other document delivered pursuant to the provisions
      hereof, shall be true in all material respects as of the Effective Date and
      as
      of the Closing.

    


    10A.2. Performance
      of Agreements.
      The
      Buyer shall have performed and complied in all material respects with all of
      the
      agreements and conditions required by this Agreement to be performed or complied
      with by it prior to the Closing. 

    


    10A.3 Corporate
      Actions.
      The
      Buyer shall have delivered to CASTion and the Sellers copies of all resolutions
      adopted by the Board of Directors of the Buyer approving this Agreement and
      the
      transactions contemplated hereby, certified by the Secretary of the Buyer as
      being duly adopted and in full force and effect as of the Closing
      Date.

    


    10A.4 Management
      Bonus Pool.
      The
      Buyer shall have authorized and set aside the management bonus pool referred
      to
      in Section 10.6 above.

    


    11. Closing.
      

    


    11.1 Stock
      Certificates and Notes.
      At
      Closing, each Seller shall deliver to the Buyer (i) the certificate or
      certificates representing the Shares identified as owned by such Seller on
      Exhibit
      A,
      together with duly executed stock powers sufficient to effect the transfer
      of
      such Shares to the Buyer or its nominee and (ii) the Notes identified as owned
      by such Seller on Exhibit
      A,
      duly
      endorsed to the order of the Buyer. If
      any
      Note or any certificate representing the Shares has been lost, stolen or
      destroyed, the affected Seller may deliver to the Buyer, in lieu of such Note
      or
      stock certificate, an affidavit of that fact and an agreement to indemnify
      the
      Buyer in a manner reasonably satisfactory to Buyer against any claim that may
      be
      made against the Buyer with respect to such Note or certificate; provided,
      however, that Buyer shall not require any Seller to provide any bond or other
      security for such indemnity.

     

    
      
        
        

      

      
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    11.2. Payment
      of Purchase Price.
      At
      Closing, against delivery by each Seller to the Buyer of the stock certificate
      or certificates, stock powers and Notes deliverable pursuant to Section 11.1,
      the Buyer will deliver to such Seller (i) the cash portion of the Purchase
      Price
      payable to such Seller in the amount specified on Exhibit
      A,
      (ii) a
      Convertible Note, payable to the order of such Seller, in the principal amount
      specified on Exhibit
      A
      and
      (iii) a Warrant, registered in the name of such Seller, for the purchase of
      the
      number of Warrant Shares specified on Exhibit
      A.

    


    11.3. Issuance
      of ThermoEnergy Common Stock.
      At
      Closing, the Buyer shall issue and deliver to the transfer agent for the
      ThermoEnergy Common Stock irrevocable instructions to issue to the Sellers
      the
      number of Thermo Shares issuable pursuant to Section 1.2(b), in the amounts
      specified on Exhibit
      A.
      

    


    11.4. Management
      Bonus Pool.
      At the
      Closing, the Buyer shall deliver to CASTion, for further distribution to the
      officers and employees of CASTion (in distributive amounts to be determined
      by
      the compensation committee of the board of directors of CASTion (as constituted
      immediately prior to the Closing), the cash portion of the management bonus
      pool
      referred to in Section 10.6 above, and the Buyer shall execute and deliver
      to
      CASTion, for further distribution to the officers and employees of CASTion
      (in
      distributive amounts to be determined by the compensation committee of the
      board
      of directors of CASTion (as constituted immediately prior to the Closing),
      the
      Management Warrants. In addition, the Buyer shall execute and deliver to CASTion
      the Bonus Agreement; 

    


    11.5 Other
      Documents.
      At
      Closing, CASTion and the Sellers shall, at the Buyer’s expense, execute and
      deliver to the Buyer such other instruments and documents as the Buyer’s
      attorney may reasonably determine to be necessary or convenient to effect the
      transactions contemplated by this Agreement and to afford the Buyer the benefit
      of this Agreement. At Closing, the Buyer shall, at the Buyer’s expense, execute
      and deliver to CASTion and/or the Sellers such other instruments and documents
      as CASTion’s attorney may reasonably determine to be necessary or convenient to
      effect the transactions contemplated by this Agreement and to afford CASTion
      and
      the Sellers the benefit of this Agreement.

    


    12. Registration
      Rights.
      

    


