Exhibit
10.1


      
        
          
            	 	 
	 	 
	
                    Principal
      Amount:  $110,000.00

                  	
                    Issue
      Date:  August 25,
2009

                  


          

        

      

      


      PROMISSORY
NOTE

      


       

      FOR VALUE
RECEIVED, ThermoEnergy Corporation, a Delaware corporation (the “Borrower”),
hereby promise to pay to the order of Focus Fund L.P. (the “Holder”), the sum of
One Hundred Ten Thousand Dollars ($110,000.00), together with interest on the
outstanding principal amount hereof at the rate of  fifteen percent
(15%) per annum.  Interest shall be computed on the basis of a 365-day
year, using the number of days actually elapsed.  A portion of the
principal amount, in the amount of Fifty-Five Thousand Dollars ($55,000.00),
together with all interest then accrued and unpaid under this Note, shall be due
and payable on September 4, 2009. The entire unpaid principal amount, together
with all interest then accrued and unpaid under this Note, shall be due and
payable on September 28, 2009 (the “Maturity Date”).

       

      This Note
may be prepaid, in whole or in part, without premium or penalty, at the election
of the Borrower.  Partial prepayments, if any, shall be applied first
to accrued and unpaid interest, and the balance to principal.

       

      The
entire unpaid principal amount of this Note, together with interest thereon
shall, on written notice from the Holder, forthwith become and be due and
payable if any one or more Events of Default shall have occurred (for any reason
whatsoever and whether such happening shall be voluntary or involuntary or be
affected or come about by operation of law pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body) and be continuing.

       

      The
occurrence of any one or more of the following events or conditions shall
constitute an “Event of Default” under this Agreement:

       

      (i)           The
Borrower’s failure to make any payment of principal or interest or any other
sums when due under this Note; or

       

      (ii)           If
the Borrower shall (a) apply for or consent to the appointment of a receiver,
trustee or liquidator of all or a substantial part of any of its assets; (b) be
unable, or admit in writing its inability, to pay its debts as they mature; (c)
file or permit the filing of any petition, case arrangement, reorganization, or
the like under any insolvency or bankruptcy law, or the adjudication of it as a
bankrupt, or the making of an assignment for the benefit of creditors or the
consenting to any form or arrangement for the satisfaction, settlement or delay
of debt or the appointment of a receiver for all or any part of its properties;
or (d) any action shall be taken by the Borrower for the purpose of effecting
any of the foregoing; or

       

      (iii)           If
an order, judgment or decree shall be entered, or a case shall be commenced,
against the Borrower, without its application, approval or consent by any court
of competent jurisdiction, approving a petition or permitting the commencement
of a case seeking reorganization or liquidation of the Borrower or appointing a
receiver, trustee or liquidator of the Borrower, or of all or a substantial part
of the assets of the Borrower, and the Borrower, by any act, indicate its
approval thereof, consent thereto, or acquiescence therein, or such order,
judgment, decree or case shall continue unstayed and in effect for any period of
ninety (90) consecutive days or an order for relief in connection therewith
shall be entered; or

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (iv)           If
the Borrower shall dissolve or liquidate, or be dissolved or liquidated, or
cease to legally exist, or merge or consolidate, or be merged or consolidated,
with or into any other corporation.

       

      As
additional consideration for the making of this loan, the Borrower hereby
covenants and agrees that, whether or not any portion of this note then remains
outstanding, the Borrower will, upon the initial closing of an equity or
convertible debt investment (a “Financing”) in the Borrower yielding gross
proceeds to the Borrower of not less than Two Million Dollars ($2,000,000.00),
the Borrower will issue to the Holder a warrant (the “Warrant”) entitling the
Holder to purchase, at any time on or before the fifth anniversary of the date
of the initial closing of the Financing, such number of the securities to be
issued in the Financing (the “Financing Securities”) as shall be determined by
dividing (i) One Hundred Ten Thousand Dollars ($110,000.00) by (ii) the price
per share at which such Financing Securities are issued in the Financing (the
“Financing Price”).  The price per share at which the Warrant may be
exercised shall be equal to the Financing Price.