    12.1. Piggy-Back
      Registration.
      If
      (but
      without any obligation to do so) the Buyer proposes to register (including
      for
      this purpose, a registration effected by the Buyer for stockholders other than
      the Sellers) any shares of ThermoEnergy Common Stock under the Securities Act
      in
      connection with the public offering of such shares of ThermoEnergy Common Stock
      solely for cash other than (i) a registration statement on Form S-8 (or any
      successor form relating to the sale of securities to employees of the Buyer
      pursuant to a stock option, stock purchase or similar plan), (ii) a registration
      statement on Form S-4 (or any successor form relating to a merger, consolidation
      or similar transaction involving the Buyer), (iii) a registration on any form
      which does not include substantially the same information as would be required
      to be included in a registration statement covering the sale by the Sellers
      of
      the Thermo Shares, the Conversion Shares or the Warrant Shares, (iv) a
      registration in which the only ThermoEnergy Common Stock being registered is
      ThermoEnergy Common Stock issuable upon conversion of debt securities which
      are
      also being registered, or (v) a registration statement being filed by the Buyer
      pursuant to a contractual obligation existing prior to the date of this
      Agreement which prohibits the inclusion of additional shares, the Buyer shall,
      at such time, promptly give each Seller written notice of such registration.
      Upon the written request of a Seller given within twenty (20) days after mailing
      of such notice by the Buyer, the Buyer shall, subject to the provisions of
      this
      Section 12, cause to be registered under the Securities Act all of the
      Thermo Shares, Conversion Shares and Warrant Shares (collectively, the
“Registrable
      Securities”)
      that
      each such Seller has requested to be registered. In
      the
      event that any such registration shall be, in whole or in part, an underwritten
      public offering of ThermoEnergy Common Stock, the number of Registrable
      Securities to be included in such an underwriting may be reduced or excluded
      partially or completely (pro rata among the requesting Sellers based upon the
      number of Registrable Securities owned by such Sellers) if and to the extent
      that the managing underwriter shall be of the opinion that the inclusion of
      some
      or all of the Registrable Securities would adversely affect the marketing of
      the
      securities to be sold by the Buyer therein; provided,
      however,
      that no
      such Registrable Securities may be excluded from such registration unless all
      securities of the Buyer held by any person (other than a Seller) who did not
      make the original request for registration shall first be excluded from such
      registration.
      The
      Buyer shall have the right, without penalty, to terminate or withdraw any
      registration initiated by it under this Section 12.1 prior to the
      effectiveness of such registration whether or not any Seller has elected to
      include securities in such registration.

     

    
      
        
        

      

      
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    12.2 Registration
      Obligations of the Buyer. In
      connection with the registration of the Registrable
      Securities for the account of the Sellers pursuant to Section 12.1, the Buyer
      shall:

     

    (a)Take
      all
      lawful action such that the registration statement and any amendment thereto
      does not, when it becomes effective, contain an untrue statement of a material
      fact or omit to state a material fact required to be stated therein or necessary
      to make the statements therein, not misleading and that the prospectus forming
      part of such registration statement, and any amendment or supplement thereto,
      does not at any time include an untrue statement of a material fact or omit
      to
      state a material fact required to be stated therein or necessary to make the
      statements therein, in light of the circumstances under which they were made,
      not misleading.

     

    (b)Comply
      with the provisions of the Securities Act with respect to the Thermo Shares,
      the
      Conversion Shares and the Warrant Shares covered by the registration statement
      until the earlier of (i) ninety (90) days after the registration statement
      has
      been declared effective or (ii) such time as all of such Registrable Securities
      have been disposed of in accordance with the intended methods of disposition
      by
      the Sellers as set forth in the prospectus forming part of the registration
      statement (the “Registration
      Period”).

     

    (c)Prior
      to
      the filing with the Commission of the
      registration statement (including any amendments thereto) and the distribution
      or delivery of any prospectus (including any supplements thereto), provide
      draft
      copies thereof to the Sellers and reflect in such documents all such comments
      as
      the Sellers (and their counsel) reasonably may propose.

     

    (d)(i) register
      or qualify the Registrable Securities covered by the registration statement
      under such securities or “blue sky” laws of such jurisdictions as the Sellers
reasonably
      request, (ii) prepare and file in such jurisdictions such amendments
      (including post-effective amendments) and supplements to such registrations
      and
      qualifications as may be necessary to maintain the effectiveness thereof at
      all
      times during the Registration Period, and (iii) take all such other lawful
      actions as may be necessary to maintain such registrations and qualifications
      in
      effect at all times during the Registration Period; provided,
      however,
      that the
      Buyer shall not be required in connection therewith or as a condition thereto
      to
      (A) qualify to do business in any jurisdiction where it would not otherwise
      be required to qualify, (B) subject itself to general taxation in any such
      jurisdiction or (C) file a general consent to service of process in any
      such jurisdiction.

     

    
      
        
        

      

      
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    (e)As
      promptly as practicable after becoming aware of such event, notify each Seller
      whose Registrable Securities are covered by the registration statement of the
      occurrence of any event, as a result of which the prospectus included in the
      registration statement, as then in effect, includes an untrue statement of
      a
      material fact or omits to state a material fact required to be stated therein
      or
      necessary to make the statements therein, in light of the circumstances under
      which they were made, not misleading, and promptly prepare an amendment to
      the
      registration statement and supplement to the prospectus to correct such untrue
      statement or omission, and deliver a number of copies of such supplement and
      amendment to each Seller as such Seller may reasonably request.

     

    (f)As
      promptly as practicable after becoming aware of such event, notify each Seller
      whose Registrable Securities are covered by the registration statement of the
      issuance by the Commission of any stop order or other suspension of the
      effectiveness of the registration statement and take all lawful action to effect
      the withdrawal, rescission
      or
      removal of such stop order or other suspension.

     

    (g)Make
      generally available to its security holders as soon as practicable, but in
      any
      event not later than eighteen
      (18)
      months
      after (i) the effective date of the registration statement, and
      (ii) the effective date of each post-effective amendment to the
      registration statement, as the case may be, an earnings statement of the Buyer
      and its subsidiaries complying with Section 11(a) of the Securities Act and
      the rules and regulations of the Commission thereunder.

     

    (h)Make
      reasonably available for inspection by the Sellers and any underwriter
      participating in any disposition pursuant to the registration statement, and
      any
      attorney, accountant or other agent retained by such Sellers or any such
      underwriter all relevant financial and other records, pertinent corporate
      documents and properties of the Buyer and its subsidiaries, and (ii) cause
      the Buyer’s officers, directors and employees to supply all information
      reasonably requested by such Sellers or any such underwriter, attorney,
      accountant or agent in connection with the registration statement, in each
      case,
      as is customary for similar due diligence examinations; provided,
      however,
      that all
      records, information and documents that are designated in writing by the Buyer,
      in good faith, as confidential, proprietary or containing any nonpublic
      information shall be kept confidential by such Sellers and any such underwriter,
      attorney, accountant or agent (pursuant to an appropriate confidentiality
      agreement in the case of any such Seller or agent), unless such disclosure
      is
      made pursuant to judicial process in a court proceeding (after first giving
      the
      Buyer an opportunity promptly to seek a protective order or otherwise limit
      the
      scope of the information sought to be disclosed) or is required by law, or
      such
      records, information or documents become available to the public generally
      or
      through a third party not in violation of an accompanying obligation of
      confidentiality; and provided,
      further,
      that, if
      the foregoing inspection and information gathering would otherwise disrupt
      the
      Buyer’s conduct of its business, such inspection and information gathering
      shall, to the maximum extent possible, be coordinated on behalf of the Sellers
      and the other parties entitled thereto by one firm of counsel designated
      by and
      on behalf of the majority in interest of Sellers and other parties;
      and

     

    (i)Use
      its
      commercially reasonable efforts to cause all Registrable Securities covered
      by
      the registration statement to be listed or qualified for trading on the
      principal trading market, if any, on which the ThermoEnergy Common Stock is
      traded or listed on the effective date of the registration
      statement.

     

    
      
        
        

      

      
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    12.3 Obligations
      and Acknowledgements of the Sellers.
      In
      connection with the registration of the Thermo Shares and the Warrant Shares
      for
      the account of the Sellers pursuant to Section 12.1, the Sellers shall have
      the
      following obligations and hereby make the following
      acknowledgements:

     

    (a)It
      shall
      be a condition precedent to the obligations of the Buyer to include
      the
      Registrable Securities of a particular Seller
      in the
      registration statement
      that
      such Seller (i) shall furnish to the Buyer such information regarding
      itself, the shares of Thermo Energy Common Stock held by it and the intended
      method of disposition of the Registrable Securities held by it as shall be
      reasonably required to effect the registration of such Registrable Securities
      and (ii) shall execute such documents in connection with such registration
      as the Buyer may reasonably request. At least ten business days prior to the
      first anticipated filing date of a registration statement, the Buyer shall
      notify each Seller of the information the Company requires from such Seller
      (the
“Requested
      Information”)
      if such
      Seller elects to have any of its Registrable Securities included in the
      registration statement. If at least two business days prior to the anticipated
      filing date the Buyer has not received the Requested Information from a Seller
      (a “Non-Responsive
      Seller”),
      then
      the Buyer may file the registration statement without including any Registrable
      Securities for the account of such Non-Responsive Seller and the Buyer shall
      have no further obligations under this Section 12 to the Non-Responsive
      Seller.
      

     

    (b)Each
      Seller agrees to cooperate with the Buyer in connection with the preparation
      and
      filing of a registration statement under this Section 12, unless such Seller
      has
      notified the Buyer in writing of its election to exclude all of its Registrable
      Securities from such registration statement.

     

    (c)Each
      Seller agrees that, upon receipt of any notice from the Buyer of the occurrence
      of any event of the kind described in Section 12.2(e) or 12.2(f), it shall
      immediately discontinue its disposition of Registrable Securities pursuant
      to
      the registration statement until such Seller’s receipt of the copies of the
      supplemented or amended prospectus contemplated by Section 12.2(e) and, if
      so directed by the Buyer, such Seller shall deliver to the Buyer (at the expense
      of the Buyer) or destroy (and deliver to the Buyer a certificate of destruction)
      all copies in such Seller’s possession, of the prospectus covering such
      Registrable Securities current at the time of receipt of such notice.

     

    (d)Each
      Seller acknowledges that it may be deemed to be a statutory underwriter within
      the meaning of the Securities Act with respect to the Registrable Securities
      being registered for resale by it, and each Seller which includes Registrable
      Securities for offer and sale within a registration statement pursuant to this
      Section 12 hereby consents to the inclusion in such registration statement
      of a
      disclosure to such effect. 

     

    12.4 Expenses
      of Registration.
      All
      expenses incurred in connection with registrations, filings or qualifications
      pursuant to this Section 12, including, without limitation, all registration,
      listing, and qualifications fees, legal fees, printing and engraving costs,
      accounting fees, and the reasonable fees and expenses of one counsel to the
      Sellers (other than underwriting discounts and commissions) shall be borne
      by
      the Buyer. 

     

    12.5 Indemnification
      and Contribution.
      

     