       

      All
payment obligations arising under this Note are subject to the express condition
that at no time shall the Borrower be obligated or required to pay interest at a
rate which could subject the Holder to either civil or criminal liability as a
result of being in excess of the maximum rate which the Borrower is permitted by
law to contract or agree to pay.  If by the terms of this Note, the
Borrower is at any time required or obligated to pay interest at a rate in
excess of such maximum rate, the applicable rate of interest shall be deemed to
be immediately reduced to such maximum rate, and interest thus payable shall be
computed at such maximum rate, and the portion of all prior interest payments in
excess of such maximum rate shall be applied and shall be deemed to have been
payments in reduction of principal.

       

      No
failure or delay on the part of the Holder in the exercise of any power, right
or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other right, power or
privilege.  All rights and remedies existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise
available.

       

      All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of Arkansas, without regard to the
principles of conflicts of law thereof. Each party agrees that any action,
claim, suit, investigation or proceeding (including, without limitation, an
investigation or partial proceeding, such as a deposition), whether commenced or
threatened. (a “Proceeding”) concerning the interpretation, enforcement and of
the transactions contemplated by this Note or the Security Agreement shall be commenced exclusively in the state or
federal courts sitting in, or having jurisdiction over, Little Rock, Arkansas
(the “Arkansas Courts” ). Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the Arkansas Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such Arkansas Court, or that such Proceeding has been
commenced in an improper or inconvenient forum. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law. Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby. If either
party shall commence a Proceeding to enforce any provisions of this Note or the
Security Agreement, then the prevailing party in such Proceeding shall be
reimbursed by the other party for its reasonable attorneys’ fees and other costs
and expenses incurred with the investigation, preparation and prosecution of
such Proceeding.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      THE
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO A
TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS NOTE.  THIS WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR THE HOLDER TO ACCEPT THIS NOTE.

       

      All
notices, requests or other communications required or permitted to be given
under this Agreement to any party shall be in writing and shall be deemed to
have been sufficiently given when delivered by personal service or sent by
registered mail, by overnight courier services with provided evidence of
delivery or attempted delivery, or by facsimile, e-mail or other means of
electronic transmission that generates evidence of delivery, to the Borrower at
124 West Capitol Avenue, Suite 880, Little Rock, Arkansas 72201, attention
Dennis C. Cossey, Chairman (fax: 501-375-5249; e-mail:
dennis.cossey@thermoenergy.com), with a copy to William E. Kelly, Esq., Nixon
Peabody LLP, 100 Summer Street, Boston, Massachusetts 02110 (fax: 866-743-4899;
e-mail: wkelly@nixonpeabody.com) or to the Holder at P.O. Box 389, Ponte Vedra,
Florida 32004, attention J. Winder Hughes III (e-mail:
focusfund@clearwire.net).  Either party may, by like notice, change
the address or telecopy number or the person to whom notice is to be
given.  Notice shall be deemed given when received or when attempted
delivery is made (based on evidence of attempted delivery by the United States
Postal Service or an overnight courier or a messenger service), provided that
notice by facsimile, e-mail or other electronic transmission shall be deemed
given when evidence of delivery is received by the sender.

       

      This Note
may be amended or supplemented, or any provision hereof waived, only by the
written agreement of the Holder and the Borrower.  Neither the
amendment of the Security Agreement, the extension of Advances pursuant hereto
nor any other transaction entered into in connection herewith shall be deemed to
be a waiver of any right or obligation of either party existing prior to the
date hereof, all of which are expressly reserved.

       

      This Note
shall be binding upon the Borrower and its successors and assigns, and shall
inure to the benefit of the Holder and its successors and
assigns.  The Borrower may not assign any of its obligations under
this Note without the consent of the Holder.

       

      If
default is made in the payment of this Note, the Borrower shall pay the Holder
hereof reasonable costs of collection, including reasonable attorneys’ fees,
regardless of whether the Holder commenced litigation in order to enforce its
rights under this Note.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      IN WITNESS WHEREOF, the
Borrower has caused this Note to be executed and delivered by its duly
authorized Chairman and Chief Executive Officer as of the date and year first
above written.

       

       

      
        
          
            	 	ThermoEnergy
      Corporation	 
	 	 	 
	 	 	 	 
	
                     

                  	
                    By:
      

                  	/s/ Dennis
      C. Cossey	 
	 	 	Dennis
      C. Cossey	 
	 	 	Chief
      Executive Officer