    (a) Indemnification
      by the Buyer.
      The
      Buyer shall indemnify and hold harmless each Seller and each underwriter, if
      any, which facilitates the disposition of Registrable Securities for the account
      of the Sellers, and each of their respective officers and directors and each
      person who controls such Seller or underwriter within the meaning of
      Section 15 of the Securities Act or Section 20 of the Securities
      Exchange Act of 1934 (the “Exchange
      Act”)
      (each
      such person being sometimes hereinafter referred to as an “Indemnified
      Person”)
      from
      and against any losses, claims, damages or liabilities, joint or several, to
      which such Indemnified Person may become subject under the Securities Act or
      otherwise, insofar as such losses, claims, damages or liabilities (or actions
      in
      respect thereof) arise out of or are based upon an untrue statement or alleged
      untrue statement of a material fact contained in any registration statement
      or
      an omission or alleged omission to state therein a material fact required to
      be
      stated therein or necessary to make the statements therein, not misleading,
      or
      arise out of or are based upon an untrue statement or alleged untrue statement
      of a material fact contained in any prospectus or an omission or alleged
      omission to state therein a material fact required to be stated therein or
      necessary to make the statements therein, in the light of the circumstances
      under which they were made, not misleading; and the Buyer hereby agrees to
      reimburse such Indemnified Person for all reasonable legal and other expenses
      incurred by them in connection with investigating or defending any such action
      or claim as and when such expenses are incurred; provided,
      however, that
      the
      Buyer shall not be liable to any such Indemnified Person in any such case to
      the
      extent that any such loss, claim, damage or liability arises out of or is based
      upon (i) an untrue statement or alleged untrue statement made in, or an
      omission or alleged omission from, such registration statement or prospectus
      in
      reliance upon and in conformity with written information furnished to the Buyer
      by such Indemnified Person expressly for use therein or (ii) in the case of
      the occurrence of an event of the type specified in Section 12.2(e), the
      use by the Indemnified Person of an outdated or defective prospectus after
      the
      Buyer has provided to such Indemnified Person an updated prospectus correcting
      the untrue statement or alleged untrue statement or omission or alleged omission
      giving rise to such loss, claim, damage or liability.

     

    
      
        
        

      

      
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    (b) Indemnification
      by the Sellers and Underwriters.
      Each
      Seller agrees, severally
      and not jointly, as
      a
      consequence of the inclusion of any of its Registrable Securities in a
      registration statement pursuant to this Section 12, and each underwriter, if
      any, which facilitates the disposition of Registrable Securities shall agree,
      severally
      and not jointly, as
      a
      consequence of facilitating such disposition of Registrable Securities to
      (i) indemnify and hold harmless the Buyer, its directors, its officers who
      sign any registration statement and each person, if any, who controls the Buyer
      within the meaning of either Section 15 of the Securities Act or
      Section 20 of the Exchange Act, against any losses, claims, damages or
      liabilities to which the Buyer or such other persons may become subject, under
      the Securities Act or otherwise, insofar as such losses, claims, damages or
      liabilities (or actions in respect thereof) arise out of or are based upon
      an
      untrue statement or alleged untrue statement of a material fact contained in
      any
      registration statement or an omission or alleged omission to state therein
      a
      material fact required to be stated therein or necessary to make the statements
      therein, not misleading, or arise out of or are based upon an untrue statement
      or alleged untrue statement of a material fact contained in any prospectus
      or an
      omission or alleged omission to state therein a material fact required to be
      stated therein or necessary to make the statements therein, in the light of
      the
      circumstances under which they were made, not misleading, in each case to the
      extent, but only to the extent, that such untrue statement or alleged untrue
      statement or omission or alleged omission was made in reliance upon and in
      conformity with written information furnished to the Buyer by such Seller or
      underwriter expressly for use therein,
      and
      (ii) reimburse the Buyer for any legal or other expenses incurred by the
      Buyer in connection with investigating or defending any such action or claim
      as
      such expenses are incurred;
      provided,
      however,
      that no
      Seller or underwriter shall be liable under this Section 12.5(b) for any
      amount in excess of the net proceeds paid to such Seller or underwriter in
      respect of Registrable Securities sold by it.

     

    (c) Notice
      of Claims, etc. 
      Promptly
      after receipt by a person seeking indemnification pursuant to this
      Section 12.5 (an “Indemnified
      Party”)
      of
      written notice of any investigation, claim, proceeding or other action in
      respect of which indemnification is being sought (each, a “Claim”),
      the
      Indemnified Party promptly shall notify the person against whom indemnification
      pursuant to this Section 12.5 is being sought (the “Indemnifying
      Party”)
      of the
      commencement thereof; but the omission to so notify the Indemnifying Party
      shall
      not relieve the Indemnifying Party from any liability that it otherwise may
      have
      to the Indemnified Party, except to the extent that the Indemnifying Party
      is
      materially prejudiced and forfeits substantive rights and defenses by reason
      of
      such failure. In connection with any Claim as to which both the Indemnifying
      Party and the Indemnified Party are parties, the Indemnifying Party shall be
      entitled to assume the defense thereof. Notwithstanding the assumption of the
      defense of any Claim by the Indemnifying Party, the Indemnified Party shall
      have
      the right to employ separate legal counsel and to participate in the defense
      of
      such Claim, and the Indemnifying Party shall bear the reasonable fees,
      out-of-pocket costs and expenses of such separate legal counsel to the
      Indemnified Party if (and only if): (i) the Indemnifying Party shall have
      agreed to pay such fees, costs and expenses, (ii) the Indemnified Party
shall
      reasonably have concluded that representation of the Indemnified Party by the
      Indemnifying Party by the same legal counsel would not be appropriate due to
      actual or, as reasonably determined by legal counsel to the Indemnified Party,
      potentially differing interests between such parties in the conduct of the
      defense of such Claim, or if there may be legal defenses available to the
      Indemnified Party that are in addition to or disparate from those available
      to
      the Indemnifying Party, or (iii) the Indemnifying Party shall have failed
      to employ legal counsel reasonably satisfactory to the Indemnified Party within
      a reasonable period of time after notice of the commencement of such Claim.
      If
      the Indemnified Party employs separate legal counsel in circumstances other
      than
      as described in the preceding sentence, the fees, costs and expenses of such
      legal counsel shall be borne exclusively by the Indemnified Party. Except as
      provided above, the Indemnifying Party shall not, in connection with any Claim
      in the same jurisdiction, be liable for the fees and expenses of more than
      one
      firm of counsel for the Indemnified Party (together with appropriate local
      counsel). The Indemnified Party shall not, without the prior written consent
      of
      the Indemnifying Party (which consent shall not unreasonably be withheld),
      settle or compromise any Claim or consent to the entry of any judgment that
      does
      not include an unconditional release of the Indemnifying Party from all
      liabilities with respect to such Claim or judgment or
      contain any admission of wrongdoing.

     

    
      
        
        

      

      
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    (d) Contribution.
      If the
      indemnification provided for in this Section 12.5 is unavailable to, or
      insufficient to hold harmless, an Indemnified Party in respect of any losses,
      claims, damages or liabilities (or actions in respect thereof) referred to
      herein, then each Indemnifying Party shall contribute to the amount paid or
      payable by such Indemnified Party as a result of such losses, claims, damages
      or
      liabilities (or actions in respect thereof) in such proportion as is appropriate
      to reflect the relative fault of the Indemnifying Party and the Indemnified
      Party in connection with the statements or omissions or
      alleged statements or omissions which
      resulted in such losses, claims, damages or liabilities (or actions in respect
      thereof), as well as any other relevant equitable considerations. The relative
      fault of such Indemnifying Party and Indemnified Party shall be determined
      by
      reference to, among other things, whether the untrue or alleged untrue statement
      of a material fact or omission or alleged omission to state a material fact
      relates to information supplied by such Indemnifying Party or by such
      Indemnified Party, and the parties’ relative intent, knowledge, access to
      information and opportunity to correct or prevent such statement or omission.
      The parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 12.5(d) were determined by pro rata allocation
      (even if the Sellers or any underwriters were treated as one entity for such
      purpose) or by any other method of allocation which does not take account of
      the
      equitable considerations referred to in this Section 12.5(d). The amount
      paid or payable by an Indemnified Party as a result of the losses, claims,
      damages or liabilities (or actions in respect thereof) referred to above shall
      be deemed to include any legal or other fees or expenses reasonably incurred
      by
      such Indemnified Party in connection with investigating or defending any such
      action or claim. No person guilty of fraudulent misrepresentation (within the
      meaning of Section 11(f) of the Securities Act) shall be entitled to
      contribution from any person who was not guilty of such fraudulent
      misrepresentation. The obligations of the Sellers and any underwriters in this
      Section 12.5(d) to contribute shall be several in proportion to the
      percentage of Thermo Shares and/or Warrant Shares registered or underwritten,
      as
      the case may be, by them and not joint.

     

    (e) Limitation
      on Sellers’ and Underwriters’ Obligations.
      Notwithstanding any other provision of this Section 12.5, in no event shall
      any (i) Seller have
      any
      liability under
      this Section 12.5 for any amounts in excess of the dollar amount of the
      proceeds actually
      received
      by such Seller from the sale by such Seller of Registrable Securities (after
      deducting any fees, discounts and commissions applicable thereto) pursuant
      to
      any registration statement under which such Thermo Shares, Conversion Shares
      and/or Warrant Shares are
      registered under the Securities Act and (ii) underwriter be required to
      undertake liability to any person hereunder for any amounts in excess of the
      aggregate discount, commission or other compensation payable to such underwriter
      with respect to the Registrable Securities underwritten by it and distributed
      pursuant to the registration statement.

     

    
      
        
        

      

      
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    (f) Other
      Liabilities.
      The
      obligations of the Buyer under this Section 12.5 shall be in addition to
      any liability which the Buyer may otherwise have to any Indemnified Person
      and
      the obligations of any Indemnified Person under this Section 12.5 shall be
      in addition to any liability which such Indemnified Person may otherwise have
      to
      the Buyer. The remedies provided in this Section 12 are not exclusive and
      shall not limit any rights or remedies which may otherwise be available to
      an
      indemnified party at law or in equity.

    


    12.6 Floating
      of Shares Outside of the United States.
      In the
      event that the Buyer proposes to issue and/or sell (including for this purpose,
      a sale effected by the Buyer for stockholders other than the Sellers) any shares
      of ThermoEnergy Common Stock to the public under the laws of any sovereign
      jurisdiction outside of the United States, then the provisions of this Section
      12 shall apply to such issuance and/or sale of shares so as to give the Sellers
      as nearly as practicable the same rights and benefits as they would have had
      had
      the Buyer proposed to register shares of ThermoEnergy Common Stock under the
      Securities Act pursuant to Section 12.1(a) above; provided,
      however,
      that
      the Buyer shall not be required to include in any such issuance and/or sale
      any
      shares of ThermoEnergy Common Stock for the benefit of the Sellers if, and
      to
      the extent that, the laws of any jurisdiction in which such offering is to
      made,
      or the rules of any exchange or trading system through which such offering
      is to
      be effected, prohibit the inclusion of shares to be offered by any person or
      entity other than the issuer.

    


    13. Offers
      to Other Holders of Common Stock and Preferred Stock.
      Promptly after the Effective Date, the Buyer shall extend to all holders of
      Common Stock and/or Preferred Stock who are not Sellers under this Agreement
      the
      opportunity to sell to the Buyer their shares of Common Stock and/or Preferred
      Stock on substantially the same terms and conditions, and for substantially
      the
      same consideration, as provided in this Agreement. The Buyer shall keep such
      offer open for a period of not less than 30 days beyond the date of
      Closing.

     

    
      
         

      

      
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    14. Board
      of Directors.
      So long
      as any of the Warrants or the Notes remain outstanding, until the sixth
      anniversary of the Closing, Spencer Trask Specialty Group, LLC or any of its
      affiliates (“Spencer Trask”), acting on behalf of the Sellers, shall have the
      right to designate one individual to receive notice of and attend all meetings
      of the Board of Directors of the Buyer (the “Buyer Board”) and any committees
      thereof. The Buyer will permit the Spencer Trask representative, at Spencer
      Trask’s expense, to visit and inspect any of the properties of the Buyer and of
      any subsidiary (including CASTion), and to discuss the affairs, finances and
      accounts of the Buyer and of any subsidiary (including CASTion), with its
      officers, all upon reasonable notice and to such reasonable extent and at such
      reasonable times and intervals as the representative may reasonably request.
      The
      Buyer will reimburse all direct out-of-pocket expenses reasonably incurred
      by
      the Spencer Trask representative in attending meetings of the Buyer Board or
      any
      committee thereof. Notwithstanding the foregoing, the Buyer may require, as
      a
      condition to the Spencer Trask representative’s attendance at meetings of the
      Buyer Board or committees thereof or to the provision to the Spencer Trask
      representative of material non-public information regarding the Buyer that
      Spencer Trask and the Spencer Trask representative execute conventional
      non-disclosure agreements in conformity with Regulation FD promulgated under
      the
      Exchange Act.

    


    15.
       Non-Survival
      of Representations, Warranties and Agreements.
      None of
      the representations, warranties, covenants and agreements in this Agreement
      or
      in any instrument delivered pursuant to this Agreement, including any rights
      arising out of any breach of such representations, warranties, covenants and
      agreements, shall survive the Closing, except for (i) the Sellers’
representations and warranties in Sections 4 and 8, (ii) the Buyer’s
      representations and warranties in Sections 6 and 7, (iii) those covenants and
      agreements contained herein that by their terms apply or are to be performed
      in
      whole or in part at or after the Closing and (iv) Sections 17 through 24 of
      this
      Agreement. 

     

    16. Continued
      Access to Records.
      CASTion
      shall permit the Buyer to have full access to all books, documents, papers
      and
      records relating to CASTion’s assets, stock ownership, properties, operations,
      obligations and liabilities, including, but not limited to, all books of
      account, tax records, minute books of directors and shareholders meetings,
      organizational documents and any other business activities or prospects after
      the Effective Date and Closing.

    


    17. Default.
      In
      addition to any other remedies available to the non-defaulting Parties under
      applicable law (including but not limited to, the right to specific performance
      of this Agreement), any Party hereto who fails to comply with the terms of
      this
      Agreement shall be obligated for, and agrees to pay, all damages, costs, fees,
      and expenses incurred or suffered by the non-defaulting Parties, including
      without limitation all fees and costs incurred by a non-defaulting Party to
      enforce the terms of this Agreement, which fees and costs shall include court
      costs and reasonable attorney's fees.

    


    18. Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (a) the date of transmission, if such notice or communication
      is delivered via facsimile (provided the sender receives a machine-generated
      confirmation of successful transmission) at the facsimile number specified
      in
      this Section 18, (b) the next business day, if sent by a nationally recognized
      overnight courier service, (c) the second business day after the date of
      mailing, if sent, postage prepaid, by first class U.S. mail or (d) upon actual
      receipt by the Party to whom such notice is addressed. The address for such
      notices and communications shall be as follows:

    

      
        	
                If
                  to a Seller:

              	
                To
                  such Seller at the address of such Seller set forth on Exhibit
                  A

              


      

       

      
        
          
          

        

        
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                If
                  to CASTion:

              	
                Mr.
                  Jeffrey L. Powell, President & CEO

              
	 	
                CASTion
                  Corporation

              
	 	
                10
                  New Bond Street

              
	 	
                Worcester,
                  MA 01606

              
	 	
                Fax:
                  (508) 854-1753

              
	 	 
	
                with
                  copies (which

              	 
	
                shall
                  not constitute

              	 
	
                notice)
                  to:

              	
                Donald
                  F. Farley, CEO

              
	 	
                Spencer
                  Trask Specialty Group, LLC

              
	 	
                535
                  Madison Avenue

              
	 	
                New
                  York, NY 10022

              
	 	
                Fax:
                  (508) 854-1753

              
	 	 
	 	
                E.
                  Matthew Gautieri, Controller

              
	 	
                Boston
                  Community Venture Fund

              
	 	
                56
                  Warren Street

              
	 	
                Boston,
                  MA 02119

              
	 	
                Fax:
                  (617) 427-9300

              
	 	 
	 	
                Robert
                  J. Crowley, President

              
	 	
                Massachusetts
                  Technology Development Corporation

              
	 	
                40
                  Broad Street

              
	 	
                Suite
                  818

              
	 	
                Boston,
                  MA 02109

              
	 	
                Fax:
                  (617) 723-5983

              
	 	 
	 	
                and

              
	 	 
	 	
                Carl
                  F. Barnes, Esq.

              
	 	
                Morse,
                  Barnes-Brown & Pendleton, P.C.

              
	 	
                1601
                  Trapelo Road

              
	 	
                Waltham,
                  Massachusetts 02451

              
	 	
                Fax:
                  (781) 622-5933

              
	 	 
	 	 
	
                If
                  to the Buyer:

              	
                Dennis
                  C. Cossey, CEO

              
	 	
                ThermoEnergy
                  Corporation

              
	 	
                124
                  West Capitol Avenue, Suite 880

              
	 	
                Little
                  Rock, Arkansas 72201

              
	 	
                Fax:
                  (501) 375-5249

              
	 	 
	
                with
                  copies (which

              	 
	
                shall
                  not constitute

              	 
	
                notice)
                  to:

              	
                Andrew
                  T. Melton, EVP and CFO

              
	 	
                ThermoEnergy
                  Corporation

              
	 	
                124
                  West Capitol Avenue, Suite 880

              
	 	
                Little
                  Rock, AR 72201

              
	 	
                Fax:
                  (501) 375-5249

              
	 	 
	 	
                and

              


      

       

      
        
          
          

        

        
          Page
            21
            of 26

          
            

          

        

        
          
          

        

      

       

      
        	 	
                William
                  E. Kelly, Esq.

              
	 	
                Nixon
                  Peabody LLP

              
	 	
                100
                  Summer Street

              
	 	
                Boston,
                  MA 02110

              
	 	 
	 	
                Fax:
                  (866) 743-4899

              


      

    

    


    or,
      in
      any case, to such other address as the addressee may, by notice pursuant to
      this
      Section 18, designate.

     

    19. Brokerage.
      No
      brokerage or finder’s fees or commissions are or will be payable by the any
      Party to any broker, financial advisor or consultant, finder, placement agent,
      investment banker, bank or other person with respect to the transactions
      contemplated by this Agreement. The Sellers, on the one hand, and the Buyer,
      on
      the other hand, shall indemnify and hold each other harmless from and against
      any claims made by or on behalf of any persons for fees of a type contemplated
      in this Section 19 that may be due in connection with the transactions
      contemplated by this Agreement as a result of any commitment, understanding,
      agreement or arrangement made by it or them.

    


    20. Prior
      Agreements; Amendments and Waivers.
      This
      Agreement supersedes all prior Agreements, offers or communications with respect
      to the matters set forth herein. This Agreement may not be amended except by
      a
      written instrument signed by all Parties hereto. The enforcement of any
      provision of this Agreement may be waived only by a written instrument signed
      by
      the Party against which such waiver is to be effective; waiver of any provision
      in any single instance shall not operate as a waiver of such provision in any
      other instance. No delay in or failure to exercise any right granted herein
      shall impair any such right or shall act as a waiver of any subsequent breach
      by
      any Party.

    


    21. Successors.
      This
      Agreement shall be binding on the Parties hereto and their respective heirs,
      successors and assigns.

    


    22. Governing
      Law.
      This
      Agreement shall be governed exclusively by the provisions hereof and by the
      laws
      of the Commonwealth of Massachusetts as the same may from time to time
      exist.

    


    23. Headings.
      The
      paragraph headings throughout this instrument are for convenience and reference
      only, and the words contained herein shall in no way be held to explain, modify,
      amplify or aid in the interpretation, construction or meaning of the provisions
      of this Agreement.

    


    24. Counterparts.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed and delivered by all Parties.
      In
      the event that any signature is delivered by facsimile transmission, such
      signature shall create a valid and binding obligation of the Party executing
      and
      transmitting such counterpart with the same force and effect as if such
      facsimile signature page were an original thereof notwithstanding any subsequent
      failure or refusal of such Party to deliver the original thereof.

     

    [The
      remainder of this page has intentionally been left blank.]

     

    
      
        
        

      

      
        Page
          22
          of 26

        
          

        

      

      
        
        

      

    

     

    In
      witness whereof, the Parties have executed this Agreement on the dates
      indicated.

    
      	 	 	 
	 	
              THERMOENERGY
                CORPORATION

            
	 
 	 
 	 
 
	
              Date:
                July
                2, 2007

            	By:  	/s/
              Andrew T. Melton
	 	
              

              Andrew
                T. Melton

              Executive
                Vice President and 

              Chief
                Financial Officer

            
	 	 


      	 	 	 
	 	
              
                CASTION
                  CORPORATION

              

            
	 
 	 
 	 
 
	
              Date:
                July
                2, 2007

            	By:  	/s/
              Jeffreey L. Powell
	 	
              

              Jeffrey
                L. Powell

              President
                and Chief Executive Officer

            
	 	 


      	 	 	 
	 	
              BANCBOSTON
                VENTURES,
                INC.

            
	 
 	 
 	 
 
	
            	By:  	
              MASSACHUSETTS
                TECHNOLOGY 

              DEVELOPMENT
                CORPORATION

                Attorney-in-Fact 

              

            


      	 	 	 
	
              Date:
                July
                2, 2007

            	By:  	/s/
              Robert
              J. Crowley
	 	
              
Name:
Robert
              J. Crowley
	 	Title:
              President
	 	 


      	 	 	 
	 	
              BCLF
                VENTURES
                I,
                LLC

            
	 
 	 
 	 
 
	
              Date:
                July
                2, 2007

            	By:  	/s/
              E.
              Matthew Gautieri
              
	 	
              

              Name:
                E.
                Matthew Gautieri 

              Title:
                Controller

            


    

    
      	 	 	 
	 	
              ESSEX
                REGIONAL
                RETIREMENT
                BOARD

            
	 
 	 
 	 
 
	
            	By:  	
              MASSACHUSETTS
                TECHNOLOGY 

              DEVELOPMENT
                CORPORATION

              
                Attorney-in-Fact 

              

            


    

     

    
      
        
        

      

      
        Page
          23
          of 26

        
          

        

      

      
        
        

      

    

     

    
      	 	 	 
	
              Date:
                July
                2, 2007

            	By:  	/s/
              Robert
              J. Crowley
	 	
              
Name:
Robert
              J. Crowley
	 	Title:
              President
	 	 


    

    
      	 	 	 
	 	
              MASSACHUSETTS
                TECHNOLOGY
                DEVELOPMENT
                CORPORATION

            
	 
 	 
 	 
 
	
              Date:
                July
                2, 2007

            	By:  	/s/
              Robert
              J. Crowley
	 	
              
Name:
Robert
              J. Crowley
	 	Title:
              President
	 	 


    

    
      	 	 	 
	 	
              SPENCER
                TRASK
                SPECIALTY
                GROUP,
                LLC 

            
	 
 	 
 	 
 
	
              Date:
                July
                2, 2007

            	By:  	/s/
              Donald F. Farley
	 	
              
Name:
Donald
              F. Farley
	 	Title:
              CEO


    

     

    
      	 	 	 
	 	
              SPENCER
                TRASK
                PRIVATE
                EQUITY
                ACCREDITED

              FUND
                III, LLC 

            
	 
 	 
 	 
 
	
              Date:
                July
                2, 2007

            	By:  	/s/
              Donald F. Farley
	 	
              
Name:
Donald
              F. Farley
	 	Title:
              CEO


    

     

    
      
        
        

      

      
        Page
          24
          of 26

        
          

        

      

      
        
        

      

    


    Exhibit
      A

     

    
      
        	
                Name
                  and Address of Seller

              	 	
                Class
                  and Number of Shares

              	 	
                Principal
                  Amount of (and interest on) Notes

              	 	
                Cash
                  Payment

              	 	
                Number
                  of ThermoEnergy Shares

              	 	
                Number
                  of Warrants

              	 	
                Principal
                  Amount of Convertible Notes

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                BancBoston
                  Ventures Inc.

              	 	 	
                C-2:
                  3,093.52

              	 	
                $

              	
                0.00

              	 	
                $

              	
                0.00

              	 	 	
                34,450

              	 	 	
                35,969

              	 	
                $

              	
                29,010.17

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                BCLF
                  Ventures I, LLC

              	 	 	
                C-1:
                  33,654.00

                 

                
                

                C-2:
                  21,623.81

              	 	
                $

              	
                715,486

              	 	
                $

              	
                620,683.49

              	 	 	
                723,273

              	 	 	
                619,898

              	 	
                $

              	
                479,808.35

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Essex
                  Regional Retirement Board

                 

              	 	 	
                C-2:
                  1546.81

              	 	
                $

              	
                0.00

              	 	
                $

              	
                0.00

              	 	 	
                17,225

              	 	 	
                17,985

              	 	
                $

              	
                14,505.56

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Massachusetts
                  Technology Development Corporation

              	 	 	
                C-1:
                  56,090.00

                
                

                 

                C-2:
                  45,475.21

              	 	
                $

              	
                703,140

              	 	
                $

              	
                603,480.42

              	 	 	
                1,183,523

              	 	 	
                1,091,034

              	 	
                $

              	
                879,961.77

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Spencer
                  Trask Specialty Group, LLC

              	 	 	
                C-2:
                  115,207.49

                
                

                 

                C-3:
                  125,000

                
                

                 

                C-4:
                  116,808.00

              	 	 	
                484,248

              	 	
                $

              	
                415,613.09

              	 	 	
                2,410,867

              	 	 	
                2,417,539

              	 	
                $

              	
                1,949,840.7

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Spencer
                  Trask Private Equity Accredited Fund III, LLC

              	 	 	
                N/A

              	 	 	
                210,223

              	 	
                $

              	
                210,223.00

              	 	 	
                25,000

              	 	 	
                50,000

              	 	
                $

              	
                0.00

              	 


      

    

    


    
      
        
        

      

      
        Page
          25
          of 26

        
          

        

      

      
        
        

      

    

     

    Addresses
      of Sellers

     

    BancBoston
      Ventures Inc.

    c/o
      Massachusetts
      Technology Development Corporation

    40
      Broad
      Street

    Suite
      818

    Boston,
      MA 02109

    Attn:
      Robert J. Crowley, President

    Fax:
      (617) 723-5983


    


    BCLF
      Ventures I, LLC

    c/o
      Boston Community Venture Fund

    56
      Warren
      Street

    Boston,
      MA 02119

    Attn:
      E.
      Matthew Gautieri, Controller

    Fax:
      (617) 427-9300


    


    Essex
      Regional Retirement Board

    c/o
      Massachusetts
      Technology Development Corporation

    40
      Broad
      Street

    Suite
      818

    Boston,
      MA 02109

    Attn:
      Robert J. Crowley, President

    Fax:
      (617) 723-5983


    


    Massachusetts
      Technology Development Corporation

    40
      Broad
      Street

    Suite
      818

    Boston,
      MA 02109

    Attn:
      Robert J. Crowley, President

    Fax:
      (617) 723-5983


    


    Spencer
      Trask Specialty Group, LLC

    535
      Madison Avenue

    New
      York,
      NY 10022

    Attn:
      Donald F. Farley, CEO

    Fax: (508)
      854-1753

    


    Spencer
      Trask Private Equity Accredited Fund III, LLC

    c/o
      Spencer Trask Specialty Group, LLC

    535
      Madison Avenue

    New
      York,
      NY 10022

    Attn:
      Donald F. Farley, CEO

    Fax: (508)
      854-1753

     

    
      
        
        

      

      
        Page
          26
          of 26